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Cal-ISO should name gas plants that went offline, led to outages: Public Citizen

Highlights

Two gas power plants went offline Aug. 14, 15

Contributed to statewide rotating power outages

Public Citizen questions virtual bidding suspension

Houston — The natural gas-fired power plants that had unplanned outages and contributed to forced power outages across California Aug. 14 and 15 should be identified in the best interest of the public, Public Citizen said in a letter to the US Federal Energy Regulatory Commission and the California Independent System Operator.

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After the unexpected loss of a 475-MW natural gas-fired plant Aug. 14, Cal-ISO issued a stage 3 emergency ordering utilities to implement rotating power outages to protect grid stability. A similar situation occurred again Aug. 15 after the loss of 1,000 MW of wind power across the state Aug. 15 in addition to the unexpected loss of a 470-MW gas-fired power plant.

It was the first time the ISO declared a stage 3 emergency and forced power outages since the 2000-01 deregulation crisis caused by systemic fraud and manipulation by power sellers and natural gas suppliers.

"The easiest method for power sellers to engage in market manipulation is through capacity withholding: creating artificial shortages to push prices sky high," Tyson Slocum, Public Citizen energy program director, wrote in the Aug. 24 letter. "The California market was plagued by such nefarious conduct during the prior deregulation crisis, and CAISO then—as now—refused to identify the culprits. It wasn't until much later that the public learned that power plants controlled by Enron and others intentionally shut down the power plants to trigger rolling blackouts."

When asked for a response to Public Citizen's letter, Cal-ISO spokeswoman Anne Gonzales said, "We do not provide resource specific performance information because it is confidential."

Power outages become political

The Aug. 14 outages lead to a "massive spike" in real-time prices exceeding $1,000/MWh, Slocum wrote.

The natural gas power plant outages may have been "inadvertent and accidental. But the public must know the identities of the power plants that experienced unplanned outages, or that were unavailable when called upon in the run-up to Stage 3 emergency declarations," according to Slocum.

The nonprofit consumer advocacy organization cited President Donald Trump's tweet that reads "In California, Democrats have intentionally implemented rolling blackouts — forcing Americans in the dark. Democrats are unable to keep up with energy demand."

With the issue now becoming political, it is necessary to publicly identify the owners of power facilities that experienced failures that triggered the blackouts, according to Slocum.

"CAISO has justified its refusal to identify the names, claiming they don't own or operate the assets—CAISO must therefore clarify whether they lack the authority to disclose the identities of assets on their grid, or if they are simply refusing to do so," Slocum wrote in the letter. "It is a common feature of non-power markets for the identities of significant production assets to be publicly identified when they experience unscheduled outages. For example, oil refineries are always publicly named when they go offline, as their outage has a significant impact on commodity trading markets."

Explanation for convergence bidding suspension

Another issue Slocum raised in the letter was Cal-ISO's suspension of convergence bidding for trading days Aug. 18-21, which suspended the ability of all scheduling coordinators to submit virtual bids as it is effecting the ISO's ability to maintain reliable grid operations.

"This admission that a key feature of Cal-ISO market design actually inhibits reliability is a serious liability and CAISO must detail the problems that led to the suspension of virtual trading," according to Slocum, adding Cal-ISO must explain the circumstances that led this key trading market to "detrimentally" impact reliability.

FERC approved Cal-ISO's ability to suspend such trading on June 2, 2016 when it "may run contrary to the efficient economic solution of the market," according to Slocum's letter.

Background

A record-breaking heatwave hit California Aug. 14-21 and led the ISO to issue flex alerts, restricted maintenance operations notices and stage 2 and 3 emergency declarations. Additional Stage 3 emergencies and power outages were avoided due to voluntary conservation in the following days.

A stage 2 emergency occurs when the ISO has taken all mitigating actions and is no longer able to provide its expected energy requirements. It requires ISO intervention in the market, such as ordering power plants online.

A stage 3 emergency means the ISO is unable to meet minimum contingency reserve requirements and load interruption is imminent or in progress. Utilities are notified of potential electricity interruptions.

The ISO also solicited any available capacity using its Capacity Procurement Mechanism authority in order to address system needs caused by the current heat wave, according to an ISO notice.