CAISO Seeks Resource Investment Preapproval

In a pitch to get stalled capacity markets moving, the California Independent System Operator seeks a four-year initial phase in which regulators guarantee utility and other load-serving entities? cost recovery. CAISO chief executive officer Yakout Mansour said a capacity market could be developed in two phases?with the cost guarantee in place during market start-up. ?It would be a process by which a [resource-adequacy] target or expectation is set by the California Public Utilities Commission,? with preapproval of generation investments on a yearly basis, Mansour told reporters June 8. ?In no way would we interfere with the obligation? by the CPUC to require utilities to invest wisely, added Anjali Sheffrin, CAISO director of market analysis. Sheffrin declined to consider raising the $250/MWh price cap in the spot market in order to attract investment. That cap is rarely hit. Generators ?depend on revenue coming from price spikes. We would like to continue to have generators rely on contracts, not price spikes,? she said. Generators dismiss Sheffrin?s optimism that contracts are enough to invite investment. ?As long as the CAISO continues to ignore the role of scarcity in real-time prices, then investors will stay away from California. It?s too much of ?command and control,?? said Gary Ackerman, Western Power Trading Forum executive director. In this case, scarcity refers to an illiquid market devoid of excess capacity. Mansour also announced that the grid operator is developing a new structure for stakeholder engagement in market development, as well as a new internal structure for its own operations. For the stakeholder revamp, an advisory group recommended last month composing four new committees: members, markets, reliability, and finance. Stakeholders would remain in an advisory position; however, a $500 membership fee would be required to become a voting committee member. No details on the internal reorganization were available at press time.

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CAISO Seeks Resource Investment Preapproval

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