Conceding to raising the cap on market prices and delaying implementation by more than three months, the California Independent System Operator expects to file the legal language to implement its wholesale market redesign with federal regulators January 31. CAISO chief executive officer Yakout Mansour noted just at press time that it appears that last-minute changes will delay implementation by six weeks past the February 2007 schedule. CAISO expects its redesign to "fix flaws" in the market and enhance reliability. The grid operator board is expected to approve a $400\/MWh price cap - up from $250\/MWh. The grid operator filed its conceptual redesign with the Federal Energy Regulatory Commission in May. CAISO had hoped to have the new parameters in effect by February 2007. But chief executive officer Yakout Mansour in a December 9 memo to the CAISO board said that an April 2007 implementation is more reasonable. According to grid operator spokesperson Gregg Fishman, "The three major components of the new market design have always been, and remain" these: ?\tAn integrated forward market to schedule power, reserves, and transmission capacity in a day-ahead market. ?\tA full network model of the grid to automatically recognize transmission bottlenecks ahead of real time to anticipate and solve congestion problems. ?\tLocational marginal pricing, a method that creates a finer degree of pricing by developing prices for potentially hundreds of "nodes" on the grid, instead of the three large "zones" that the grid operator uses now. The new locational pricing part of the tariff "will be a strong deterrent to gaming," noted Gary Ackerman, Western Power Trading Forum executive director. Board members will likely allow for an increase in the cap on bid price - now at $250\/MWh. It was put in place to regulate prices that skyrocketed during the 2000-01 energy crisis. The call to raise the cap was made by third-party generators in a formal filing to FERC this June. At first cold toward the proposed change, CAISO began to loosen its grip on the $250\/MWh cap over the last few months because natural gas prices have doubled. Gas is used to fuel many of the power plants that bid into the grid operator's market, and owners have complained mightily that the cap keeps them from making a profit. Although the grid operator did not reveal a specific new ceiling, a memo dated December 16 from Greg Cook, CAISO tariff and regulatory policy manager, proposes tariff language adopting a $400\/MWh cap. The new market redesign supplants the grid operator's "MD02" effort - which went out the door when CAISO replaced its management at the beginning of this year. "The old MD02 didn't have a clear vision for congestion rights revenue allocation, nor anything on the hour-ahead market," Ackerman noted. The redesign also includes load-aggregation points, trading hubs, and integration with the expected resource-adequacy standard. Although stakeholders are either worn out from endless meetings on the market design or appear to be hopeful that it can work, Ellen Wolfe, president of Resero Consulting, notes several issues that remain. Those include what happens to power plants with contracts to keep them on call for the grid operator, what rights CAISO has to call power plants into the market on demand, and how to "button up" all of the detailed tariff provisions so that they are congruent with one another.