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W A T E R [ H E R C. y f P AM& RArERSIDE PUBLIC UTILITIES Board Memorandum P U 8 i I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: October 21, 2011 ITEM NO: 5 SUBJECT: PUBLIC UTILITIES ELECTRIC ANNUAL RESOURCE ADEQUACY PLAN FOR 2012 ISSUE: That the Board of Public Utilities consider approval of the Public Utilities'Annual Resource Adequacy Plan for 2012 ("Plan") as required by Public Utilities' Resource Adequacy Program ("Program"). RECOMMENDATION: That the Board of Public Utilities recommend that the City Council approve the attached Plan. BACKGROUND: On September 8, 2005, the California Legislature enacted Assembly Bill (AB) 380, requiring the California Public Utilities Commission ("CPUC"), with the assistance of the Califomia Independent System Operator ("CAISO"), to establish Resource Adequacy requirements for utilities subject to the CPUC's jurisdiction ("CPUC UtilitiW). CPUC Utilities include the Southern California Edison Company, the Pack Gas and Electric Company, and the San Diego Gas & Electric Company. On March 16, 2006, the CAISO filed with the Federal Energy Regulatory Commission ("FERC') revisions to its Operating Agreement and Tariff(the "CAISO Tariff") implementing an Interim Reliability Requirements Program ("IRRP"), which largely mirrors the Resource Adequacy Program requirements of AB 380. The CAISO has requested that the FERC allow the IRRP to became effective May 31, 2006. By default, the CAISO's IRRP(and its Resource Adequacy default criteria) applies to all utilities bound by the CAISO Tariff, including the CPUC Utilities and others, such as Riverside. However, the IRRP also provides that the local regulatory authorities of non-CPUC Utilities, such as Riverside's City Council, may adopt their own Resource Adequacy Programs that include, at least, the following elements: (1) an electric demand forecast; (2) Resource Adequacy standards,including appropriate reserve margins; (3)annual and monthly plans detailing how projected demand will be served by Resource Adequacy resources; and (4) Resource Adequacy compliance monitoring. In response to the CAISO's FERC filing, on May 23, 2006, the City Council adopted Resolution No. 21170 approving the Program. The Program establishes requirements to ensure that Riverside Public Utilities (RPU) procures adequate resources to serve the projected needs of Riverside's electric customers. In particular, Section 1.1 of the Program requires RPU to prepare a Plan each year for the following calendar year and submit the approved Plan to the CAISO. The Plan identifies the capacity resources owned of contracted for by the City of Riverside (°City") sufficient to meet 100 percent of the City's forecasted monthly peak electrical demands for 2012. This assures that there are capacity resources adequate to serve the electrical requirements of the City's customers consistent with good utility practices and applicable reliability requirements. The City Council is required to annually approve the Plan.