FERC on Thursday approved CAISO’s procedure for distributing more than $2 million in penalty proceeds and nonrefundable interconnection study deposits to its members (ER20-2604).

CAISO’s Tariff requires it to collect penalties for violations of its rules of conduct and deposit them in an interest-bearing trust account. At the end of each calendar year, CAISO distributes the proceeds, with accrued interest, to eligible market participants based on a formula that factors in the pro rata share of the grid management charge paid to the ISO by each participant. The Tariff also requires CAISO to seek FERC’s approval for any disbursements of penalty proceeds, which totaled $622,500 in 2019.

“The methodology in CAISO’s proposal is consistent with relevant provisions in its Tariff for allocating and distributing penalty proceeds to scheduling coordinators,” FERC found.

CAISO had also petitioned FERC for permission to distribute $1,452,574.98 in nonrefundable interconnection study funds for projects interconnecting to Southern California Edison’s distribution system. The ISO noted the funds would be allocated to market participants without accounting for whether a participant had been assessed a financial penalty over the course of the year.

FERC determined that the methodologies in CAISO’s proposal were consistent with its Tariff. The commission concluded that “our decision to grant the petition is consistent with the commission’s disposition of prior CAISO filings where it proposed to distribute forfeited interconnection study funds with interest … without accounting for whether or not a scheduling coordinator had been assessed a financial penalty under section 37 or Tariff during the relevant calendar year.”