CAISO focused on congestion revenue rights when it served up the latest volley in the ongoing dispute over what played out on the Western grid during the January cold snap that forced Northwest utilities to import unusually high volumes of energy to avoid blackouts. 

“Given all the nuances and complexities with all the dynamics at play during that event, it is always useful to step back and have the opportunity to provide some basic facts of how things actually happened,” Guillermo Bautista Alderete, CAISO director of market performance and advanced analytics, said during a Sept. 27 presentation to the Western Energy Imbalance Market’s Regional Issues Forum (RIF).  

“But in order to reach that point in the discussion, it is critical that we first differentiate between the fact and the myth,” Alderete said.  

The cold snap over the Jan. 12-16 Martin Luther King Jr. holiday weekend saw record low temperatures along with historically high peak demand, prompting five different balancing authority areas (BAAs) to declare energy emergency alerts. Stressed grid conditions also produced price separation between the Northwest and California, with extremely high bilateral prices in the Northwest and at the Malin intertie in particular.   

Central to the dispute over the event was CAISO’s role in supporting the Northwest during extreme weather conditions, as the disagreement quickly became a proxy for the broader competition for members between the ISO’s Extended Day-Ahead Market (EDAM) and SPP’s Markets+. (See NW Cold Snap Dispute Reflects Divisions Over Western Markets.) 

A Feb. 8 report by the Western Power Pool found that while CAISO and other California BAs exported nearly 3,000 MW of energy to the Northwest, they were also net importers, suggesting that the Desert Southwest and Rockies regions — and not California — were the origin of most of the Northwest’s supporting imports.  

That was followed by a Feb. 23 letter from the Portland, Ore.-based Public Power Council (PPC) to Bonneville Power Administration CEO John Hairston, which critiqued the ISO’s allocation of congestion revenue rents (CRRs) during the event. The PPC wrote that “CAISO’s congestion policies resulted in over $100M of congestion revenues being collected by the CAISO BAA, despite most of the generation serving the Northwest coming from outside California.” 

In a March 6 report, Powerex expanded on the CRR complaint and even called on Northwest entities to develop ways to circumvent flowing energy through California, while CAISO that same day issued its own 80-page report defending its actions during the cold snap and explaining the mechanisms used by the WEIM to move power around the grid.    

‘Myth Busting’

Alderete’s Sept. 27 “myth-busting” presentation to the RIF drilled further into the CRR issue, offering a series of seven “facts” and “myths” about what occurred and focusing on the congestion occurring at Malin and on the California-Oregon Intertie (COI) — the main interface between BPA and the ISO. 

The first “myth” Alderete addressed was the assessment that the ISO unilaterally decides on Malin limits to influence congestion. He emphasized that both BPA and the ISO are path operators on the COI and that there is an agreement between the two operators to have a “coordinated operation of the path” and “always enforce the most limiting constraint on the path.”  

According to Alderete, this first “myth” set the stage for the second one: that the ISO directly influenced day-ahead congestion on the Malin intertie. His presentation said the day-ahead congestion occurred “simply because the volume of exports requested for the Northwest exceeded the full Malin capability. Exports at Malin were twice as much as the full Malin capacity, and through the day-ahead market, the ISO positioned internal supply economically to support exports to the Northwest.”  

A third “myth” further perpetuated the belief that CAISO limited COI flows to influence congestion, but Alderete said that COI transfer capability during the MLK weekend was fully available and used in the day-ahead market for the share of the line operated by the ISO.  

“Here is the simple fact for these critical days of the MLK weekend: There were no derates on the Malin intertie. The full capacity of the intertie was used and made available in the day-ahead market,” Alderete said. “I can see how this myth could have been created out of confusion and maybe not appreciating the time frames of the event, and I can clarify that, specific to the MLK weekend, there were indeed weather-related forced outages in the BPA area, and those eventually resulted in derates to the path.”  

But the forced outages and derates affected only the real-time market, Alderete said.  

Delving further into the weeds, Alderete contested the “myth” that CAISO “charged excessive prices to exports flowing to the Northwest, reiterating that congestion prices on Malin were set by export bids, which reflected the price exports were willing to pay to flow.  

Alderete also provided additional color to the process of allocating congestion, saying that while a fifth “myth” holds that parties outside the ISO market have a right to day-ahead congestion revenue, the fact is that it’s sourced “only from re-dispatch of participating resources in the ISO market, including exports.”  

CAISO doesn’t have access to resources outside of its market, such as those north of Malin, to re-dispatch and alleviate congestion on ISO constraints, meaning that the sixth “myth,” that CAISO collected congestion rents on all Malin capability, is incorrect. 

“Congestion on Malin is only collected for the capacity made available to the market, lower than the full capability,” the presentation read. “The ISO operates two-thirds of COI capability; only that portion will be managed in the ISO market with Malin intertie.” 

The final and “biggest myth” that caused significant concern among some Western entities was that CAISO kept all $100 million of day-ahead CRRs collected on the Malin intertie. But Alderete emphasized that CRRs are given to their holders and that any surplus is allocated to demand and exports. Because the Malin capacity wasn’t fully exhausted in the CRR release, over $50 million in surplus congestion rents were allocated to measured demand. 

Alderete’s presentation came after a group of Markets+ supporters released a series of “issue alerts” favorably comparing the SPP day-ahead market with the EDAM. The latest alert, focused on market seams, covered the congestion rent subject. (See Markets+ ‘Equitable’ Solution to Seams Issues, Backers Say.)   

Alderete told RTO Insider in an email that the ISO will continue the conversation about the issue at the RIF’s October meeting, for which an exact date has not yet been announced.