Pink Pylons 1218

Federal energy regulators expressed concern about electric grid reliability in California, but voted against a Federal Power Act Section 206 inquiry into whether CAISO's tariff is just and reasonable.

Federal energy regulators on Dec. 17 narrowly voted down a proposal that could have forced the California Independent System Operator to replace its tariff to ensure system reliability.

The Federal Energy Regulatory Commission voted 2-1 against the proposal, with Chairman James Danly voting in favor of adopting the Federal Power Act Section 206 draft order.

"I think there is an urgent need for action in CAISO," Danly said at the meeting. He said the events leading to the August blackouts will likely be repeated, as there is a reliance on intermittent resources in California and only two-thirds of demand response was available at the time. He said it is FERC's job to ensure rates are just and reasonable.

But FERC member Neil Chatterjee said that while serious work is needed to address CAISO's market, an FPA Section 206 proceeding would be a distraction as CAISO undertakes a long list of reforms. It would also create an ex parte situation where FERC and CAISO would not be able to communicate and collaborate.

"I don't think a 206 proceeding is appropriate at this time," Chatterjee said, stressing the last three words. He noted that CAISO has already proposed that the California Public Utilities Commission increase the planning reserve margin from 15 percent to 20 percent, and has undertaken a resource-adequacy enhancements initiative and other steps (see related story).

FERC member Richard Glick also voted against the proposal, saying FERC should not interfere with CAISO's efforts.

At the meeting, FERC staff gave a presentation on the August blackouts, echoing findings from a root-cause analysis that mid-August temperatures reached record highs. Staff also noted that CAISO's planning has focused on peak load hours, not net peak load hours that reflect demand after rooftop solar is taken into account. CAISO faced similar conditions in September, but avoided blackouts. During the August event, most generation resource types did not reach expected resource-adequacy levels, and there were significant variations in solar-photovoltaic generation during peak and net peak load times, FERC staff said. Demand response also fell below dispatch levels.

The draft order to show cause would have established a proceeding under FPA Section 206 to determine whether CAISO's tariff is unjust and unreasonable and needs to be revised. It specifically says the August outages could indicate that the existing tariff is insufficient in providing reliability [EL21-19].

The draft order questioned whether CAISO's tariff needs to be revised, including RA-related mechanisms, reliability-must-run contracts and forward scheduling. It also directed CAISO to consider what other tariff changes might be necessary to assure better resource availability, including new incentives for availability and performance by demand-response and intermittent resources.

Newly seated Commissioner Allison Clements voted "not participating."

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