In a key advance for Western power markets, the California Independent System Operator this week asked federal regulators to approve rules for a region-wide day-ahead market.
“This market enhancement will increase reliability, decrease costs to ratepayers, optimize generation dispatch across a broader footprint, and help participants and the states they serve achieve clean energy policy objectives,” CAISO said in its Aug. 22 application with the Federal Energy Regulatory Commission.
The day-ahead market positions power supply to meet demand forecasts across the market’s footprint and identifies economic transfers between participating areas, CAISO said in a summary of the proposal.
CAISO asked FERC to approve two sets of tariff revisions. First, it proposed changes to its day-ahead market to address challenges caused by increasing system variability and uncertainty. Second, it proposed extending its day-ahead market to balancing areas in the Western Energy Imbalance Market, or WEIM. Both initiatives received wide support in extensive stakeholder processes, according to the grid operator.
In its Day-Ahead Market Enhancements initiative, CAISO proposed two new market products – imbalance reserves and reliability capacity – to address the growing magnitude of imbalances in the supply and load forecast between the day-ahead and real-time market, the grid operator said.
Under the Enhanced Day-Ahead Market, WEIM participants from across the West can join EDAM and settle all balancing area loads and resources in the day-ahead timeframe as well as all imbalances between day-ahead positions and the real-time market, CAISO said. The WEIM, a real-time market used to balance shifts in supply and demand, has 22 participants, including NV Energy, Northwestern Energy and Pacificorp. The market participants account for about 80% of the load in the West.
CAISO asked FERC to approve its proposal by Dec. 21. The grid operator aims to launch the regional day-ahead market in the spring of 2025.
CAISO faces competition from the Southwest Power Pool in bringing a more robust power market to the West, which is made of 38 balancing authority areas responsible for meeting supply and demand within their footprint.
The Southwest Power Pool is developing an energy market called Markets+. In April, the grid operator said 31 entities, including Arizona Public Service, NV Energy and Xcel Energy – Colorado, have joined efforts to develop the day-ahead market.
The Natural Resources Defense Council supports both efforts, but would prefer a single day-ahead market for the West.
“A larger, single, day-ahead market will amplify financial benefits for the region and boost reliability by significantly expanding the capacity for resource sharing,” Kelsie Gomanie, an advocate in NRDC’s climate and clean energy program, said in a late-April blog post. “A dual-market structure could do the opposite by splitting the region and limiting resource sharing.”
Ultimately, NRDC would like to see a Western regional transmission organization, according to Gomanie.
