Dive Brief:
- The California ISO has adopted a market-based approach to acquiring backstop capacity in the event of resource insufficiency or if market units are not offering capacity.
- The new mechanism replaces a single fixed price approach set to expire in February 2016.
- The ISO board of governors also said the Energy Imbalance Market, which went live in November 2014, continues to operate well, with processes improving and customers beginning to see savings.
Dive Insight:
California's grid operator will move towards a market-based approach to acquiring backstop capacity next year, when the current administrative price mechanism will expire.
In a statement, the board said the proposed mechanism is the result of a significant stakeholder process in which an agreement was reached on rules that allow energy prices to reflect "changing market conditions and a reasonable opportunity for suppliers to recover their fixed costs."
The process will solicit offers annually, monthly, and daily and will run whenever the ISO determines there is a need for backstop capacity, according to a memorandum to the board describing the proposal.
The current fixed-price mechanism is set to expire Feb. 16, 2016. The market-based proposal will need to be reviewed by FERC.
Separately, the board also reappointed Dr. James Bushnell to the Market Surveillance Committee for a new three-year term that ends March 2018.
The board was also briefed on the Energy Imbalance Market. Power flows between the ISO and the market’s first participant, Portland-based PacifiCorp, are providing cost savings to consumers in both regions, the board said.
