CAISO Board Focuses on Near Term Needs and Long Term Ambitions

By Published On: September 27, 2021

The California grid operator is keeping close tabs on climate crisis-driven wildfires and outage uncertainties while looking down the road towards a regional power market.

Despite wildfires across CAISO’s region, power system conditions have been relatively stable since mid-July, but “extraordinary action” is still needed for procurement of emergency resources,  California Independent System Operator President and Chief Executive Officer Elliot Mainzer reported to the power system and market operator’s board Sept. 23.

“The prolonged drought, more extreme weather, wildfires, and diminished hydro have increased reliability risks,” Mainzer said. If needed this fall, CAISO will dispatch emergency generation to protect reliability, and mitigate costs for consumers in California and other Western states

Readying for emergencies

Solicitations under CAISO’s just-instituted Significant Event Capacity Procurement Mechanism produced short-term contracts for 624 MW for July, 650 MW for August, and approximately 400 MW for September, Mainzer said.

Gov. Gavin Newsom’s July 30 emergency proclamation allows greater access to existing back-up generation on a short-term basis, waiving pollution limits, through CAISO’s emergency capacity procurement mechanism for reliability, he added.

CAISO also is putting greater urgency on transmission planning, Mainzer said. It cannot meet clean energy objectives and protect reliability without “the transmission capacity to send power where it is needed and displace older generating resources.”

Wildfires have disrupted transmission throughout the West since July. Southern Oregon’s Bootleg Fire and British Columbia’s Pine Pass Fire reduced capacity across the Pacific Northwest, Southern California’s South Fire limited supply to the Los Angeles area, and Northern California’s Dixie Fire created a Plumas County “electrical island” that left CAISO without access.

Greater situational awareness

New processes and tools enable greater situational awareness and system operator coordination against Western Interconnection fire threats. As a result, “we have not needed to shed load so far this summer, although we did come close during the weekend of July 9 due to extreme heat and the Bootleg Fire’s impact on imports,” according to Mainzer.

CAISO is also working to build regional coordination.

The CAISO Board finalized approval of new governance provisions giving its Energy Imbalance Market Governing Body a bigger role. Decisions impacting both the EIM real time market and the larger CAISO day ahead market will now require majority approval from each authority. The new rules also provide procedures for settling disputes when interests diverge.

The governance change was a “necessary” initial step towards a west-wide Regional Transmission Organization, Western Grid Group Director and CAISO Board-appointed Governance Review Committee member Douglas Howe recently told Current.

With EIM cumulative benefits now at $1.42 billion and six participants being added by 2023, regional leaders see a new opportunity. Moving from the estimated 5% of real-time power flows in the EIM to optimizing dispatch of all the resources in Western markets could save billions of dollars in meeting the high renewables and emissions reduction mandates across the West, stakeholders told Current.

The Board’s unanimous approval of the new governance ensures the diverse EIM participants of every ideological flavor across the Western Interconnection fair treatment in a regional market, said Natural Resource Defense Council Energy Program Co-Director Ralph Cavanagh.

To further advance regional coordination, Mainzer announced an Oct. 13 virtual stakeholder Extended Day-Ahead Market Forum. Presentations will introduce the key design decisions needed for a regional day-ahead market, he said.

An EDAM can drive market “evolution” by building on the EIM’s success to “optimize transmission connectivity and resource diversity across the widest geographical footprint possible,” Mainzer said.

Meeting all needs

The EIM’s resource sufficiency evaluation, which assures EIM participants can deliver on their market commitments, was inadequate during “several intervals” of California’s August 2020 blackouts, Mainzer said. Phase 1 of an EIM stakeholder process is clarifying rules and practices to improve its accuracy and transparency. Phase 2 will address failures to deliver committed resources.

New initiatives for the CAISO interim market mechanisms, approved by federal regulators in June to allow more efficient energy transfers through its system, have advanced. At stake is crucial energy imported and exported through the CAISO system to protect reliability during extreme weather-driven demand spikes and supply shortages.

Generation traded between states has long been “wheeled,” or passed through the CAISO system, but increasing reliability threats now make fast, certain access “critical,” Mainzer said in a July stakeholder workshop.

CAISO has, at some times of constrained supply, been forced to prioritize between exporting resources or using energy to serve California load. But discriminating in favor of native California load raises red flags for other Western Interconnection balancing authorities.

New market mechanisms for this summer were put in place in July to better protect Western Interconnection load serving entities and balancing authorities. The longer-term framework for summer 2022 and beyond must be resubmitted for final FERC approval by June 2022.

Phase 1 of CAISO’s External Load Forward Scheduling Rights Process, launched by the July workshop, can be in place by summer 2022, Mainzer told the Board. They include stakeholder proposals for studies to drive transmission upgrades and “a forward transmission reservation process” to make scheduling priorities more transparent and show all market participants what transmission is available, he said.

Phase 2 of the process will develop “a long-term, holistic, durable, framework for establishing scheduling priorities,” Mainzer said. It will also bridge differences in CAISO market practices and Western Interconnection practices, further facilitating inter-regional coordination.

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