Senate Bill (“SB”) 350, which the California legislature passed in 2015, sets ambitious goals for the state, including a 50% renewables portfolio standard and a doubling of energy efficiency by 2030.  To help encourage a coordinated approach to meeting these goals, SB 350 mandates that the California Public Utilities Commission (“CPUC”) examine the future of California’s energy procurement practices through an Integrated Resource Planning (“IRP”) process. 

Pursuant to SB 350, the CPUC voted on February 18 to open a new proceeding on IRP.  This proceeding attempts to take a more coordinated approach to energy generation and transmission planning in the state.  Traditionally, the CPUC has relied on a long-term procurement planning (“LTPP”) proceeding  to determine what type and quantity of resources California utilities should seek to procure.  However, with the recent growth of new energy technologies such as energy storage and demand response that do not fall within the scope of the traditional LTPP proceeding, the CPUC recognizes that it needs to take a more holistic approach to utility procurement strategies.

The IRP will largely build upon the work down in previous LTPP proceedings.  But the CPUC also intends for the IRP to be an “umbrella” resource planning proceeding, which will be informed by and influence a number of current resource-specific proceedings.  The CPUC has already identified 19 related proceedings under the IRP umbrella.  The proceeding will also look at the scope of SB 350’s required integrated resource plans that load serving entities will submit to the CPUC starting in 2017.

Although the CPUC intends to coordinate with LTPP requirements, the CPUC does not foresee that the IRP proceeding will result in California utilities filing additional bundled procurement plans; however, that possibility has not been entirely ruled-out.  The CPUC will also consider procurement policy issues stemming from the growth of community choice aggregation, including cost-sharing mechanisms and procurement that could benefit customers who live in different utility service territories.

The CPUC intends for the IRP to be a venue in which the public can participate in the state’s efforts to meet the SB 350 goals.  If correctly implemented, IRP has the potential to efficiently identify low-cost solutions for load serving entities to hit the SB 350 targets while continuing to deliver reliable energy services.  The CPUC has begun a substantial undertaking – regardless of the ultimate IRP requirements, this proceeding will be one to watch.