Eyeing a launch date of November 2007, Cal-ISO at last has come forward with plans for revamping its widely disparaged wholesale market design. The formal proposal, known as the MRTU (Market...
Squeezing Scarcity From Abundance
California's pursuit of a centralized administrative solution in reliability hinders everyday operational issues.
to meet equipment failure and an additional margin to reflect capacity load uncertainty. For integrated utilities in the rest of the WECC, the determinations are relatively simple. Each utility is tasked with procuring sufficient capacity through construction or contract to meet WECC standards.
However, California is considerably more complex because it has three governmental institutions with responsibility for setting reliability standards: the PUC, the CEC, and the Cal-ISO. 6 Complicating the situation, the ISO serves only a portion of the state, and the PUC regulates only privately owned utilities. (The PUC will require a reserve margin of 15 to 17 percent in 2006 for the utilities under its jurisdiction.)
Although the Cal-ISO is deeply committed to a "time-on-target" policy where operational reserves are acquired on a daily basis, in practice this leaves it in the position of always driving too fast for its headlights. Its choice appears to be based on the assumption that reserves will always be available at the last moment. Despite substantial rhetoric to the contrary, there is no a priori reason why a regional transmission organization needs to purchase reserves at the last moment, nor is it entirely clear where this concept originated. 7
Cal-ISO's recent report states:
Snow-pack/hydro conditions in neighboring regions is one factor that can affect ISO imports. Typically, hydro conditions have more effect on the amount of energy (MWh) imported into the ISO control area throughout the season, rather than affecting the amount of import capacity (MW) available at peak. However, in severe drought conditions, neighboring regions' water levels may be too low to offer this spare "peaking" capacity during periods of high ISO demand. For 2005, various trade journals and other sources have reflected concern, and have debated over hydro conditions in the Pacific Northwest (Oregon, Washington, and British Columbia). Currently Northwestern 2005 snow equivalents range from 20 to 30 percent of average in the Oregon and Washington Cascades, to 70 percent in the upper Snake River area. British Columbia has faired somewhat better so far, reporting near average snow water equivalents.
"Runoff at the Dalles" (Columbia River flow-through at the Dalles) is another common indicator of Northwest hydroelectric availability. Recent reports have forecasted the 2005 Dalles runoff at 60 to 66 percent of average. By comparison, 2004 runoff at the Dalles was roughly 82 percent of average, while runoff during 2001's drought conditions was around 54 percent of average. 8
While Cal-ISO was correct that forecasted flows for the summer of 2005 were significantly lower than average, the reality was not terribly bleak. The project capacity margin for the Pacific Northwest for summer 2005 was 54.9 percent-27,722 MW at system peak. As always, these calculations are made assuming drought conditions. 9 Since transmission limitations from Oregon to California reduced the potential supply of capacity to 7,700 MW, the likelihood that capacity availability in the Pacific Northwest would be scarce was slight. 10
For the summer of 2005 at least, the availability of capacity imports was an institutional problem, not an engineering one. Cal-ISO calculated that assumed capacity would be unavailable on a