Simplifying Policy Management

Supplemental MTR orders (D.21-06-035; D.23-02-040, as modified by D.24-02-047) and applies related compliance, accreditation, and enforcement rules, including references to D.25-09-007 and D.25-06-005. The order is effective February 26, 2026.

Key Procurement Requirements and Timing

• Total new procurement required: 6,000 megawatts (MW) net qualifying capacity (NQC) by June 1, 2032, phased as follows:
  • 2,000 MW NQC online by June 1, 2030;
  • Additional 2,000 MW NQC online by June 1, 2031;
  • Additional 2,000 MW NQC online by June 1, 2032.
• At least 25% of each LSE’s total obligation (per Attachment A) must be met by clean-firm resources (capacity factor ≥80% and not use-limited) and/or long-duration energy storage (LDES able to discharge ≥8 hours) by June 1, 2032, as defined in D.21-06-035 Ordering Paragraph 2, as modified by D.25-06-005.
• Contracts for resources used to meet these requirements must be at least ten years in length and must be online (delivering power) by the applicable June 1 compliance date. Deliveries must begin by those dates to be counted.

Allocation of Responsibility and Timing Details

• Allocation basis: Each LSE’s share is allocated using the California Energy Commission’s (CEC) adopted 2024 Integrated Energy Policy Report (IEPR) 2026 energy load forecasts for Investor-Owned Utilities (IOUs) and Community Choice Aggregators (CCAs), weighted by each LSE’s share of the 2026 resource adequacy (RA) managed peak. Specific IOU/CCA and aggregate Energy Service Provider (ESP) allocations are listed in Attachment A.
• ESP individual allocations: Calculated using each ESP’s year-ahead adjusted peak RA forecast for 2026 (month 9) divided by the aggregate for all Commission-jurisdictional LSEs. These ESP allocations will be transmitted confidentially by CPUC staff within two weeks after the decision’s effective date.
• Crediting: LSEs may count excess procurement previously done to satisfy D.21-06-035 or D.23-02-040 toward these new requirements if the resources otherwise qualify here. Energy-only resources may count only in limited co-located situations where generation and fully deliverable storage share the same CAISO point of interconnection and meet RA slice-of-day eligibility; each component is credited by its Effective Load Carrying Capability (ELCC).

Accreditation, ELCC, and Modeling

• Accreditation basis: Marginal ELCC values will be produced by CPUC staff.
  • ELCC values for resources due online by 2030 and 2031 will be published no later than July 31, 2026.
  • ELCC values for resources due online by 2032 will be published no later than December 31, 2027.
• Resource eligibility: Maintains MTR/Supplemental MTR rules—resources must be zero-emitting or Renewable Portfolio Standard (RPS)-eligible; repowered or upgraded baseline resources count only for incremental capacity; baseline swaps/waivers and obligation swaps are allowed (with prior contract termination after January 13, 2023, still ineligible for baseline swaps).
• Modeling: Commission staff used the SERVM model with the 2024 IEPR load forecast and updated procurement lists (per the September 30, 2025 Administrative Law Judge (ALJ) Ruling) to estimate a reliability need of roughly 6,267 MW of “perfect capacity” online by June 1, 2032, and a likely shortfall of about 6,000 MW by 2032 under 2024 IEPR loads.

Compliance, Enforcement, and Flexibility

• Compliance filings: Semi-annual procurement compliance reports are required on June 1 and December 1 of each year through 2032, unless modified later.
• Penalties and enforcement: Non-compliance is treated consistent with D.21-06-035—penalties are assessed case-by-case, considering an LSE’s “good faith efforts” (as defined in D.21-06-035 Ordering Paragraph 5). Penalties are based on the net cost of new entry (net CONE). Backstop procurement may be ordered with cost responsibility allocated to customers of the non-compliant LSE.
• Delay flexibility: The three-year flexible compliance (grace) provisions from D.25-09-007 apply. LSEs may be deemed compliant if they have required long-term contracts and otherwise meet RA requirements, allowing for delays outside LSE control, recognizing market challenges such as expiring federal tax credits, tariffs, and federal siting restrictions.
• Good-faith and prior procurement: LSEs’ prior excess procurement toward earlier MTR obligations can be credited here if qualifying.

