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CPUC Cuts Plans for New Power Plants in Half in Southern California

Devra Wang

Posted February 13, 2013

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The California Public Utilities Commission this week unanimously voted to look first to energy efficiency and other clean energy resources to meet electric needs in Southern California. As a result, the CPUC reduced its authorization of new fossil generation by nearly half - from the Independent System Operator’s recommended 2,371 megawatts (equivalent to four large power plants) to 1,200 megawatts of gas-fired plants in the West Los Angeles region. The move is critical in determining how the Los Angeles region’s electric needs will be met over the coming decade.

Instead of ignoring all future energy efficiency plans and building power plants, as the ISO recommended, the CPUC today made clear that it will meet the law’s requirement to rely on efficiency as the top priority resource. The Commission also prioritized other “preferred” resources, such as distributed renewable generation and storage. The result: less dirty power in the LA region where residents suffer from chronic bad air quality.

The Commission’s clear message that it will rely on efficiency to avoid the need for dirtier and costlier power plants is a big step forward to resolve a vigorous debate on this issue which also was the subject of a recent Senate Energy Committee informational hearing

Progress since the Senate Hearing

California has a very successful history of relying on efficiency to avoid power plants, and it now powers about a fifth of our state’s electric needs. But recent disconnects between the state’s energy agencies had called into question whether California would continue to rely on efficiency to avoid new electricity generation. 

An earlier draft of today’s CPUC ruling had some troubling provisions that illustrated the very issues the recent committee hearing examined: it would have arbitrarily cut the expected energy savings from efficiency by 50 percent. But the commission appropriately rejected that proposal today in favor of a full (albeit still conservative) estimate.

Following the Senate Energy Committee hearing, Chairman Padilla asked the CPUC, ISO and California Energy Commission to provide joint recommendations on how they will improve their approach to accounting for the reduced demand resulting from efficiency. Today, the CPUC’s message could not be more clear: it will rely on energy efficiency as resource. This is a crucial step toward an improved interagency process.

What Does This Mean for the LA Region?

Over the coming decade, nearly 5,000 megawatts of old natural gas-fired power plants in the West LA region served by Southern California Edison that use once-through-cooling technologies, which are known to be harmful to wildlife and the marine environment, are required to either undergo significant refurbishment to upgrade their cooling technology or shut down. (The West LA region is the left half of the light gray oval on the map below.)  Today’s decision means that much of that capacity will be replaced by cleaner resources – efficiency, demand response, and renewables; the remaining fraction will be natural gas-fired power plants (and those will use more efficient, modern technologies). So this is a step in the right direction.CAISO Map all areas and sub areas - 2012.jpg                           Source: California ISO

This year, the Commission will also examine the future of the San Onofre nuclear plant that is currently shut down. This may present another opportunity to continue to transition the southern California grid toward more efficient and clean technologies.

Some Bad Mixed in With the Good 

Although there was a lot to like in the Commission’s ruling today, there also were less palatable parts.

  • The ruling to authorize new power plants in the Moorpark area illustrates some of the remaining challenges that the joint agencies should address to properly account for energy efficiency. Because the ISO’s analysis did not include energy savings from future efficiency efforts, the commission had to rely on crude adjustments to the model results to take efficiency into account. This inaccurate accounting of energy efficiency highlights the need for the agencies to work together to include energy efficiency from the start so that the commission can rely on the model results. 
  • The commission turned away from its past approach of simply limiting the maximum amount of new generation that a utility can procure by also requiring SCE to procure a minimum amount. A lot can change over the next decade, so it does not make sense for the commission to require SCE to acquire new generation if it ends up not needing it. The requirement for a minimum of 215 megawatts in the Moorpark area is particularly troubling since SCE did not even ask for authority to immediately procure more power because the studies did not show a need in that area until the end of the decade.
  • The commission required a minimum amount of natural gas-fired generation, which turns the CPUC’s “loading order” for preferred resources on its head by requiring investment in a low-priority resource. Moreover, what the ISO and SCE seek are resources that have flexible operating characteristics that help keep the lights on. Rather than requiring gas-fired generation, the commission should continue to press the ISO and utilities to develop clear descriptions of the operating characteristics needed and  figure out how preferred resources like demand response can competitively meet that need.

Stay Tuned

The Commission postponed its vote on proposals for new generation in San Diego Gas and Electric’s territory until February 28. Those proposals underestimate how much energy efficiency will displace conventional generation, and we are urging the Commission to rely on the full amount of energy savings for SDG&E, just as it did today in the LA region. 

The CPUC, CEC and ISO’s joint response to the Senate Energy Committee’s request for recommendations to improve the agencies’ reliance on energy efficiency is due Feb. 25, just before the SDG&E vote, so stay tuned for an interesting month.

This blog was co-authored with my colleague Sierra Martinez.

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