By Hudson Sangree and Robert Mullin

CAISO is postponing stakeholder initiatives on day-ahead market enhancements and storage-as-transmission assets (SATA), while adding four new initiatives as part of its 2019 annual plan.

The day-ahead market enhancements initiative has been postponed in response to stakeholder requests for more time to implement required changes, CAISO said in an update posted Wednesday. The effort aims to replace the day-ahead market’s current one-hour scheduling with a 15-minute granularity to improve handling of net load variability in real time. (See CAISO Says Changes Will Better Match Forecasting, Demand.)

“Grid infrastructure has advanced, the resource fleet has changed and the policies regulating operation of the grid have evolved (i.e., FERC mandated 15-minute scheduling in real-time energy markets). As a result, hourly scheduling granularity is no longer the most efficient way to schedule resources,” the ISO said in its straw proposal for the initiative.

As a byproduct of the initiative, CAISO is proposing to alter the Western Energy Imbalance Market to require participants to submit base schedules with a 15-minute granularity instead of the current one-hour.

“The use of hourly base schedules was originally chosen to align with the CAISO’s hourly day-ahead schedules, which were the reference point for imbalance energy,” the ISO said.

While EIM participants are generally supportive of the change, they’ve also cautioned CAISO that they need more time to comply with it.

In its April 1 comments on the ISO’s third straw proposal, for example, EIM member Arizona Public Service wrote that “while APS is supportive of moving to 15-minute scheduling and bidding granularity, these changes will require significant software and system changes, and will likely require modifications to EIM entities’ internal business processes. Sufficient time must be included in the implementation schedule for these system upgrades.”

NV Energy noted that the scheduling changes will require EIM members to revise their open access transmission tariffs (OATTs).

“NV Energy requests that the EIM entity OATT amendments be coordinated with the CAISO Tariff amendment for this market enhancement. It will be necessary for the CAISO Tariff to be approved with ample time for the EIM entities to file OATT amendment changes with FERC,” the utility said. It and founding EIM member PacifiCorp also urged CAISO to provide market participants 60 days to test the 15-minute functionality before implementation.

Northern California Power Agency (NCPA) also expressed concerns about the speed of the effort, contending the ISO “has exhibited a tendency to release major market changes that contain material deficiencies that have to be corrected over time.” Such an approach can have “financial consequences” for market participants, it warned.

“As such, NCPA believes the implementation timeline being considered will need to be adjusted to include very robust structured and unstructured market simulations, based on a clearly defined set of measurable and verifiable milestones, managed in close coordination and collaboration with stakeholders prior to releasing the changes into the production environments,” it said.

SATA Deferred

The storage initiative is being deferred until 2020 to provide time for the resolution of storage-dispatch policy in CAISO’s energy storage and distributed energy resources initiative phase 4 (ESDER 4). Phase 4 “will explore refinements to the distributed energy resource and storage participation models, as well as lower integration barriers for demand response resources,” the ISO said. (See CAISO Updates ESDER Phase 3 Proposal.)

“The scope of this initiative is to enable storage providing cost-based transmission services to also participate in ISO markets and receive market revenues to provide additional ratepayer benefits and provide greater flexibility to the grid,” CAISO wrote in its second revised straw proposal in October 2018.

New Additions

Meanwhile, CAISO said it’s adding four new measures to its 2019 roadmap:

• Its new hybrid resources initiative will address issues related to solar-plus-storage in “forecasting, operations, resource adequacy and market design to provide for storage dispatch resolution in ESDER 4.”
• A second initiative will address an “inefficiency” in the allocation of the real-time market neutrality settlement charge, which is currently calculated based on the sum of instructed and uninstructed imbalance energy, unaccounted for energy and greenhouse gas awards. The charge is allocated to settlements based on an offset calculated for each LMP component. The initiative proposes to eliminate the transfer of the real-time imbalance energy offset between EIM balancing authority areas, remove the GHG awards from the real-time market neutrality and create a GHG-specific neutrality allocation.
• An intertie bid cost verification initiative will seek to align “intertie resource requirements with internal resources under FERC Order 831,” which directs ISOs and RTOs to cap resources’ incremental energy offers at the higher of $1,000/MWh or the resource’s verified cost-based incremental energy offer. FERC issued the order in November 2016 after wholesale power prices spiked during the winter storms of 2013/14 and generators said they could not recover their costs. (See CAISO Developing New Bidding Rules.)
• A capacity procurement mechanism (CPM) initiative is meant to update the soft offer cap and consider 12-month pricing for CPM designations.