Blackouts Trip Market, Generators

By Published On: September 16, 2011

The grid operator had no “Plan B” alternative to shutting down the wholesale electricity market when blackouts spread Sept. 8 from Arizona to San Diego. Yet, the California Independent System Operator created an immediate backup plan, with, apparently no pre-conceived parameters for making such a decision. “Sometimes, and rarely, the New York Stock Exchange must shut down trading for one or more equities. It happens in all markets. Just less frequently in electricity,” noted Gary Ackerman, executive director, Western Power Trading Forum. Instead of hour-ahead bidding for electric supplies, ancillary services, and availability to curtail power sources to take pressure off the grid, CAISO imposed a $250/MWh price at 6 p.m., reducing it to $100/MWh at 10 p.m. The market returned to normal competitive operations at 1 a.m. for areas outside San Diego Gas & Electric territory, and at 4 a.m. the next day for San Diego. The decision was made quickly and without stakeholder involvement, the CAISO revealed during a Sept. 14 call with traders. The grid operator would not say whether or not there are parameters within the organization that kick in when considering a market shutdown, responding only that the situation is under investigation. The Federal Energy Regulatory Commission initiated an inter-agency inquiry into the blackouts Sept. 9 between it, California’s grid operator, and the North American Electric Reliability Corporation. The commission insists it’s an “inquiry,” not a full-blown investigation, according to spokesperson Mary O’Driscoll. “We want to assist industry to make sure these remain rare and isolated events,” said Jon Wellinghoff, commisson chair. The inquiry is set to begin Sept. 19 with “extensive interviews,” according to the federal commission staff. CAISO is in the lead on the inter-agency inquiry but refused to reveal what it’s looking into outside the physical cause of the blackouts. Market information is considered proprietary, so information on how much profit was gained or lost during the market shutdown, and the bidding leading up to the shutdown, was unavailable. Just before the grid operator closed the market, at 5 p.m. Sept. 8, electricity supply prices reached a high of $1,579/MWh. The market price is capped at $1,000 MWh, Under extenuating circumstances, such as last week’s blackout, higher prices can be considered. In the 2000-01 energy crisis, debates focused on traders wielding market power in order to profit from potential blackouts. “Market power was completely eliminated” because in the blackout zone traders didn’t have the ability to hold back nor deliver, according to Ackerman. Outside that zone, traders couldn’t capture any high price because there was no consumption within the blackout area. While not dissatisfied with the market shutdown, Ackerman was irritated by the $100/MWh cap imposed at the spur of the moment. He suggested a default cap be $10,000/MWh on energy the same as it was during the energy crisis. The genesis of the blackout was at the 500 kV Hassayampa-North Gila line when it tripped, according to initial reports. That caused 4,300 MW to suddenly drop out of the system, leading to cascading blackouts. The grid operator used old-fashioned phone calls to resynchronize the lines as generation started up, according to Debi Le Vine, director, system operations. Under construction in the blackout area is the major 500 kV Sunrise Powerlink transmission line, stringing the territory between Imperial Valley and San Diego. An interagency task force is examining whether Sunrise Powerlink would’ve made a difference, said CAISO spokesperson Stephanie McCorkle.

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