Dive Brief:

• The California ISO has pledged to work with federal regulators to improve its energy imbalance market after price spikes raised concerns at FERC, Argus reports.
• The agency opened an investigation into the imbalance market, which launched late last year, when volatility was higher than anticipated.
• CAISO had requested a waiver of some market rules, telling regulators the volatility resulted from the market just beginning to come together.

Dive Insight:

FERC didn't buy the California grid operator's explanation that high volatility in the fledgling energy imabalance market was simply the result of a nascent market beginning operations. Regulators have opened an investigation and called for a technical conference on the issue.

Now, Argus reports the ISO is pledging to work with federal regulators. At a planning forum last week ISO market validation manager Guillermo Bautista said "we are going to have a technical conference and work out the issues together... We will continue to report performance to FERC."

California's grid operator requested FERC extend for a year a waiver that allows more flexibility to setting the marginal economic bid. The commission rejected the proposal in a March 16 order, saying CAISO "failed to establish that the imbalance energy price spikes are continuing to occur primarily as a result of the transitional issues it identifies."

Regulators also said the ISO's proposal failed to include measures to ensure new entrants joining the energy imbalance market are able to confirm market readiness and identify operational issues prior to full activation.