Retail Energy Buyer

Subscribe to the free weekly newsletter written just for retail energy buyers

CAL-ISO Proposal to FERC Would Curtail EIM Price Spikes

August 26, 2015 By Cheryl Kaften

The California Independent System Operator (CAL-ISO) filed a proposal (ER15-861-003) with the Federal Energy Regulatory Commission (FERC) on August 19 intended to avoid price spikes – also known as “power balance infeasibilities” or “price excursions” – in its two-partner Western Energy Imbalance Market (EIM).

The suggested changes actually have been pending since April 23; however on July 20 FERC said it would not be able to review the docket until CAL-ISO submitted a more detailed tariff amendment.

Overall, the purpose of the two-party EIM, comprising CAL-ISO and the Portland, Oregon–based utility PacificCorp, is to strengthen grid reliability by truing up supply and demand closer to the time when electricity is consumed, and by allowing real-time visibility across neighboring grids. The new platform is designed either to dispatch the exact energy resources needed; or to reduce and avoid congestion issues.

However, subsequent to PacifiCorp’s full activation in the CAL-ISO Energy Imbalance Market –– on November 1, 2014 –   the region experienced price spikes during Winter 2015. After investigating the problem, CAL-ISO found that the “pricing excursions” were triggered by the inability of its own market system to recognize the capacity that PacifiCorp was holding in reserve to meet potential needs.

Lacking the ability to recognize PacificCorp’s capacity, the EIM registered “a resource shortage” – or supply scarcity – and triggered higher, penalty pricing. This spike in pricing was totally unnecessary, CAL-ISO stated, occurring simply because the EIM platform was “not aware of such capacity.”

Now, the system operator proposes to enhance EIM functionality “so that it will automatically recognize and account for capacity the balancing authority area has available to maintain reliable operations.”

In its letter of August 19 to FERC, CAL-ISO said it planned to enhance its EIM functionality to “allow EIM entities to identify as part of their EIM resource plans capacity that they have available and can be used to resolve a potential power balance violation.”

CAL-ISO also proposes to not only adopt mechanisms to reflect this EIM available balancing capacity as part of the energy bid curves submitted for resources that are already participating in the Energy Imbalance Market; but also to create bids based on default energy bids to reflect EIM available balancing capacity from resources that are available for use by an EIM entity but do not participate directly in the Energy Imbalance Market.

” [CAL-ISO] is confident that implementing this proposal will substantially ameliorate the remaining infeasibilities encountered in the PacifiCorp balancing authority areas, such that the percentage of remaining infeasible intervals in the energy imbalance market will not be excessive [compared with CAL-ISO’s internal markets and other regional transmission organizations markets],” the grid operator said in its July 19 filing with FERC.
Indeed, the system operator pointed out that the infeasibilities that occurred last winter already are being seen less frequently, because the partners have implemented better operational practices.

These changes are key for the EIM, since it is scheduled to grow again in the fourth quarter of the year. According to Platt’s, NV Energy, Nevada’s largest utility, is preparing to join the EIM on October 1 and Puget Sound Energy, Washington’s biggest utility, expects to follow a year later.

CAL-ISO is now asking FERC that the platform upgrades be approved and implemented by November 1, which would give participating parties time to comment on the proposal.

Leave a reply


*