CAISO introduced a straw proposal Wednesday that aims to attract supply this summer and head off shortfalls like those that led to rolling blackouts in August and energy emergencies in September.

Propelled by those concerns, the ISO is moving ahead on its “market enhancements for summer 2021 readiness” stakeholder initiative at an unusually fast pace. It began advancing the measure in earnest in early January and scheduled it to be adopted by the Board of Governors in late March, with implementation scheduled for June 1.

The proposal took the form of a slide presentation only, not a written proposal as would normally be the case, because of time constraints. It is part of a series of fast-tracked measures being pursued by the ISO and the California Public Utilities Commission in anticipation of summer heat waves and capacity deficiencies as the state transitions from fossil fuels to renewables.

It and other measures are intended to address issues identified in a root-cause analysis of the summer shortages submitted to Gov. Gavin Newsom by CAISO, the CPUC and the state Energy Commission at Newsom’s request. It identified a variety of problems including transmission constraints, questionable exports from the ISO during tight supply conditions and market practices that undermined supply. (See CAISO Says Constrained Tx Contributed to Blackouts and Summer Readiness Sought by CAISO, CPUC.)

“This initiative’s goal is to prepare the CAISO’s operations and market ahead of this summer,” James Friedrich, market design policy specialist, said in his presentation. The “initiative is part of several measures to better access available supply, protect grid reliability and avoid rotating power outages during extreme heat waves. In addition to reliability, the CAISO has the responsibility to ensure its markets are operated efficiently, including mitigating market power and ensuring rational price formation.”

The proposal deals with import incentives during tight load conditions, scarcity pricing enhancements and coordination with the interstate Western Energy Imbalance Market (EIM), among other changes. (See Western EIM Questions Performance in Shortfalls.)

For example, it proposes reviewing the performance of the ISO’s resource sufficiency evaluation (RSE) as part of its EIM participation. The re-evaluation would address defects identified in prior workshops such as accounting for resources that are derated as part of the capacity test and eliminating the double counting of mirror resources.

Two proposed enhancements seek to improve market incentives during times of tight supply. One would improve day-ahead market scheduling incentives, and a second would improve real-time incentives.

Another part of the straw proposal involves increasing the real-time market’s prices under certain conditions, including when the ISO issues a day-ahead market alert, or a warning or emergency in real time. The proposal would scale prices to the $2,000/MWh threshold established by FERC in Order 831. The order required ISOs and RTOs to raise the hard caps on supply bids from $1,000 to $2,000; offers over $1,000 require suppliers to justify their costs.

CAISO’s Market Surveillance Committee said in September that the ISO needs to consider implementing scarcity pricing to obtain energy during heat waves and supply shortages. (See CAISO MSC Urges Scarcity Pricing for Emergencies.) CAISO plans to pursue a separate stakeholder initiative on scarcity pricing starting soon. (See CAISO Adds Scarcity Pricing to Policy ‘Roadmap’.)

Making sure storage resources are charged in strained conditions is another component of the straw proposal. Hundreds of megawatts of additional storage are scheduled to come online by this summer. A lack of storage for renewable resources last summer led to shortages when solar ramped down in the evening but demand from air conditioning remained high.

Comments on the straw proposal are due this Wednesday, with a final proposal expected by the end of the month.