By Hudson Sangree

FERC last week approved CAISO Tariff changes designed to incorporate generator contingencies and remedial action schemes into its market optimization and congestion pricing methodology (ER19-354).

“The commission accepts CAISO’s filing because we agree with CAISO that its proposal will more closely align market dispatch and prices with actual operations,” FERC wrote. “This will allow prices received by generators to more accurately reflect their contribution to congestion under a dispatch that is secure against generator contingencies. We also agree with CAISO that its proposal will be beneficial by reducing reliance on exceptional dispatch.”

The ISO filed the Tariff revisions in November. It proposed language to clarify its rules on modifying and operating the grid to expressly include generator contingencies and remedial action schemes to deal with the loss of generators. It also proposed adding new components to its marginal cost of congestion formula.

“CAISO states that making several clarifications to existing terminology will improve transparency,” FERC wrote. “In particular, CAISO proposes to add a sentence to the definition of a ‘contingency’ to expressly include ‘potential outages due to remedial action schemes.’”

The ISO proposed similar clarifications to section 27 of its Tariff, which addresses its market and processes.

“CAISO states that these clarifications consist of parentheticals to clarify that remedial action schemes are included in CAISO’s modeling of transmission contingencies,” FERC said.

The ISO also proposed adding a new component to its formula for calculating congestion prices that accounts for generator outages. Currently, the grid operator calculates the marginal cost of congestion based on the “economic effect of additional power at a specific point flowing across a given transmission constraint,” the commission said.

To do so, CAISO multiplies the transmission constraint coefficient by the power transfer distribution factor and its shadow price, FERC noted.

“The power transfer distribution factor is the percentage of a power transfer that flows on a transmission facility as a result of the injection of power at the relevant bus and the withdrawal of power at the reference bus,” the commission said. “CAISO notes that the shadow price is the marginal value of relieving the constraint.”

Under the revised formula, CAISO will calculate the cost of congestion, then subtract the product of the power transfer distribution factor for the relevant generator contingencies and its shadow price, FERC said.

“CAISO contends that its proposal will ensure that its preventative modeling and market prices reflect grid realities. CAISO argues that the proposed revisions will also decrease out-of-market actions and the need for operators to manually monitor remedial action schemes and generator contingencies,” the commission said. “In addition, CAISO asserts that its proposal will appropriately price each generator’s contribution to congestion in the markets.”