TPP Portfolios, CAISO Actions, and Transmission Guidance

• Base case portfolio: CPUC transmits a reliability and policy-driven base case to CAISO for the 2026–2027 TPP that:
  • Is consistent with the 2025–2026 TPP base case and designed to meet a 25 million metric ton (MMT) greenhouse gas (GHG) emissions target for the electric sector in 2035, consistent with the California Air Resources Board’s (CARB) 2022 Scoping Plan and Senate Bill 1020 (Stats. 2022, Ch. 361);
  • Incorporates MTR resources and roughly half of the long-lead time (LLT) resources found needed in D.24-08-064;
  • Delays some offshore wind resource online dates by up to six years and recommends up to a two-year extension to in-service dates for transmission supporting North Coast (Humboldt) offshore wind.
• Humboldt transmission: CPUC recommends CAISO allow potential in-service dates for approved Humboldt projects (supporting North Coast offshore wind) to extend by two years, to June 1, 2036.
• Sensitivity portfolio: CPUC transmits a Limited Wind Sensitivity (low-wind development) portfolio for CAISO study to identify contingency transmission needs if wind development lags. This sensitivity is not a policy preference; it is more costly than the base case but useful for planning.
• Deliverability reservations: CPUC requests CAISO reserve deliverability for geothermal, LDES, out-of-state wind, and offshore wind in amounts summarized in the decision’s Table 7 and portfolio dashboards.
• Modeling results: SERVM/PCM modeling shows the recommended base case meets the CPUC reliability standard (Loss of Load Expectation (LOLE) < 0.1) in modeled years 2036 and 2041 and aligns with the CARB Scoping Plan trajectory for electricity sector GHGs.

Other Findings and Process Changes

• Drivers: Commission staff identified three key changes since D.23-02-040: significant load growth projected in the CEC 2024 IEPR for 2028–2032; rapidly phasing out federal tax credits; and federal actions (tariffs, restrictions) affecting renewables siting.
• Resource mix notes: Energy storage—especially batteries—has comprised much of past MTR procurement because of declining costs, modularity, and faster development timelines. Solar build rates in both base and sensitivity portfolios exceed recent historical annual builds, suggesting potential feasibility constraints.
• Busbar mapping and inputs: The decision adopts staff-recommended updates to TPP inputs and assumptions, including factoring in federal tax credit/tariff impacts, transmission cost adders, and corrected offshore wind profiles. It directs further busbar mapping updates for next year and includes some targeted busbar remapping (e.g., SDG&E Arizona to PG&E and SCE areas) for this TPP.
• Procedural posture: Rulemaking R.20-05-003 / R.25-06-019 remains open. The decision requests CAISO TPP analysis for model years 2036 and 2041.

Cost Recovery and Utility Filings

• Power Charge Indifference Adjustment (PCIA) and cost recovery: Any IOU procurement in response to this decision is subject to PCIA vintage cost responsibility as of this decision’s effective date.
• PG&E, SCE, and SDG&E may file Tier 2 advice letters within 60 days to update balancing accounts for PCIA treatment.
• These IOUs must file Tier 3 advice letters to request cost recovery for procurement resulting from this order, except that pumped storage or utility-owned resources require a full application.
• IOUs may submit Tier 1 advice letters to claim compliance for contracts/resources already approved elsewhere, subject to Ordering Paragraph 3 limits.

Findings and Conclusions Guiding the Order (Highlights)

• CPUC staff SERVM analysis (reported in the September 30, 2025 ALJ Ruling) supports requiring roughly 6,000 MW NQC new procurement through 2032.
• Staging procurement across 2030–2032 allows LSEs to pursue projects that may still qualify for expiring federal tax credits while mitigating market impacts.
• The decision keeps MTR-consistent eligibility, compliance, and enforcement practices, retains ELCC accreditation methodology, and preserves LSE responsibility for procuring to serve their own load unless centralized procurement is justified.
• No specific local procurement requirement was imposed to avoid higher costs and procurement difficulty, though LSEs are encouraged to pursue locally appropriate projects.

