Staff Presentation: December 17, 2020
Docket No. EL21-19-000
Item E-3

Good morning, Chairman and Commissioners.  Item E-3 is a draft order to show cause that establishes a proceeding under section 206 of the Federal Power Act to determine whether the California Independent System Operator Corporation’s (CAISO) Tariff is unjust and unreasonable and should therefore be revised.  Specifically, the draft order finds that the heat events of August 14-19, 2020 may indicate that CAISO’s existing Tariff may be inadequate to ensure that sufficient resources are available to meet load and maintain system reliability.

Many of the pertinent facts have just been discussed by my colleagues in their presentation on the heat storm event, and these facts are covered in the draft order as well.  Moreover, the draft order describes a November 24, 2020 report from CAISO’s Department of Market Monitoring (DMM), which reviewed the system conditions and performance of CAISO’s day-ahead and real-time markets from mid-August to September 7, 2020.  Among other things, the DMM report stated that resource adequacy counting rules overestimate the actual capacity available from many resources during the critical early evening hours.  Specifically, DMM’s report found that the availability of demand response resources and wind and solar resources as a percentage of their credited capacity was significantly lower during the critical periods of time on August 14-15 when load shedding was initiated, than other types of resources, such as natural gas, hydroelectric, and nuclear resources.

The draft order specifies several areas of CAISO’s Tariff that may need to be revised to address the Commission’s concerns, including Tariff provisions concerning CAISO’s resource adequacy-related mechanisms, reliability must run arrangements, and forward scheduling.  In addition, the draft order directs CAISO to consider whether other Tariff changes may be necessary to ensure better resource availability and performance, including different approaches for incentivizing availability and performance by demand response and intermittent resources than what the Tariff currently provides.

The draft order directs CAISO to either: (1) show cause as to why its Tariff remains just and reasonable and not unduly discriminatory or preferential; or (2) explain what changes to its Tariff it believes would remedy the identified concerns if the Commission were to determine that the CAISO Tariff has in fact become unjust and unreasonable or unduly discriminatory or preferential and, therefore, proceeds to establish a replacement tariff.

CAISO’s response is due within 30 days of the issuance of the draft order.  Replies to CAISO’s response are due within 30 days of that response.  The draft order indicates that it is the Commission’s intent to identify and implement any necessary Tariff changes prior to the summer of 2021.

This concludes our presentation.

This page was last updated on December 17, 2020