The California Independent System Operator Board of Governors approved the final set of market enhancements in preparation for summer 2021 in hopes of avoiding a repeat of the rotating outages that occurred in 2020 during a weeklong heatwave across the US Western grid.
The board approved an initiative April 21 that will refine the prioritization of energy imports, exports and transfers through the ISO's balancing authority area. It will enhance the ISO's ability to reliably manage intertie energy transactions during electricity shortages, such as those that occurred during the August 2020 heatwave that caused rotating power outages, according to an ISO news release."This is a very complex problem," Jan Schori, ISO Board of Governors member, said about finding a solution for the upcoming summer as the governor already declared drought conditions in two counties. "We have to prepare and expect the worse. We have to try to do something this summer ... so we don't have a repeat of last summer."
If approved by the US Federal Energy Regulatory Commission, the changes will become effective May 31.
The changes make ISO rules more comparable to other balancing authorities, said Eric Hildebrandt, ISO executive director of market monitoring.
"I think everybody is better off due to increased clarity," Hildebrandt said.
Stakeholder concernsHowever, there were several stakeholder concerns about the changes.
"This is not anyone's idea of where we should be a year from now," Severin Borenstein, ISO Board of Governors member, said about ISO staff weaving together something workable for this summer but looking for a long-term solution with more time.
The Western Energy Imbalance Market Governing Body, acting in an advisory role, did not agree with the substance of the ISO's initiative, but advised the ISO Board of Governors to start a regional stakeholder process and engage FERC to proactively create a durable long-term regional solution, said EIM Governing Body chair John Prescott, adding "interruption of FERC's open-access transmission rules is at issue here. ... This needs to be a West-wide solution."
The ISO is scheduled to begin a regional stakeholder process on a long-term solution to wheeling priorities, which are energy transfers through the ISO BAA, in the coming months.
"Obviously this is a very delicate balancing act," ISO Board of Governors chair Angelina Galiteva said. "I know this is a temporary solution. We need a better long-term solution."
Initiative detailsThe changes focus on the priorities the market places on serving ISO load, exports and transactions wheeling through the ISO system when the market encounters constraints and must manage price-taker bids.
The first change is to no longer prioritize exports clearing the day-ahead market over serving ISO load, said Greg Cook, ISO executive director of market and infrastructure policy.
"Under today's practices a low-priority recallable export scheduled in the day-ahead market has a higher priority than load in the real-time market," according to ISO staff's memo to the board. "This creates the possibility that a low priority recallable export is served by ISO resource adequacy capacity, which is intended to serve ISO internal load. This proposal removes this unintended outcome and further aligns the market rules with Federal Energy Regulatory Commission precedent that exports supported by ISO resource adequacy capacity are essentially non-firm, recallable sales."
This change enforces two classes of export schedules all the way through the real-time market, including exports backed by capacity designated to serve external load having a higher priority and exports not backed by capacity designed to serve external load having a lower scheduling priority, Cook said.
Second, changes were made to the designation of capacity backing high-priority non-recallable exports to better ensure that capacity sold to ISO load serving entities is not backing high-priority non-recallable exports. This will ensure designated capacity that is backing high-priority non-recallable exports is available and physically capable of sustaining the export in real-time so the ISO does not have to support the export using its resource adequacy capacity.
Lastly, changes were made to the prioritization of wheel-through self schedules, to differentiate high-priority and low-priority wheels, and to create a new process to equitably allocate transmission if the ISO's hour-ahead scheduling process if infeasible.
"We're looking at what are the rules we can have in place for this summer," Cook said. "I believe this proposal we put out does a good job of balancing those needs."
This was the final near-term summer readiness initiative for the board's consideration. The ISO adopted five initiatives for summer 2021 readiness during a March 24 meeting and filed the proposed changes with FERC seeking approval by May 25.
August 2020 outagesA historic heat storm in August 2020 led the ISO to declare a Stage 3 emergency, triggering rotating power outages for the first time since 2001. Outages took place Aug. 14-15 to maintain grid stability after two gas plants and 1,000 MW of wind generation across the state was lost and unable to serve load, the ISO has said.
During the heat wave, numerous flex alerts were issued, restricted maintenance operations were declared, convergence bidding was suspended and the ISO solicited any available capacity using its Capacity Procurement Mechanism.
The SP15 on-peak day-ahead locational marginal price reached a record high of $697.91/MWh Aug. 18 when ISO peakload reached almost 47 GW, a nearly three-year high, according to ISO data.
