RESOURCE ADEQUACY: CPUC Adopts 2027-2029 Local Capacity and UCAP Framework; Baker Presses for Load-Trading Market

The CPUC adopted its final Track 1 Resource Adequacy decision on July 2, setting CAISO's recommended Local Capacity Requirements at 23,618 MW for 2027, 24,545 MW for 2028, and 25,480 MW for 2029. The LA Basin climbs from 6,823 MW to 7,721 MW across the three years.

The decision also adopts CAISO's 2027 Flexible Capacity Requirements, which reach their system-wide maximum in March at 30,378 MW, with the CPUC-jurisdictional share at 29,063 MW.

UNFORCED CAPACITY

The Unforced Capacity framework takes effect for the 2028 RA compliance year, covering dispatchable thermal, nuclear, geothermal, and non-hybrid storage resources. Each resource's accreditation will fall by its EFORd during RA Measurement Hours, calculated from the best three of the prior four calendar years of CAISO outage data.

New resources will receive class-average values until unit-specific history accumulates, and thermal generators get weather-normalized ambient-temperature derates drawn from NOAA typical-weather-year data.

Seven implementation questions move to Track 2:

• Hybrid resource methodology;
• The Must-Offer Obligation basis once UCAP replaces qualifying capacity;
• EFORd (equivalent forced outage rate during demand) for the energy component of storage;
• Fifth-hour foldback;
• Flexible RA interaction;
• Slice-of-Day template integration; and
• The four-hour discharge requirement for storage RA eligibility, added at adoption.

STORAGE ACCREDITATION

The decision revises the storage qualifying-capacity calculation to address foldback, effective for the 2027 compliance year rather than immediately as the proposed decision had it.

The Alliance for Retail Energy Markets and PG&E argued that immediate adoption would strand 2026 procurement and create CAISO-CPUC compliance conflicts, and the Commission agreed. The revised formula uses MAX_CONT_ENERGY_LIMIT minus MIN_CONT_ENERGY_LIMIT, divided by four, constrained by the Point of Interconnection.

On energy-only resources, the decision:

• Rejects standalone energy-only (EO) resources as counting toward RA capacity;
• Defers broader EO charging-sufficiency treatment to CAISO's 2026-2027 Transmission Planning Process; and
• Permits excess energy from a co-located EO resource at the same Point of Interconnection to count toward its paired storage resource's charging sufficiency after that storage resource's own energy need is subtracted.

LONG-DURATION ENERGY STORAGE

Long-duration energy storage (LDES), defined as any resource able to discharge at maximum capacity for at least eight continuous hours, receives a formal RA counting pathway for the first time.

Beginning in 2027, load-serving entities may count LDES across the full 24-hour Slice-of-Day period using a Forward Charge Period multiplier that runs from 2x for eight-hour resources to 8x for resources of 72 hours or more. Closed-loop pumped storage hydropower receives LDES treatment; open-loop is deferred.

CHARGING SUFFICIENCY PENALTY AND DEMAND RESPONSE

The decision closes an enforcement hole in the storage charging rules. Starting in 2027, a load-serving entity carrying an MWh charging-sufficiency shortfall will have that shortfall converted into a flat 24-hour MW adder, with the largest resulting hourly deficiency setting the RA penalty.

For Demand Response, the decision adopts a near-term Slice-of-Day correction, directing the CPUC to send CAISO three values:

• The maximum showing value;
• The peak showing value; and
• The average hourly MW across the hours within the Availability Assessment Hour window during which the resource is available.

MARKET RULES & TRANSACTABILITY

The decision also splits the treatment of the CAISO's new day-ahead capacity products. Reliability Capacity keeps its zero-dollar bid requirement and revenue-return rule. For Imbalance Reserve, the decision removes the zero-dollar bid requirement and clarifies that the revenue prohibition reaches only the capacity-related component, not the opportunity-cost portion of the Imbalance Reserve award, which CAISO's tariff allocates separately.

Both rules make an exception where the load-serving entity is itself the resource owner, and neither disturbs existing contracts; they apply to contracts executed after the decision's effective date.

The decision declines to adopt CalCCA's hourly load obligation trading mechanism, citing Energy Division's Transactability Report, which found no demonstrated inability for load-serving entities to meet Slice-of-Day obligations under existing tools. Commissioner Matthew Baker voted for the decision but used his remarks to keep that debate alive. He called Slice-of-Day RA products "chunky," observed that no load-serving entity can match procurement to load with precision, and said he expects RA to grow scarcer across the West as load growth accelerates.

A market "around the edges," in his framing, could bring compliance costs down, and Baker asked his colleagues to keep an open mind toward any mechanism that does so.

INSTANT ANALYSIS

The decision prices performance into RA value. A thermal unit that trips often will accredit for less, and storage that folds back before four hours will be credited for what it delivers. Availability in the hours the system calls on a resource now drives its accredited value; nameplate no longer settles it.

Energy-only resources get a limited charging-sufficiency role, but not an RA-capacity role. Deliverable storage gains a cleaner charging-sufficiency route when paired with co-located energy-only generation, and eight-hour-plus storage finally has a counting rule. Standalone EO still cannot count for RA, and broader energy-only treatment stays bound to CAISO’s 2026-2027 transmission study.

The decision adopts UCAP, but defers the work that will determine how it operates in practice. Hybrid methodology, the Must-Offer Obligation basis, storage energy-component EFORd, fifth-hour foldback, flexible RA interaction, Slice-of-Day template integration, and the four-hour eligibility rule all move to Track 2. Those items govern how UCAP appears in contracts, compliance filings, and CAISO obligations, and they remain unsettled 15 months before the first UCAP compliance year opens.

Reliability Capacity stays under the familiar zero-dollar-bid/revenue-return treatment, but Imbalance Reserve gets a narrower rule that preserves opportunity-cost compensation while barring the capacity-related revenue component for future RA contracts.

The transactability rejection is not the last word. Baker voted yes on a record that rejects the proposal for now, then made clear he does not view the broader transactability question as settled. CalCCA lost on need because the Transactability Report found none at this time, but Baker's remarks give CalCCA and other parties a clearer target for any future proposal. If 2026 or 2027 Slice-of-Day data show avoidable compliance costs as Western RA grows scarcer, the next proposal will likely be built around cost containment rather than basic feasibility.