Attachments

• Attachment A contains the LSE allocations; ESP allocations will be transmitted confidentially by CPUC staff per Conclusion of Law 18 and Ordering Paragraph 7.

Summary

This decision establishes firm procurement targets of 2,000 MW NQC per year for 2030 through 2032, ELCC and contracting rules, enforcement and three-year flexibility provisions, and transmits both a base case and a wind-sensitivity portfolio to CAISO for transmission planning tied to the state’s 2035 electricity GHG reduction path.

policy alignment with reliability and affordability goals.

Unforced Capacity (UCAP) and Capacity Accreditation

• Pacific Gas and Electric Company (PG&E) supports embedding UCAP within the 2030 compliance framework, aligning UCAP with CAISO’s QC methodology and planning reserve margin, and opposes class-average UCAP values for new resources.
• San Diego Gas & Electric Company (SDG&E) calls for UCAP alignment with Net Qualifying Capacity (NQC) and Minimum Operating Output (MOO) metrics to prevent dual-compliance issues, and recommends improvements to CAISO Outage Management System data.
• Calpine LLC requests mechanisms to refresh UCAP values for retrofits, exclude foldback outages from UCAP calculations, and use facility-level constraints for geothermal resources.
• VISTRA CORP. supports a comprehensive, resource-specific UCAP framework for System RA, with separate Installed Capacity (ICAP) QC for CAISO deliverability and Local RA.
• GreenGenStorage, LLC recommends calibration and coordination with CAISO to avoid stacking UCAP derates on top of ELCC and SOD adjustments.
• Redwood Coast Energy Authority (RCEA) recommends treating microgrids distinctly in UCAP rules, recognizing their unique resilience functions and infrequent capacity reservation, and prefers economic bidding approaches to manage market participation and resilience.

Energy-Only (EO) Resources and Charging Sufficiency

• PG&E supports allowing EO resources to count toward charging sufficiency, with binding attestation requirements for Scheduling Coordinators during the NQC process.
• SDG&E favors allowing EO resources to meet slice-of-day charging sufficiency requirements, expecting this to lower procurement costs and reduce renewable curtailment.
• Sonoma Clean Power Authority (SCPA) and Peninsula Clean Energy Authority (PCEA) recommend recognizing the reliability contribution of standalone EO resources, removing deliverability requirements for non-summer months, and avoiding rigid geographic restrictions unless reliability needs are demonstrated.
• Central Coast Community Energy (3CE) supports PG&E’s interim QC-based proxy for EO resources, including geographic guardrails and alignment with IRP modeling, and endorses EO co-located resources to maximize RA value.
• California Wind Energy Association (CalWEA), as part of the Joint Parties, supports expanding the RA charging sufficiency test to include EO resources within CAISO planning study areas and NP26/SP26, with a light-touch demonstration of availability.
• GreenGenStorage, LLC supports allowing EO resources within the same Transmission Planning Study Area to count toward charging sufficiency for deliverable storage, with enforceable Must-Offer Obligations and congestion guardrails.
• VISTRA CORP. opposes counting EO resources toward charging sufficiency without robust evidence of deliverability, citing statutory requirements for demonstrable deliverability.

Storage Accreditation and Long-Duration Energy Storage (LDES)

• SDG&E rejects a fixed 50% initial state of charge for long-duration storage, advocating for technology-specific, nonlinear performance profiles.
• GreenGenStorage, LLC recommends excluding open-loop pumped storage hydro from slice-of-day charging sufficiency requirements and treating it as dispatchable capacity under standard accreditation mechanisms.
• Sierra Club supports development of an effective ELCC methodology for LDES, including multi-year reevaluations.
• VISTRA CORP. supports a 2027 storage QC framework using contracted energy and duration metrics, and prefers a conservative, duration-neutral approach for initial state of charge.

