A new document from the National Association of Regulatory Utility Commissioners and the National Regulatory Research Institute (NRRI) aims to help state utility regulators deal with issues of resource adequacy.

Presenting the Resource Adequacy Primer for State Regulators to NARUC’s Summer Policy Summit on Monday, Judith Jagdmann — chair of the Virginia State Corporation Commission and first vice president of NARUC — explained that because “resource adequacy is the foundation for providing reliable electric service,” both organizations felt it necessary to provide a guide to help.

“This may be a first for commissioners: We’re not trying to tell you what to do,” Jagdmann joked, further explaining that the document’s “purpose is to assist you in making your own decisions on many of the current and evolving issues of the day.” NARUC and NRRI intended the primer not just for new commissioners and staff who need to get up to speed on the basics of resource adequacy, but also as a handy reference for experienced members of the regulatory community facing topics they may not have encountered recently.

Bird’s-eye View

The primer is divided into three parts. The first provides basic information about the bulk power system, such as generation, transmission, distribution and operational practices, as well as metrics used to evaluate resource adequacy. This includes material on “resource planning, reserve margins, and the responsibilities of state and federal regulators.”

In the second part, NARUC and NRRI lay out how states apply resource adequacy in market and non-market areas around the country. Sections on ERCOT, CAISO, ISO-NE, MISO, PJM, NYISO and SPP are included along with non-market areas of the Western and Eastern Interconnections. Each section covers the general functioning of each area and the entities involved in resource adequacy and planning, as well as region-specific topics such as the impact of rapid wind and solar penetration in Texas and NYISO’s capacity market.

The third part focuses on current and emerging issues across the BPS, divided into two sections:

• measuring resource adequacy with an evolving resource mix and changing demand characteristics; and
• the interplay between regional and state planning.

In the first section, the authors note “significant and ongoing changes to the resource mix and usage patterns” of the North American grid. Primarily this means the introduction of significant wind and solar generation resources into the system, along with increasing output from demand-side resources such as rooftop solar panels and battery storage, and a rise in extreme weather events. These trends mean that the amount of dispatchable generation has declined significantly, while forecasting demand has become more difficult because of “changing load profiles, behind-the-meter resources, and increasing occurrences of extreme weather events.”

The second section includes discussions of a rise in court disputes in recent years from “the ongoing tension between FERC capacity market rules and state generation policies,” as well as constitutional challenges to state generation policies. For example, one ongoing argument deals with whether FERC can “establish wholesale market rules in ways that negatively impact and potentially frustrate state generation policies.”

Elliott Nethercutt, principal researcher at NRRI, acknowledged that because the primer is meant to be an introduction to resource adequacy, there are many areas that could be explored in greater detail, such as “how those different [state and federal regulatory] levels interact.” Jagdmann added that the hope is for commissioners to use it as a jumping off point for further investigation.

“It’s not going to be everything, but it’s going to give you a beginning and the core components so that you’ll know what’s going on,” she said.