California Independent System Operator leadership on March 24 approved a wide-ranging set of rules meant to better prepare the electricity grid for high temperatures and surging air-conditioning demand this summer.
CAISO since the rolling blackouts of last August has been intensely working on the market enhancements for 2021 readiness initiative, about six months into the tenure of CAISO CEO and President Elliot Mainzer.
"The past month has been a very intense and consequential time for the ISO and its many partners, dominated by summer 2021 market enhancements and operational readiness, and very active and sometimes pointed stakeholder feedback," Mainzer said in written comments to the board.
In addition to the summer 2021 readiness measures, the board approved the first phase of CAISO's resource-adequacy enhancements, a new 2020-2021 transmission plan and another reliability must-run contract—this one for the Kingsbury cogeneration plant in Kern County to meet a system reliability need.
The Board of Governors approved each item at a March 24 virtual meeting. Also, as part of a consent agenda, the board approved rule changes specific to the Western Energy Imbalance Market regarding the resource-sufficiency test, which is meant to ensure there is adequate generation and that balancing authority areas don't have to lean on each other for power. The EIM Governing Body approved those rule changes earlier this month (see CEM No. 1632). Mainzer said that to respond to stakeholder concerns, CAISO will launch another initiative to address the resource-sufficiency test in early April.
Also approved in the consent agenda were fixes for an issue regarding market modeling of energy interchanges between EIM balancing authority areas and the ISO balancing authority area that caused operational issues during last summer's tight conditions.
The market enhancements for 2021 summer readiness initiative is a collection of market rule changes aimed at bringing in more supply and ensuring it gets its bid price. The first change approved by the board was a policy to provide "make-whole" payments for energy imports under certain tight supply conditions. This would be done in cases where settlement at market prices does not cover the energy bid price. The measure is meant to strengthen incentives to offer imports to the real-time market in times of tight supply by eliminating the chance that a supplier could be paid less than its bid price, CAISO said.
A second approved change will price energy based on the market's energy bid cap when the ISO is arming load to meet the ISO balancing authority area's contingency reserve requirement. Arming load refers to a practice whereby ISO grid operators contact electric distribution companies and have them configure their systems to immediately shed certain portions of their load in the event the ISO experiences an unexpected supply loss.
The third approved change included in the 2021 summer readiness package is to allow market participants to specify whether a reliability demand-response resource is eligible to be dispatched in hourly blocks, 15-minute intervals or five-minute intervals. Reliability DR resources are those that participate in investor-owned utility reliability-based and emergency-triggered DR programs, CAISO said, and can only be dispatched in emergency situations. The DR resources will be included in the ISO's real-time predispatch, and the changes allow reliability DR resources to set ISO market prices, CAISO said. This change will reduce the need for system operators to dispatch reliability DR resources manually and better allow the market to reflect the energy bid price of the resources, as well as improve market incentives during tight supply conditions, CAISO said.
The resource-adequacy changes approved by the board have three elements: a minimum-state-of-charge requirement for energy storage, fixes to the planned-outage process, and new authority to procure capacity to meet local-area efficiencies.
The interim minimum-state-of-charge requirement is meant to ensure energy storage is available when needed at evening peak periods, and will be imposed only during critical hours on days when supply is tightest. Storage operators will be able to drop the requirement in real time if system conditions change, and the minimum-charge requirements will be during hours directly prior to discharge times and not earlier in the day, CAISO Executive Director of Market and Infrastructure Policy Greg Cook said in a presentation to the board. According to Cook, some stakeholders were concerned the charging requirement would make it more difficult to participate in the real-time market, so CAISO restricted the times it would use the requirement and made it temporary. CAISO committed to undertaking a new energy storage enhancements initiative to replace the minimum-state-of-charge requirement by 2023.
For planned outages, the newly approved rule changes will require resources with resource-adequacy commitments to provide substitute capacity for planned outages. This is meant to improve reliability, since planned outages are not included in the RA planning reserve margin and the ISO cannot evaluate planned outages far in advance. According to CAISO, some stakeholders are worried that they might not be able to find such substitute capacity and that the substitution should not be required in months when there is excess capacity to cover outages. But CAISO believes the rules are justified, since RA should not be counted when there are planned outages and no replacement capacity, and the market should not bear the risk of the insufficient capacity due to planned outages.
"[A] resource should be available during the month it is providing resource adequacy or it should compensate another generator for meeting its obligation," Cook said in his presentation.
Finally, the third RA change approved by the board creates new capacity procurement mechanism authority to fix deficiencies in local capacity area energy. There has been increased reliance on availability-limited resources to meet local area resource-adequacy capacity needs, CAISO said. The grid operator expanded its local-capacity technical studies to ensure both sufficient capacity and energy, and the new CPM authority to make up for local area or subarea shortfalls was largely supported by stakeholders.
The 2020-2021 transmission plan approved by the board includes three reliability projects totaling less than $5 million, all in Pacific Gas & Electric's territory. Projects within the transmission plan include the Palermo-Wyandotte 115-kV line section reconductoring project; the Manteca No. 1 60-kV line section reconductoring project; and the Kasson-Kasson Junction 1 115-kV line section reconductoring project. Other projects were put on hold, including North of Mesa upgrades; the Moraga-Sobrante 115-kV line reconductoring project; and the Wheeler Ridge Junction Station project. CAISO determined the North of Mesa upgrades and the Wheeler Ridge Junction Station project could be replaced with energy storage.
Aspects of the transmission plan approved by the board include continuing to pursue low-emission strategies to address reliability needs, higher renewable-energy goals, and prudent and economic development of the transmission system, according to a CAISO presentation.
Finally, the board approved a reliability must-run agreement for the 34.5-MW Kingsburg cogeneration plant in Kern County. The owner had submitted a retirement notice in October 2020 to take effect this April, but CAISO denied the request. The plant is needed to meet system reliability needs and avoid violations of reliability standards, CAISO said. The natural gas-fired plant began operation in 1990 and supplies steam and processing services to the Sun-Maid Growers Cooperative raisin processing and packaging plant, and sells power to PG&E.
Most of the items approved by the board on March 24 also require approval by the Federal Energy Regulatory Commission.