Microgrids and Local Resilience

• Redwood Coast Energy Authority (RCEA) highlights the unique resilience value of microgrids, recommends microgrid-sensitive UCAP rules, and proposes economic bidding approaches to balance market participation and resilience obligations.

Local Capacity Requirements and Incentives

• Sierra Club urges preserving and enhancing the Local Capacity Requirement Reduction Compensation Mechanism (LCR-RCM), with targeted incentives for disadvantaged communities and improved coordination with IRP.
• PG&E opposes CalCCA’s proposal to net local RA data one-for-one against Clean Peak Energy requirements, citing previous CPUC decisions.
• Central Coast Community Energy (3CE) recommends CCAs use local RA data to evaluate whether CPE plus LSE procurement provides sufficient contracted local capacity.

Transparency and Procurement Tracking

• Sierra Club proposes creating a public, locally segmented procurement dashboard to display current, contracted, and projected resources, local capacity requirements, and battery replacement analyses.
• PG&E supports greater transparency through broad publication of aggregated local RA capacity data, including clarifications on units, timeframes, and aggregation by technology.

Contracting, Bidding, and Revenue Allocation

• SDG&E opposes blanket contract renegotiations for RC/IR revenues, supports allowing existing contracts to remain, and recommends clear benchmarks for any “good-faith effort” standard.
• PG&E supports eliminating zero-dollar bidding for RC and IR products and preserving LSE contractual flexibility over revenue allocation.
• VISTRA CORP. urges preserving bilateral contracting flexibility and rejects forced zero or minimum megawatt bids, mandatory revenue transfers, or forced contract renegotiations related to new RA/Imbalance Reserve products.

Load Forecasting and Data Center Loads

• SDG&E recommends safeguards against speculative large-load forecasts, such as those from data centers, and urges delaying binding determinations of Local Capacity Requirements for 2027–2029.
• PG&E opposes separating data center loads from forecasts for RA purposes, referencing CEC IEPR processes and concerns about forecast uncertainty.
• Central Coast Community Energy (3CE) supports CalCCA’s proposals regarding data-center load to improve load forecasts and avoid over-procurement.
• VISTRA CORP. urges that load forecasting responsibility remain with the CEC and supports improvements in year-ahead load forecasting accuracy and inclusion of large loads.

Technical Methodologies and Data Improvements

• Sierra Club supports using best-available unit-specific UCAP data for gas plants, accounting for cycling, derates, and extreme-heat performance, and proposes clear eligibility and participation rules for EO resources.
• SDG&E recommends improvements to CAISO Outage Management System data to avoid double-counting outages for hybrid resources and opposes dispatch-based forced outage proposals.
• Calpine LLC requests limiting class-average forced outage rates for geothermal resources and adopting facility-level UCAP constraints.

Implementation Timing and Process Recommendations

• PG&E urges deferring the first UCAP compliance requirement to 2030, with a transition period beginning in 2028–2029, and recommends phased timing for major reforms.
• VISTRA CORP. recommends deferring deeper local RA and CPE policy work to future processes and supports retaining a robust reliability metric such as a one-day-in-10-year LOLE.
• SDG&E urges delaying binding determinations of Local Capacity Requirements for 2027–2029 until risks are better understood through additional workshops.

guiding principles, including equity considerations, for the Avoided Cost Calculator.

Background

This proceeding was initiated to improve the consistency of cost-effectiveness assessments for distributed energy resources (DERs), enhance data access and utilization to support DER adoption and integration, and consider equipment performance standards for customer DER programs. Phase One focuses on updating the Avoided Cost Calculator (ACC) and improving data access, while Phase Two will address the development of equipment performance standards. A new Track Three was added to establish guiding principles for the ACC, including equity considerations, after these issues remained unresolved. The prehearing conference for this proceeding was held on March 29, 2023.