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CAISO board approves Aliso Canyon plan to improve gas-electric coordination

TheCalifornia ISO boardof governors on May 4 approved a plan aimed at improving gas and electriccoordination and heading off reliability risks due to the of the Aliso Canyonnatural gas storage facility.

Themulti-month leak at the storage facility was resolved in February. The facilityis down to about a fifth of its capacity, but state regulators have saidoperator Southern California GasCo. cannot inject more gas into the field until the utility provesits wells are safe. A task force made up of CAISO, the California EnergyCommission, California Public Utilities Commission, ,and SoCalGas is assessing risks that the limited operation of the facilityposes to gas and electric markets and exploring mitigation measures.

Inearly April, that task force released an assessment and action plan to addressreliability risksposed by the situation, which some parties have claimed could include blackoutsif there's not enough gas available to supply power plants.

Asidefrom taking part in the task force, CAISO also launched a stakeholder processto explore ways to mitigaterisks to gas and electric markets to avoid electric service interruptions. Aspart of that effort, CAISO management proposed operational tools and marketenhancements to address limitations resulting from the loss of Aliso Canyon.

In aMay 2 memo to theboard, Keith Casey, CAISO's vice president of market and infrastructuredevelopment, said the operational tools will enable CAISO operators to managegas usage. "These tools are designed to reflect gas limitations in the ISOmarket and to minimize electric generation dispatch that would otherwiseoperate outside gas system limitations," the memo said. "This willavoid further exacerbating gas system conditions and contributing to thelikelihood that gas curtailments will result in the disruption of electricservice in the area."

Meanwhile,the market enhancements will give generators more ability to reflect gas systemlimitations and gas prices in their bids submitted to the CAISO market and willresult in the market dispatching generation in a way that is consistent withgas system limitations to maintain reliability.

Theoperational tools include one to give CAISO operators the authority to reservetransfer capability on internal transmission paths and another to reduce theamount of ancillary services procured from resources in Southern California tomake sure the markets procure ancillary services that have access to sufficientfuel to respond to a contingency event.

Oneof the market modifications is to increase the gas cost estimate that is usedto calculate the ISO real-time market commitment cost bid cap and defaultenergy bids for generators on the SoCalGas and systems, a change that will allow these generators' real-time bid prices tobetter reflect gas system limitations and gas prices.

"Thisgreater bidding flexibility will increase the likelihood that the ISO marketwill only dispatch these generators for local needs and not for system energythat can be provided by generators not subject to gas limitations in otherareas of the electric grid," the memo said.

Thememo noted that if the board approved the proposal, CAISO management will filetariff revisions with FERC asking the agency to consider the mitigationmeasures quickly so they can take effect in early June.