By Jason Fordney

CAISO’s operating revenues jumped 4.4% to $214 million last year on the back of increased Energy Imbalance Market (EIM) earnings and an uptick in summer activity.

The ISO reported “true operating income” (operating revenue minus operating expenses) of $47.4 million for the full year, compared with $44.4 million in 2016. True operating income fluctuates throughout the year as a large portion of revenue comes in the summer, when energy demand and prices are higher.

CAISO is a nonprofit corporation that earns the bulk of its revenue from a grid management charge (GMC), composed of market services, system operations and congestion revenue rights charges assessed by the megawatt-hour. The ISO also collects other charges and fees, including those for trades between scheduling coordinators. It additionally operates the EIM.

Including depreciation and amortization, CAISO’s fourth-quarter report showed a $6.9 million net operating income “loss,” but spokesman Steven Greenlee said that is “merely an accounting outcome.”

“The level of net operating income has no effect on our cash flow, budgeting or grid management charges,” Greenlee told RTO Insider.

CAISO collected $47.3 million of its operating revenue from its GMC in the fourth quarter, up from about $45.8 million the previous year. Other operating revenues totaled $4 million during the last quarter. GMC revenue for 2017 grew by 3% to $198.3 million and was higher than what CAISO had budgeted.

August Sees Highest Take

CAISO’s gross market revenues for all services going through the ISO market peaked at $1.2 billion in August, the period of highest summer demand and when the ISO dealt with the impact of the solar eclipse on solar generation. (See Grid Operators Manage Solar Eclipse.) Revenues fell to their lowest in February, at slightly more than $500 million.

The gross revenue figure represents the total value of all energy transactions and related services included on ISO invoices. CAISO recoups its costs through the GMC, which is a small component of these overall market revenues, the ISO said.

Q4 Expenses Grow

The ISO’s fourth-quarter operating expenses were $51 million, up about 16% from the same period a year earlier. Expenses include salaries and benefits to employees, building and facility costs, insurance, outside contractors, legal and auditing services, training, travel and professional dues.

CAISO’s expenditures for consulting and contracting services grew by $2.9 million quarter-over-quarter to $7.2 million. Third-party vendor contracts rose from $2.6 million to $3.5 million between the same two periods.

While expenses grew, they were $7.1 million less than CAISO had budgeted for the year. The ISO cut salaries and wages by about $1 million quarter-over-quarter and had lower “building, leases and facilities” costs, and lower legal and auditing expenses. The ISO cut three full-time positions in 2017, leaving the headcount at 599.

Revenue Exceeds Budgeted Level

Fourth-quarter operating revenues exceeded the budget by $7.5 million, mostly because of EIM administrative charges and forecasting fees beating projections, the ISO said.

CAISO’s Corporate Management Committee approved $19.5 million in projects last year to increase electric system performance and to meet FERC mandates, the ISO said. These include market improvements, technology, customer service, grid readiness and other funds.

The ISO on Jan. 3 had $1.9 billion in collateral from market participants to support $294 million in aggregate liabilities in the market.