By Jason Fordney

A CAISO official revealed Tuesday that a generation owner has approached the ISO about seeking a 2019 reliability-must-run contract, a development likely to sharpen an ongoing stakeholder debate about the out-of-market payments.

Keith Johnson, CAISO infrastructure and regulatory policy manager, acknowledged the generator’s request in response to a series of questions during an hourslong stakeholder meeting that at times became slightly charged as market participants delved deeply into the ISO’s backstop energy procurement policies.

Generation owners typically inquire about an RMR when they are considering shutting down a unit and want to know if it might be eligible to receive one of the increasing number of contracts the grid operator has been inking in recent years to keep gas-fired plants available for reliability reasons.

Stakeholders have questioned whether retirement notifications and subsequent discussions between generation owners and CAISO should remain confidential or be announced immediately. In response, the ISO is working on rule changes that would allow it to provide the public early notification of unit retirements under different scenarios.

The notification changes are included in “Phase 1” of a broader set of RMR and capacity procurement mechanism (CPM) changes that CAISO is developing. Another primary component of the program is a must-offer requirement for RMR units that will “look, feel and act more like resource adequacy,” Johnson said.

The ISO on March 13 issued its draft final proposal for Phase 1, with the goal of getting approval from the Board of Governors in May, in place for fall contracting for the 2019 operating year. Comments are due April 10 on the proposed rule changes, a topic of a similarly pointed stakeholder session last month. (See CAISO, Stakeholders Debate RMR Revisions.)

CAISO has received plenty of feedback about including more RMR/CPM reforms in Phase 1, but Johnson told stakeholders Tuesday that “we are avoiding shoehorning stuff in there that can’t be adequately vetted with you.”

More comprehensive RMR/CPM refinements are being considered for a later Phase 2, CAISO said in a presentation during the meeting. Thirteen items are up for discussion for the second phase, including more clarification regarding the differences between RMR and CPM, and whether the two programs can be merged into one procurement tool.

Additionally, CAISO had already developed and submitted a package of RMR changes to FERC, which it said it expects to be approved on April 12.

RMR critics — which include the California Public Utilities Commission — say the growing need for the contracts points to market deficiencies that call for broader reforms across the market. The commission replaced a previous set of CAISO-approved RMRs with energy storage. (See CPUC Retires Diablo Canyon, Replaces Calpine RMRs.)

NRG Energy subsidiary GenOn recently notified the commission that it plans to retire three gas-fired plants by early next year, possibly setting them up for RMRs. (See NRG Set to Retire California Gas Plants.)