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Cal-ISO applies to tweak rules on demand response, availability penalties

Highlights

ISO seeks to use demand response sooner in emergencies

Plan would exempt more outages from availability penalties

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The California Independent System Operator has asked the Federal Energy Regulatory Commission to approve two rule changes so it can call on demand response sooner during emergencies and limit certain availability penalties during outages.

The demand response changes could affect the order in which the ISO dispatches resources when prices are high. And while the other proposal would exempt more resources from penalties meant to ensure resource availability, the ISO said the change should not hurt reliability.

Current rules only allow the ISO to call on its so-called reliability demand response resources after it has issued a warning notice and just before it asks for help from neighboring balancing authorities.

RDRR PROPOSAL

The ISO proposed Thursday rule changes (ER19-1561) so it can call on RDRR any time after issuing a warning, which is an operational notification that the grid operator might dip into its reserves. Warnings are rare, so by the time the ISO issues one, the grid operator really needs flexibility, ISO staff said last month.

"At that point, things are happening so fast, we really need all hands on deck," Delphine Hou, the ISO's manager of state regulatory affairs, said at a March 15 web conference on the issue. The ISO said the high bid price of RDRRs, which is about $950/MWh, still will limit their use.

The California Large Energy Consumer Association had raised concerns that the change could needlessly halt production at participating manufacturing plants when other resources could have met the ISO's need. CLECA noted that some RA facilities are bidding at the $1,000/MWh bid cap, and said that RDRR could be triggered before price-responsive RA resources.

The ISO told FERC that it had reached out to parties that had concerns, including CLECA, Southern California Edison and the California Public Utilities Commission. But it appears that the ISO made no changes to the proposal, which simply deletes one sentence from the tariff.

RAAIM EXEMPTION

Meanwhile, the ISO also filed a proposal to expand an exemption from Resource Adequacy Availability Incentive Mechanism penalties during outages. RAAIM creates financial incentives for resources providing resource adequacy capacity to meet their availability obligations, the ISO explained.

Current rules exempt resources from RAAIM penalties during certain forced outages, including outages that are outside of a resource's control. Until last year, all planned outages were also exempt from RAAIM. But in May, the ISO made rule changes that exposed RA resources to RAAIM for planned outages beyond their control, the ISO noted.

So the ISO Thursday proposed (ER19-1562) to exempt from RAAIM both forced and planned outages that are outside a resource's control. It reviewed outage history and found that the change would lead to a 1.77% increase in the amount of outages that are exempt from RAAIM. "Accordingly, the [ISO] does not foresee a reliability impact or degradation of the RA program by making these changes," the filing said.

-- Kate Winston, kate.winston@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com