CAISO Grapples with Congestion and Summer Reliability Concerns

The clout of the state attorney general and governor should be used to alleviate transmission congestion along the Mexican border, said California Independent System Operator chair Michael Kahn. Congestion in the southernmost part of the state continues to threaten the system with supply shortages in the area this summer. "We will try and get all parties in one room next week and work out a solution," CAISO director of market operations Ziad Alaywan told the CAISO board May 27. Kahn suggested adding a stick?threats from the AG and state chief?to help motivate recalcitrant parties to back off on sending too much power over the constrained system. Part of the problem is Sempra and Intergen, which have two new power plants in Mexico and have contracts with the Department of Water Resources. They get paid to send power into the state, which aggravates the congestion. Schedulers also have a perverse incentive in that they get paid for backing off supplies to relieve congestion. Congestion at the Miguel transmission corridor was noticeably worse the first quarter of the year than the last quarter of 2003, according to Alaywan. Board member Mike Florio pointed to the California Public Utilities Commission's delay in getting an additional line at Miguel approved. He called the expected year's delay?attributed to a proposal to underground the second line?"unconscionable" given the need and the extra $50 million spent on congestion payments. He also noted that the power jam has led to calls to power up the more polluting old, inefficient plants in the area because of the threat of blackouts. CAISO apprised the board of a very low snowpack this year, reducing the amount of hydro available. The grid operator will be assessing the availability of hydro imports from the Northwest as well as the supply situation in the Southwest. Next week the California Energy Commission is expected to release its revised resource-adequacy report to reflect projected higher growth rates. The earlier report estimated an annual growth rate of 1.8 percent, but the upcoming one will nearly double it to 3.5 percent. The CAISO board did take action at this week's meeting and approved a tariff amendment to clarify the application of the "decremental reference price" used to manage intrazonal congestion. While the board met in Folsom, policy makers elsewhere had their eyes on the potential for blackouts. "It will be a rosary bead summer," drawled Pat Wood, Federal Energy Regulatory Commission chair, noting the potential for problems in the southern half of the state. Visiting California this week, Wood also warned about the failure to get more transmission sited, which he attributes to the "BANANA" problem: Build Absolutely Nothing Anywhere Near Anyone. Florio said BANANAism was the problem plaguing the second Miguel line. CEC chair Bill Keese said, without conviction, that he thought there were "sufficient resources for this year and next year." He was concerned, though, about the shutdown of the state's old plants. Plants 20 years old and older produce about 17,000 MW of dependable capacity, according to the CEC.

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CAISO Grapples with Congestion and Summer Reliability Concerns

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