Item E-19: Commissioner James Danly Concurrence Regarding CAlifornians for Renewable Energy and Michael E. Boyd

Commissioner James Danly Statement
March 18, 2021
Docket No. EL20-69-000
Order:  E-19

I concur with the Commission’s decision to deny CAlifornians for Renewable Energy and Michael E. Boyd’s complaint for failing to meet our pleading requirements.  I share complainants’ concerns about blackouts and other failures during the heat and wildfire event in August, 2020, but complainants must do more than make bare allegations.  I previously voted to initiate a Federal Power Act section 206[1] investigation into the same facts, but the Commission failed to support that action.[2]  I understand that the California Independent System Operator Corporation (CAISO) plans to file a package of tariff modifications, and I will carefully review that filing.  In addition to these efforts, I still welcome a section 206 investigation, or failing that, for affected parties to file legally sufficient section 206 complaints identifying specific tariff revisions and other relief, supported by substantial evidence.  In my view, comprehensive action is necessary to prevent more blackouts.

The dominant narrative since the California reliability crisis last summer is that a “perfect storm” of extended hot weather and devastating wildfires is to blame for CAISO implementing rolling blackouts.[3]  As I previously have stated, I reject that excuse.[4]  If there was a “perfect storm,” it was not from weather and wildfires but the convergence of market and regulatory failures.

I see two immediate and critical areas in need of reform.  First, CAISO’s markets appear inadequate to allow dispatchable generation resources the opportunity to recover sufficient revenues to remain in operation or to invest in necessary equipment and upgrades.  CAISO has no capacity market, and the energy market prices, which are capped, suffer from longstanding price formation problems, by which I mean artificially low prices.  CAISO has several reliability must-run contracts for essential plants which allow those favored resources to continue operating, but support for them undercuts market prices for everyone else.  These market failures have existed for years.

Second, subsidies for renewable power are doled out without sufficient consideration for their inferior reliability and security attributes, as compared to the generators they drive out of the market.  Intermittent resources in their current configurations simply do not provide the full reliability benefits for which they are given credit.  We can either admit this and directly confront the issue, or we can have more blackouts and be driven to confront it in an emergency when the situation is dire and there are no appealing alternatives to be implemented before resorting to curtailments.

I thus welcome complaints that satisfy our pleading standards so that the Commission will be forced to squarely confront the issue with a procedural vehicle by which to build a factual record and to then, in turn, go on the record with a decision on the merits of CAISO’s current markets.  If necessary, parties to the litigation can then appeal that decision in the courts. 

For these reasons, I respectfully concur.