When the applause dies down, the smart grid may turn out to be its own worst enemy. The California Independent System Operator (CAISO) explained this irony in comments it filed in May, after the...
Transmission & ISOs
Market Monitoring. Less than one month after it found anticompetitive behavior and asked to suspend trading in its own market for 10-minute nonspinning reserves, the New York Independent System Operator filed "Addendum A" to its Market Monitoring Plan, listing thresholds and cutoff points it will use to identify market abuses.
However, the ISO said it would impose mitigation measures only for conduct deemed "significantly inconsistent" with competition. That means conduct that produces a "material change" in either prices or guaranteed production cost payments in New York power markets. It defined "material change" as an increase of 200 percent (or $100 per megawatt-hour) in the hourly day-ahead or real-time locational marginal price (LMP) of energy at any location, or a 200 percent increase in daily guaranteed payments owed to a market participant.
Overall, the ISO will monitor three types of conduct related to power production or bidding. It offered examples for each type, along with threshold levels used to identify suspicious conduct:
- Physical Withholding. Refusing to offer bids to sell output from a power plant, falsely declaring a unit to be out of service, or running a unit at too low an output. Defined as (a) operating a unit at less than 90 percent of the ISO's dispatch instruction, or (b) withholding 10 percent or 100 megawatts of the capability of a single unit, or (c) withholding 5 percent or 200 MW of the total capability of a market participant.
- Economic Withholding. Bidding at "unjustifiably high" prices, either to avoid dispatch or to ensure that a bid sets the marginal market-clearing price. Defined as increasing a bid too much (such as 300 percent) above mean or median bids reflected in bids submitted during the previous 90 days for similar hours or load levels. The ISO added that bid increases above prior mean or median levels of $100 per megawatt-hour (for energy) or $50 per MW (for real-time spinning reserve) would also draw attention.
- Uneconomic Operation. Boosting unit output to uneconomic levels to create a transmission constraint and gain a benefit. Examples are running a unit above 110 percent of the ISO's real-time dispatch instruction, or scheduling energy at a locational marginal price less than 20 percent of the applicable base level (the mean LMP for the lowest-priced quartile of hours that the unit was dispatched over prior 90 days).
The ISO suggested it would not monitor markets outside New York. As it noted, "taking advantage of opportunities to sell at a higher price or buy at a lower price in a market other than a New York Electric Market shall not be deemed ... inconsistent with competitive conduct."
However, it acknowledged that by setting and disclosing the precise thresholds that trigger sanctions, it actually might influence decisions by generators. Thus, the ISO said it would monitor future conduct focusing on whether the very act of disclosure might require it to fashion an entirely new set of thresholds.
ISO Funding. The Midwest ISO asked the Federal Energy Regulatory Commission for authority to issue $200 million in debt, saying it