Dive Brief:

• The California ISO believes it has identified the source of price spikes in its fledgling energy imbalance market, and told federal regulators last week that it would need to implement certain changes to better recognize capacity available in the market. 
• The grid operator told FERC that a failure to recognize capacity held by PacifiCorp led to apparent shortages and subsequent price spikes.
• FERC opened an investigation into the imbalance market last month, which had experienced problems since it launched late last year.

Dive Insight:

In a filing with federal regulators last week, California's grid operator described price spikes in its energy imbalance market as "excursions and infeasibilities," but also said that it had discovered the cause: the system's inability to recognize capacity held in reserve by PacifiCorp. 

California ISO had said the price spikes were the result of transitional issues and requested FERC allow a year-long waiver to give the system more flexibility in setting marginal economic bids. Federal regulators rejected that idea, finding insufficient evidence to back the operator's theory, and instead opened an investigation. 

In its filing, the ISO said it is in the process of assessing "the flexible ramping requirement for PacifiCorp’s two balancing areas based on the collected data for the actual real‐time imbalance conditions."

Portland-based PacifiCorp began operating its Energy Imbalance Market system in parallel with the California ISO system last year. Two weeks ago the ISO and PacifiCiorp announced they had signed a memorandum of understanding indicating PacifiCorp would "explore full participation in the ISO as a Participating Transmission Owner."

The agreement will result in a joint study on the feasibility and potential benefits of PacifiCorp joining the ISO's market.