By Hudson Sangree

FERC accepted an agreement last week between CAISO and a Calpine plant to provide black start service, but it also agreed with the California Public Utilities Commission that more cost information was needed to determine if the deal was just and reasonable (ER19-2800).

The federal commission accepted the agreement effective Nov. 6 but required additional information to be presented at settlement hearings.

CAISO in 2016 determined it needed additional black start capability in the San Francisco Bay Area. It issued a request for proposals in June 2017 and ultimately selected a plan by Calpine to provide battery storage at the company’s gas-fired Russell City Energy Center in the city of Hayward.

The agreement between Russell City and the ISO — in which Pacific Gas and Electric, the transmission provider in Hayward, is also a participant — stipulates that the plant will collect about $7.4 million annually for five years to cover a $21.8 million capital investment and earn a reasonable rate of return. The plant owner will recover both the variable cost of providing black start service and the fixed cost of constructing the battery system.

The variable cost represents the sum of a start-up charge, a fired-hours charge, greenhouse gas reimbursement, CAISO charge reimbursement, a performance test field support charge and a power plant outage cost reimbursement — all outlined within a schedule of the agreement. The contract also provides for Russell City to recover a “market revenue shortfall” if the revenues received during energy delivery are less than provided for by the schedule.

Russell City contends that CAISO’s competitive solicitation process guarantees that its rates, terms and conditions for black start service are just and reasonable. The ISO would have the option to renew the agreement for an additional five years after the contract expires.

In its comments to FERC, the CPUC said it supported the development of black start capability in the Bay Area but argued Russell City had not provided underlying cost information to support its filing. The state commission requested that FERC require Russell City to refile the agreement with underlying cost information, or alternatively accept the agreement but also determine that it does not set any precedent. FERC agreed with the CPUC’s concerns.

“Although Russell City, CAISO and PG&E represent that they exchanged information with CPUC about cost allocations during their negotiations of the agreement, that information has not been submitted into the record of this proceeding and therefore is not available for this commission to evaluate in determining whether the proposed rates are just and reasonable under Section 205 of the Federal Power Act,” the commission found.