CAISO Market Redesign on Faster Track

A ?very positive ruling? by the Federal Energy Regulatory Commission has put the power market redesign proposed by the California Independent System Operator ahead of schedule. In a group of June 30 orders, federal regulators approved, in principle, key structural changes in California?s electricity market and approved enforcement of CAISO?s tariff by the grid operator?s market monitoring unit, FERC stated. The commission also determined that CAISO?s governing board is sufficiently independent and accepted its generator interconnection compliance filing. These were ?very positive rulings for us,? CAISO spokesperson Gregg Fishman said, adding that FERC ?took a weight off our shoulders.? Acting a full month ahead of the July 31 date requested, the commission provided approval to conceptual elements of CAISO?s Market Redesign and Technology Upgrade proposal. FERC pointed out that this is the last in a series of orders intended to provide guidance to CAISO so that it can make a detailed tariff filing in November supporting the market restructuring elements. At press time, FERC?s orders had not been posted, so details of the commission?s actions beyond the commission?s statement were not available. The statement said the approval included: Clearing demand bids at load aggregation points. Revising the hour-ahead market known as the hour-ahead scheduling process. Mitigating market power?including a multiyear transition of the bid cap to $1,000/MWh from the present $250/MWh cap. FERC described the higher cap as ?a level consistent with caps in effect in other regional markets.? The order also directs commission staff to convene a technical conference to explore opportunities for wholesale demand response in California. In a separate order, the commission defined the universe of existing transmission service contracts that will be in place after the CAISO market redesign is implemented in February 2007. This order also addresses the applicable standard of review for each existing transmission contract in question, FERC said. Separately, the commission concluded that CAISO?s proposed board selection process, which calls for an independent search firm to seek out qualified board candidates, is acceptable for the purposes of the independence requirements of Orders 888 and 2000. In addition, the CAISO board as presently constituted meets the commission?s independence requirements. In previous orders, FERC limited CAISO?s ability to unilaterally administer the enforcement protocol provisions of its market restructuring effort pending the establishment of an independent governing board. With the determination that the grid operator board meets FERC?s independence requirements, the commission found that CAISO?s market monitoring unit, or MMU, ?may now administer the Enforcement Protocol provisions related to behavior that is objectively identifiable and for which violations have clear Commission-approved sanctions set forth in the [CAISO] tariff.? Further, the commission accepted in part, and rejected in part, CAISO's proposed revisions to its pro forma large generator interconnection procedures and interconnection study requirements, FERC?s statement continued. The commission similarly partly accepted and rejected the large generator interconnection agreement filed by CAISO and the three participating transmission owners, Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric. FERC accepted the transmission owners? conforming tariff filings and, consistent with the finding that the CAISO board is independent, is evaluating the generator interconnection filings under the independent entity variation standard.

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CAISO Market Redesign on Faster Track

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