Opinion ID: 151421
Heading Depth: 3
Heading Rank: 2

Heading: Resource Adequacy Requirements

Text: Resource adequacy is the availability of an adequate supply of generation or demand responsive resources to support safe and reliable operation of the transmission grid. First Market Redesign Order ¶ 3 n. 2. The Commission explained that ensur[ing] that all load serving entities procure adequate generation capacity to serve their load ... is critical to maintaining reliability and ensuring that wholesale prices remain just and reasonable. Further,... resource adequacy requirements... will lessen the likelihood of price spikes occurring during periods of high demand. Id. ¶ 4. As part of its market redesign proposal, California ISO proposed to impose on load-serving entities two types of resource adequacy requirements: system requirements and local requirements. System resource adequacy requirements are set by state authorities and aim to ensure there is sufficient generation in the entire California ISO balancing authority area to serve the ISO's aggregate load. Local resource adequacy requirements are imposed on entities that serve load in constrained areasknown as local capacity areas or load pockets where the transmission capability is insufficient to reliably serve 100% of the load without relying on generation capacity that is physically located within that area. California ISO proposed to perform an annual technical study to calculate the minimum amount of generation capacity that must be available within each local capacity area. Then, responsibility for acquiring the necessary local resources would be allocated to the applicable load-serving entities in accordance with each entity's share of load. San Francisco contended it should be permitted to satisfy its local resource adequacy requirement with resources it could import from outside the load pocket it serves, pursuant to a preexisting firm transmission contract. California ISO refused, explaining that the local requirement could only be satisfied with resources physically situated within the load pocket. FERC sided with the ISO. San Francisco petitions for review, arguing FERC's decision arbitrarily and capriciously abrogated its contractual rights.