On Wednesday May 7, FERC will host a conference in Washington, D.C. that might prove extraordinary. The commission staff promises not only to review the forward capacity markets now operating in...
Declaring Emergencies in California: The Realities of ISO Operation
day-ahead and hour-ahead markets. This volume is calculated by subtracting the total export from the total imports (including dynamics) for the ties connected to the CAISO control area. The majority of the time the CAISO Control Area is resource deficient, making imports significant to the CAISO's ability to serve system load.
For the example, imports still do not provide enough generation to meet load and operating reserve requirements. More often than not, the shortfall exceeds even the WSCC operating reserve requirement.
System operators usually have this sort of picture of the operating situation one day, and more often one hour, prior to the operating day and will draw upon all of its options to try to procure additional generation resources in advance of the expected period of shortage. Unfortunately, the CAISO has limitations in its authority and can only purchase sufficient energy in real time during the operating hour as allowed by its tariff. Since the CAISO cannot force suppliers outside its control area to provide power, the actual supply that is "available" to the CAISO is ultimately the supply that can be voluntarily sold and delivered to the ISO. It is at this point that the CAISO considers and negotiates during the operating hour (as appropriate) out-of-market purchases to meet reliability criteria when insufficient power is offered through the hourly energy markets. It is these out-of-market purchases that appreciably contribute to the high cost of electricity. Any resource deficiency is addressed by implementing the following: (1) Interruptible load curtailments, (2) Firm load curtailments, (3) Voluntary conservation, (4) Obtaining additional energy only available when stage emergencies are declared, and (5) Maintaining less that 7 percent of operating reserves.
The actual net interchange volume is calculated by subtracting the total export from the total import for the ties connected to the CAISO Control Area. Import levels have declined by 28 percent between 1999 and 2000 (see Figure 5), which has significantly contributed to California's current energy crisis.
While overall imports have been declining, the volume of imports scheduled into the forward market has deteriorated to crisis levels. As the examples show during declared emergencies, the CAISO seems to bring in additional imports than what was originally scheduled. However, this capacity often becomes available at out-of-market prices that extend well beyond the real-time market-clearing price. The CAISO is virtually held hostage to higher costs while it endeavors to keep the state's lights on.
CAISO's over reliance on real-time purchases demonstrates the lack of market incentives to pre-schedule in the day-ahead or even hour-ahead markets.
Meanwhile, resources on dynamic scheduling are virtually a part of imports into California. Dynamic scheduling generally refers to generation resources geographically located in one control area, which are dynamically scheduled by a second and separate control area. The CAISO has more information about these resources with some even on automatic generation control. These resources are scheduled in the forward markets through scheduled imports and are included in the pre-scheduled net interchange data presented above. There is a maximum total of 1,857 MW of dynamically scheduled resources available to the CAISO.