By Jason Fordney

FERC staff have accepted CAISO’s implementation agreement for Canadian energy marketer Powerex to join the Western Energy Imbalance Market (EIM) but cautioned that the arrangement could be subject to further scrutiny once the commission meets after restoring its quorum.

“Preliminary analysis indicates that CAISO’s proposed implementation agreement has not been shown to be just and reasonable and may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful,” FERC staff said in its delegated order (ER17-1796).

The order’s language suggests that the commission could compel the ISO to address certain EIM stakeholder concerns about the agreement. FERC’s quorum was restored Thursday with the swearing in of former Pennsylvania Public Utility Commissioner Robert Powelson, joining former Senate Republican aide Neil Chatterjee, whom President Trump named acting chairman. (See Chatterjee Named Acting FERC Chair as Quorum is Restored.)

Powerex, which markets hydroelectric generation from parent BC Hydro, finalized the agreement with CAISO in May after announcing its intention to join the West’s only real-time energy market. (See Powerex Slated to Become First Non-US EIM Member.) The company’s membership would provide the EIM increased access to about 17,000 MW of generating capacity, about 12,000 MW of which is hydro. Powerex currently markets power across the U.S. and as far south as Mexico.

In filings with the commission, some commenters raised concerns about “the principles set forth to guide the negotiation and implementation of additional agreements necessary for Powerex’s EIM participation,” as well as potential changes to the EIM framework that would be required to integrate the company into the market, FERC said.

CAISO said that the specifics of Powerex’s participation in the EIM will be detailed in separate filing to FERC before the company is integrated. The ISO has told FERC that concerns about the way Powerex is integrated are beyond the scope of the proceeding and can be addressed in future filings.

“The implementation agreement does not establish binding terms for Powerex’s participation in the EIM but merely commits the CAISO and Powerex to work in good faith to reach agreement on an acceptable framework,” CAISO said in a July 14 answer to filed comments. As a Canadian entity, Powerex has unique legal and regulatory circumstances, but that does not mean that it will be subject to a different set of rules than other EIM participants, CAISO said.

EIM participants Pacific Gas and Electric and Southern California Edison did not oppose the Powerex integration and did not ask for it to be modified.

Market participants are concerned, however, about a provision in the agreement that allow it to be modified to include additional parties, which they say is unique to the Powerex integration. CAISO would be required to make additional filings to explain why the agreement should be modified to allow additional parties, which the grid operator said is not currently being contemplated.

In a joint filing with FERC, EIM participants — including PacifiCorp, Idaho Power, Portland General Electric, Puget Sound Energy and NV Energy — said that Powerex’s entry is a new model because it is a merchant market participant that is not located within or pseudo-tied with any EIM participant. They were concerned about provisions in the agreement that enable Powerex to enter into non-EIM transactions after submitting its base schedules to the market.

EIM entities that enter into transactions after the submission of base schedules can be subject to energy imbalance charges. The companies said CAISO should explain whether Powerex will be subject to the same bidding deadlines and charges, “or will be the only merchant participant permitted to enter modifications to base schedules as if it were an EIM entity.” They said they “look forward to the development of subsequent agreements with Powerex and BC Hydro that demonstrate uniform (not just compatible) market rules are applied to all market participants.”

The implementation agreement becomes effective Aug. 15, with Powerex slated to join the EIM in April 2018.