CAISO Okays FTR Auction, Ponders Border Congestion

By Published On: January 24, 2004

While there was a lot of activity at the California Public Utilities Commission at its January 22 meeting, little action was taken by the California Independent System Operator at its board meeting on the same day. With no discussion, the board unanimously approved this year?s annual auction of a set number of firm transmission rights, including ones along Path 15, which will be a first. ?The old board used to have multihour debates on the issue,? said CAISO board member Mike Florio after the quick 4-0 vote. The ?old board? was composed of two dozen stakeholder representatives and was disposed of in a still-controversial move by the governor during the energy crisis. CAISO?s transmission right auction will be held next month, and more than 11,000 rights contracts will be put up for sale. Some of the rights are free for the taking, but the pricey ones tend to be along Path 26. The right represents a unidirectional 1 MW portion of a transmission path, and holders have scheduling priority in the day-ahead market. The rights are generally good for one year, but rights along the California-Oregon Intertie will have a nine-month term because the 30-year transmission contracts between Pacific Gas & Electric and the Western Area Power Administration expire later this year. The CAISO board discussed possible remedies to the serious congestion problem in the southeastern corner of the state?at Miguel-Imperial Valley. The new power plants on the Mexican side of the border have exacerbated the area?s transmission jam. CAISO staff recommend against the creation of a new zone for the area. ?Ultimately, the creation of a new zone appears to be an extremely costly way to address CAISO?s reliability concerns, given the short period of time it will be in place before implementation of the new CAISO design,? states the staff analysis. The electron logjam is also affected by the state?s long term-contracts for power in Arizona, which allow the seller to deliver power to the point with the lowest cost. Those are places of least value for the buyer, who must also pick up the tab for any virtual congestion, according to Frank Wolak, chair of CAISO?s market surveillance committee. The best solution, according to the grid operator, would be one negotiated by market participants.

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