Dive Brief:

• On Monday, federal regulators signed off on reliability-must-run (RMR) contracts for three California gas plants needed through this year, over the protests of some stakeholders worried about market distortions, cleaner alternatives and higher rates. The California ISO (CAISO) identified the Calpine plants as necessary for reliability although they did not have long-term contracts and Calpine was considering halting their commercial operations.
• The settlement among Calpine, PG&E and CAISO resolved all issues and "appears to be fair and reasonable and in the public interest," the Federal Energy Regulatory Commission wrote in the approval.
• The California Public Utilities Commission opposed the agreements, and directed Pacific Gas & Electric earlier this year to solicit bids for clean energy resources to replace the RMR contracts.

Dive Insight:

FERC approved the agreement among Calpine, PG&E and CAISO after it was certified on an expedited basis by a settlement judge.

The commission said in its approval that the agreement "resolves all issues in dispute in these proceedings."

At the 600 MW Metcalf plant, the agreement also makes Calpine "fully responsible" for routine or emergent work, and unplanned repairs and capital items. The settlement also established variable operations and maintenance rates at Metcalf.

The CPUC and PG&E each opposed using RMR contracts for a variety of reasons, including market distortions, cleaner alternatives and higher rates. But ultimately the capacity was deemed necessary for reliability.

In January, the state commission authorized PG&E to issue a request for offer for battery storage or other preferred resources to replace the three plants. The RFO sought to address two local sub-area capacity deficiencies in the Pease and South Bay-Moss Landing subarea, and to manage a high voltage issue in the Bogue subarea.