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California Realities and Federal Plans

A tale of two energy worlds.

Fortnightly Magazine - August 2009

require reporting of GHGs from all sectors of the economy. The rule would apply to fossil-fuel suppliers and industrial gas suppliers, as well as to direct GHG emitters, including manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHGs, including carbon and methane. According to the EPA, approximately 13,000 facilities, accounting for approximately 85 to 90 percent of GHG emitted in the United States, would be covered under the proposal. Under the proposed rule, the first annual report would be submitted to the EPA in 2011 for calendar year 2010 emissions, except for vehicle and engine manufacturers, which would begin reporting for model year 2011. Such national, economy-wide monitoring and reporting of GHG emissions could help support a national GHG cap-and-trade registry and, in turn, trading regime.

The draft ACES bill passed by the House in June included RPS with targets of 6 percent of national power from renewable power sources by 2012 and 20 percent by 2020.

CAISO Catch Up

Effective April 1, 2009 CAISO implemented its MRTU initiative that is intended to:

• Enhance wholesale market efficiencies through use of a more accurate grid model;
• Provide more transparent prices for the generation and delivery of energy;
• Enhance electric reliability by coordinating with the California Public Utility Commission’s Resource Adequacy program; and
• Prevent market manipulation by market participants.

MRTU is intended to prevent the market manipulation that led to the statewide energy crisis in 2001, when virtually all energy came through the California Power Exchange, which (along with giant utility PG&E) filed for bankruptcy. CAISO President Yakout Mansour has said that MRTU will provide “the flexibility and visibility of an intelligent grid,” creating power-trading transparency that shows the cost of generating power at a certain location, as well as the actual delivery price. This is possible because MRTU encompasses 3,000 pricing nodes, a level of detail that reveals key market signals and allows more efficient addressing of grid logjams to prevent having to buy more expensive power at the last minute.

MRTU is actually two projects. The first is the revised market design. MRTU will use a full network model to analyze energy schedules and address grid bottlenecks the day before the schedules are due to run. Identifying and resolving congestion problems a day in advance, when more options are available, is intended to ensure a more reliable grid and to reduce costs. With MRTU, CAISO fine-tunes energy schedules to address congestion and meet energy needs in the day-ahead time frame and continues that process right up until electricity is consumed. MRTU also allows for locational marginal prices (LMPs) that reflect the true cost of generating and delivering electricity at specific locations. This information helps CAISO choose the less-costly option when more power is needed to keep the grid balanced.

The second project is the implementation of the technology necessary to allow the redesigned market to operate. This aspect of the project implements the hardware and software needed to manage all aspects of the market from the dispatch of generators