By Robert Mullin

FERC approved CAISO’s plan to extend the temporary Tariff provisions the ISO implemented last June in response to natural gas pipeline restrictions stemming from last year’s closure of the Aliso Canyon natural gas storage facility.

The measures — which are intended to reduce the potential for blackouts through improved gas-electric coordination — now remain effective until Nov. 30, 2017, a year after the original sunset date.

“We find that continuation of the interim measures for an additional year should improve scheduling coordinators’ ability to manage their gas procurement and enhance their ability to recover gas procurement costs, while also providing CAISO with flexible tools to maintain reliability and avoid adverse market outcomes related to the limited operability of Aliso Canyon,” the commission wrote in its Nov. 28 decision (ER17-110).

In a separate ruling Nov. 21, the commission also approved the ISO’s request to make permanent three other related “bidding enhancement measures” approved by FERC on June 1 that also would have expired Nov. 30. (See below.)

No Timetable for Return

The ISO sought expedited approval to extend the Alison Canyon measures to head off concerns about potential natural gas shortages during the coming winter, a second peak season for Southern California gas consumption because of increased residential heating. (See CAISO Seeks to Extend Aliso Canyon Gas Rules Through Winter.)

While Aliso Canyon owner Southern California Gas has been testing the storage facility for leaks, the California Public Utilities Commission has not yet set a timetable for reopening the facility. State regulators have instead signaled that they expect utilities to implement winter-specific measures for electricity consumers that would mirror the state’s successful summer response to constrained gas supplies. (See Sandoval: Nuke Shutdown, Auto-DR Aided Aliso Canyon Response.)

For its part, CAISO is preparing for the facility to remain out of service for most of 2017.

The commission’s decision enables the ISO to extend provisions that provide scheduling coordinators with two-day ahead advisory schedules and allow gas-fired generating units to incorporate more timely fuel prices into their market offers. It also continues use of an after-the-fact cost recovery mechanism for generators that includes pipeline penalties and is based on same-day gas prices rather than day-ahead gas indices.

The ISO will also retain its authority to override its “dynamic competitive path” assessment when it determines that the transmission path is no longer competitive in the face of a gas constraint, as well as to suspend virtual bidding to prevent market manipulation.

The commission also approved CAISO’s request to refine a provision that allows the ISO to enforce a market constraint that limits the minimum and maximum amount of gas that can be burned by generators in the affected area during periods of restricted supply. The refinement will set a limit on the maximum burn only, given that generators this summer demonstrated they could regulate their minimum burns simply by lowering the price of their bids into the real-time electricity market.

‘Objective Standard’ Rejected

FERC rejected a request by the Western Power Trading Forum (WPTF) to require CAISO to establish standards for deeming when a constrained transmission path has become uncompetitive or suspending convergence bidding. Reprising a statement from its decision authorizing the original Aliso Canyon measures, the commission said “the impact of the natural gas constraint on the assessment of competitive paths can only be assessed based on actual system conditions once the constraint is in place.”

Requiring CAISO “to develop objective standards for when and how these measures may be implemented is not feasible,” the commission concluded.

However, the commission did agree to a WPTF request that the ISO be required to publish a market notice for any revisions made to generator gas adders — rather than just during instances when the adder is increased.

The commission also said it agreed with market participants who filed comments contending that the interim measures should not become substitutes for permanent market reforms that could become necessary in the future.

“We find that the Tariff revisions proposed here are appropriate for mitigating the risks resulting from the limited operability of Aliso Canyon but expect CAISO to honor its commitment to consider other types of longer-term market enhancements,” the commission said. It encouraged the ISO to begin a stakeholder process to address the potential need for additional measures dealing with exceptional — or out-of-market — dispatches related to the facility’s closure.

Nov. 21 Ruling

In a separate ruling Nov. 21, the commission approved the ISO’s request to make permanent three “bidding enhancement measures” approved by FERC on June 1 to address summer gas supply concerns (ER16-2445). (See FERC Approves CAISO’s Aliso Canyon Response Plan Ahead of Summer.)

The Tariff revisions allow scheduling coordinators to rebid commitment costs in the real-time market if they were not committed in the day-ahead market or residual unit commitment process; ensure that the ISO’s short-term unit commitment process does not commit resources that did not submit bids into the real-time market unless they were scheduled or committed in the day-ahead market or had a real-time must-offer obligation; and allow scheduling coordinators to seek after-the-fact recovery of unrecovered commitment costs that exceed the commitment cost bid cap as a result of actual fuel procurement costs.

CAISO told FERC that the Tariff provisions were developed independently of the concern over Aliso Canyon as part of a stakeholder effort approved by the ISO’s Board of Governors in March 2016.

Although the changes were not intended to be temporary, the ISO said it included them in the package of interim revisions accepted in the June 1 order because it believed they would help it manage the transmission system and market operations during the summer.

The commission said the Tariff revisions “should provide more accurate prices in the real-time market and help avoid the inefficient dispatch of resources in the real-time market based upon bids that may not reflect current fuel prices.”

Monitor Seeks Sunset

The ISO’s internal Department of Market Monitoring told FERC the language permitting the real-time rebidding of commitment costs should only be extended until the end of summer 2017 pending a review of how limitations on rebidding commitment costs could be directly enforced through the ISO’s market software. The Monitor said it opposed continued reliance on non-automated, after-the-fact monitoring and enforcement to protect against the potential for excessive bid cost recovery payments.

The commission rejected the Monitor’s request to sunset the real-time rebidding rules but ordered CAISO to submit an informational report by Oct. 1, 2017, “detailing its assessment of the effectiveness of the rebidding process and its efforts to automate the monitoring and enforcement process.”