CAISO Plans Big Energy Market Expansion

The California Independent System Operator plans to significantly broaden its real-time Energy Imbalance Market to include its much larger day-ahead market.

“We believe we can get many of the benefits of full regionalization,” said Greg Cook, CAISO director of infrastructure, during a Jan. 8 briefing to the EIM body of state regulators. He said the benefits would include market efficiencies and improved integration of renewable resources from trades across a larger footprint in the far bigger market.

CAISO is starting to lay the groundwork to allow EIM members to participate in its day-ahead market in early 2020.

As part of this effort, the grid operator is developing several enhancements to its day-ahead market before then, including changing it from a one-hour market to a 15-minute market. Cook said that would make way for “a better matching of net load curves to real time needs.”

The enhancements in the works also are to include improved efficiency in hedging congestion via improvements in congestion revenue right auctions.

The day-head market revisions are to go live for CAISO in the fall of 2018.

In addition, CAISO plans to require flexible capacity from EIM members trading in the broader revamped market. Two years ago, CAISO began requiring California load serving entities to have flexible capacity that can be dispatched to fill power gaps in the day-ahead market.

The grid operator aims to safeguard against balancing authorities “leaning on others for capacity, flexibility or transmission,” according to Cook.

The planned day-ahead market enhancements, however, will avoid the thorny issues of resources adequacy and transmission cost recovery. Each balancing authority in the EIM that joins the day-head market is to maintain those responsibilities.

Finding agreement on those issues bogged down efforts to formally turn CAISO into a western grid.

Although each EIM balancing authority that takes part in the day-ahead market sets its own transmission charges, CAISO plans to ensure they are aligned with the “existing bilateral transmission framework,” Cook said. That is to ensure consistency.

The regulators in each state will maintain control over integrated resources planning.

Current EIM members include PacifiCorp, NV Energy, Puget Sound Energy, and Arizona Public Service. Pending members include PowerEx, BANC/SMUD, Portland General Electric, Idaho Power, Seattle City Light, and the Salt River Project.

In related news, the grid operator is striving to create a single region-wide greenhouse gas compliance design for the EIM market.

Mark Rothelder, CAISO vice president of market quality and renewable integration, said the aim is to make sure EIM members serving load outside California don’t pay the $5 greenhouse gas adder required in the Golden State. At the same time, the grid operator hopes to ensure generators that serve load in California “receive compensation to sufficiently cover GHG compliance costs,” Rothleder said. — Elizabeth McCarthy

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CAISO Plans Big Energy Market Expansion

William J. Kelly

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