City Council Agenda Report
Meeting Date: October 6, 2026
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Principal Management Analyst Subject
Public Utilities Resource Adequacy Plan for 2027
Recommendation
A. Find that approval of the proposed action is exempt from California Environmental Quality Act (CEQA) review, because it is an administrative and fiscal activity that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a “project” as defined by CEQA Guidelines Section 15378;
B. Adopt Resolution No. 2026-040 approving and adopting the Vernon Public Utilities Department Resource Adequacy Plan for 2027, which includes the Coincident Peak Demand Forecast, the Planning Reserve Margin, the Qualifying Capacity Criteria, and the Qualifying Capacity from such resources, the City’s Resource Adequacy and Supply Data and approving the resources used to satisfy the California Independent System Operator’s (CAISO) tariff requirements and repealing Resolution No. 2025-028; and C. Authorize staff to submit the Vernon Public Utilities Department’s Resource Adequacy Plan for 2027 and the Monthly Resource Adequacy and Supply Data to the CAISO.
Background
As the electric grid operator for the State, the California Independent System Operator (CAISO) is responsible for maintaining a reliable electric grid. One of the keys to maintaining a reliable grid is to ensure that the electric system has adequate resources to meet its electric demand. To do this, the CAISO has established provisions in its Tariff to ensure that Load Serving Entities (LSE), such as the City of Vernon (City), will secure sufficient resources to meet their customers’ energy demands.
Pursuant to Section 40 of the CAISO Tariff, LSE must annually provide a Resource Adequacy demonstration or plan to the CAISO. The Resource Adequacy demonstration must include: (1) a coincident peak Demand Forecast, (2) Reserve Margin, (3) Qualifying Capacity Criteria, (4) annual and monthly Resource Adequacy and Supply data, (5) a list of Resource Adequacy Resources that will be counted on to satisfy its Local Capacity Requirement, and (6) Flexible Resource Adequacy Capacity Requirement. The Resource Adequacy demonstration categories are each defined and described in detail below.
1. Coincident peak Demand Forecast is defined as the amount of the City’s load contributing to the CAISO system peak. This is calculated by first establishing a monthly peak Demand Forecast for the upcoming year and applying a projected load growth rate if appropriate.
Based on staff’s analysis of actual data, no adjustment is deemed necessary for 2027.
To establish the Coincident Peak Demand Forecast for 2027, staff have used its monthly peak Demand Forecast (as listed in Table 1 of the Resource Adequacy Plan for 2027) and multiplied it by the coincident peak factor provided by the California Energy Commission. The results of this calculation are the Coincident Peak Demand Forecast and are listed in Table 2 of the Resource Adequacy Plan for 2027.
2. Planning Reserve Margin is defined as the amount of Resource Adequacy Capacity, and LSE must maintain above its coincident peak Demand Forecast. The Electric Utility governing board of the Vernon City Council has established its Planning Reserve Margin at 15%.
3. Qualifying Capacity Criteria is the criteria used to determine the type of resources that can be used to meet an LSE’s capacity obligation and the amount of capacity (Qualifying Capacity) from such resources. The City has elected to use the following resources to meet its capacity needs and the qualifying capacity of each of them:
a. Power supply contract(s) entered through Western Systems Power Pool (WSPP) Agreement, Market Redesign and Technology Upgrade (MRTU) Amendment, and any product defined as a Scheduling Coordinator (SC)-to-SC traded product for which an Inter-SC Trade (IST) can be submitted to the CAISO. b. Vernon Purchase Power Contract with the Southern California Public Power Authority (SCPPA) for the SCPPA’s share of the Palo Verde Generating Station.
The qualified capacity shall be 4.9% of SCPPA’s share of the Palo Verde Generating Station.
c. The contract between the United States Department of Energy Western Area Power Administration Boulder Canyon Project, and the City of Vernon. The Qualifying Capacity will be based on the most current schedule for the available capacity from the Boulder Canyon Project.
d. The generating units and system units within the City’s electric system. The amount of Qualifying Capacity of such units shall not exceed the Net Qualifying Capacity (NQC) as determined and listed annually by the CAISO.
e. Long-term power purchase contracts for 5 years or longer. The Qualifying Capacity will be based on the City of Vernon’s percentage share of the NQC for each contract, as determined and listed annually by CAISO.
f. Capacity from a Participating Generator, System Unit, or System Resource as defined in the CAISO Tariff.
g. Interruptible Service agreements between the City of Vernon and its electrical customers. The Qualifying Capacity will be based on the contracted amount the electrical customer has agreed to interrupt.
h. Battery Energy Storage System (BESS)/Non-Generator Resources: Power Supply contracts for BESS or Non-Generator Resource as defined by the CAISO, entered through a power purchase agreement, shall be eligible to count as Qualifying Capacity. The amount of Qualifying Capacity shall be based on the NQC value as determined and listed annually by the CAISO and the City of Vernon’s percentage share of NQC for each contract.
4. Local Capacity Requirement is defined as the monthly allocation of the local capacity (Los Angeles Basin) that the City must make available to the CAISO and demonstrated in the CAISO-approved Resource Adequacy data templates. Resources located in the Los Angeles Basin area shall count toward the City’s local capacity requirement.
5. Flexible Resource Adequacy Capacity Requirement is defined as the monthly allocation of the Flexible Resource Adequacy Capacity Requirement that the City must make available to CAISO and demonstrated in the CAISO-approved Resource Adequacy data templates. Flexible resources can ramp up and down quickly and can start and shut down multiple times per day (i.e., flexible capacity). The Malburg Generating Stations and the City-owned H. Gonzales units shall count towards the City’s flexible capacity requirement.
6. Annual and monthly Resource Adequacy and Supply data - must be submitted to the CAISO on the established templates and the set schedule dates. The Resource Adequacy data templates shall identify all qualified resources committed to meeting the City’s Resource Adequacy obligations and the adopted Reserve Margin. Annual Resource Adequacy Plans data must demonstrate that 90% of the Coincident Peak Demand Forecast plus planning Reserve Margin and Flexible Resource Adequacy Capacity Requirement has been secured, and 100% of the total local Resource Adequacy requirement has been secured. Monthly Resource Adequacy and Supply data templates must demonstrate that 100% of the Coincident Peak Demand Forecast plus planning Reserve Margin, Flexible Resource Adequacy Capacity Requirement, and local Resource Adequacy requirement have been met. Monthly Resource Adequacy and Supply data may be adjusted for seasonal variations in the City’s load or changes in its contracted/owned resources.
Consistent with the CAISO Tariff requirements, VPU staff has prepared the Vernon Public Utilities Resource Adequacy Plan for 2027 and now seeks authorization from the City Council to submit the Plan and the Monthly Resource Adequacy and Supply data to the CAISO.
Strategic Plan Goals
Goal 3: Advance Sustainability and Environmental Stewardship Fiscal Impact
There is no fiscal impact associated with this report.
Attachments
1. Resolution No. 2026-040