By Jason Fordney

CAISO is seeking comment from market participants on three proposed modifications to the Western Energy Imbalance Market (EIM).

The grid operator on Tuesday kicked off the stakeholder process for the proposals, which include allowing third-party transmission providers to receive congestion revenue when they make unused capacity available between EIM balancing authority areas (BAAs).

In response to questions during a call on the initiative, CAISO said transmission owners will not have to turn over control of their transmission facilities to participate and would receive payment only if there is congestion on the system.

CAISO says the measure would increase transfer capacity among members, which the ISO’s internal Market Monitor has pointed out reduces congestion and limits the ability of any single participant to wield market power within its BAA. (See Increased Transfer Capacity Reducing EIM Congestion.) EIM entities can currently collect congestion revenue through an offset, but that functionality is not extended to third parties.

The ISO plans to use its existing functionality for transmission contributions, known as “energy transfer system resources” that are used to track, tag and settle EIM transfers. It will need to establish a pro forma agreement that enables scheduling coordinators to submit transmission contributions on behalf of a third party, and create a new make-whole mechanism that would guarantee a payment from congestion revenue. The ISO is seeking stakeholder input on what level of interval granularity those payments should be calculated and how their associated costs should be allocated.

CAISO also wants to correct an inequity that occurs when an EIM BAA wheels power between other BAAs. Wheel-through BAAs receive some revenue when congestion occurs but are not compensated if there is no congestion. In that circumstance, only the source and sink BAAs accrue benefits when a wheel-through transfer occurs.

“How should we quantify the benefits of providing EIM transfers through an EIM BAA?” CAISO asked in its meeting materials.

The ISO has also proposed a new policy for situations in which market participants change their bilateral schedules after submitting their hourly base schedules. Under current practice, changes made after submission are exposed to real-time imbalance settlement payments.

Settlement can result in either charges or payments, but there is no way for market participants to know the cost beforehand. Proposed changes would allow them to manage their exposure to imbalance settlement charges, CAISO said.

After the comment period ends June 30, CAISO will post a straw proposal on the initiative by July 27 and hold stakeholder meetings in August and September. The EIM Governing Body is set to review the proposals in October, ahead of a decision by the CAISO Board of Governors in November.