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A Vision for Trasmission: How the RTOs Stand

And where the trouble spots lie in FERC's grid plan.
Fortnightly Magazine - August 2002

practiced in the Northeast. "Given the relative success of markets such as PJM and NYISO, and the past problems in California, IEP is wary of proposals that California blaze new and untested trails," the organization said. "CAISO's proposed belt, suspender, rope, and noose combination of must-offer unit commitment, local market power mitigation (through bid caps), AMP, damage control bid caps (at levels far below other markets), and a competition index is excessive and will ultimately harm the consumers it seeks to protect," the producers added.

The ACAP Rule. Many players opposed CAISO's proposed ACAP (available capacity) obligation to assure generation supply. CAISO would couple its ACAP regime with a must-offer rule and a residual unit commitment (RUC) process, to cover any "gap" that might exist between CAISO's forecast of day-ahead load and the total amount of supply resources that load-serving entities actually clear though the day-ahead market.

Power producers complained that the three-part protocol would fail to compensate them for startup and minimum-load costs, or take account of operating limits dictated by emissions rules. Edison Mission said that if CAISO forces plants to be available for dispatch to meet morning load, but they shut down after the afternoon peak, with that pattern repeating daily, a plant could quickly exhaust a year's worth of emission credits, because of too many cold starts.

The Bonneville Power Administration (BPA) also has attacked CAISO's ACAP plan, arguing that out-of-state suppliers who sell power into California could suffer discrimination.

The problem, says BPA, stems largely from the fact that operators in other control areas in the Western Interconnection cannot achieve automatic generation control or dynamic scheduling across control area boundary lines. That means that outside suppliers lack the capability to comply with CAISO instructions for intra-hour redispatch. In fact, said BPA, suppliers outside CAISO lack even the permission to adjust mid-hour configuration, as western reliability rules don't permit such deviations.

"The term 'deviation' is a misnomer in this situation," explained BPA attorney Lara Skidmore, "because the import supplier is not deviating from the amount scheduled according to the practices of its control area.

"Rather," she explained, "it is the ISO that is deviating from the amount it knows the importer is obliged to deliver. It is inappropriate to penalize importers for their inability to follow these ISO dispatch instructions, and it is discriminatory for the ISO to impose 10-minute dispatch on resources that are unable to follow its instructions."

This problem will apply as well to CAISO's redesign of its 10-minute real-time market, which also requires mid-hour re-dispatch unavailable to imports.

"As a result," said Skidmore, "imports are paid the 10-minute price even when those prices are below the bid price." That risk, she says, "makes the ISO real-time market less desirable than other West Coast markets, which have price certainty for sellers."

In instructive fashion, Sempra faulted the ACAP/RUC plan as focused wrongly on energy supplies, rather than arranging for capacity, or pure availability, as under UCAP and ICAP (installed capacity) plans in effect back east.

CAISO proposes to minimize the total cost of serving the