On April 30, 2021, FERC accepted the California Independent System Operator Corporation's ("CAISO") submission of two proposals to revise its Tariff to amend provisions for its Energy Imbalance Market ("EIM"). In its first set of EIM enhancements, CAISO proposed to require EIM participants to settle deviations in their base schedules through CAISO's market at a common location and price, eliminating EIM participants' option to settle deviations in their base schedules bilaterally. In its second set of EIM enhancements, CAISO proposed to allow EIM participants the option not to have CAISO settle unaccounted for energy within an EIM participant's balancing authority area ("BAA"), which results in a charge or credit to the affected EIM entity and can cause potential cost shifting in an EIM entity's unaccounted for energy settlement. FERC accepted CAISO's first proposal to be effective May 1, 2021, and the second set to be effective October 1, 2021.
In its first set of EIM enhancements, CAISO proposed to require EIM participants to settle deviations in their base schedules through CAISO's market at a common location and price, eliminating EIM participants' option to settle deviations in their base schedules bilaterally. CAISO stated that these changes will reduce the potential for cost shifting BAAs because, when wheeling imbalance energy through multiple EIM BAAs, the settlement process may pay or charge one EIM participant for a transfer into or out of its BAA, but not pay or charge for the opposite leg. CAISO also proposed to stop considering uninstructed imbalance energy and unaccounted for energy quantities in the bid cost recovery ("BCR") uplift transfer adjustment formulation because those determinants do not track with cost causation. CAISO stated that unaccounted for energy is a post-market accounting mechanism rather than a determinant of resource commitment or dispatch, and that uninstructed imbalance energy is not driven by the deviations causing imbalance energy. As such, these quantities should be removed from the calculation of the BCR adjustment.
FERC found that CAISO's proposal requiring EIM participants to settle deviations in their base schedules through CAISO's market at a common location and price was just and reasonable because it more closely aligns EIM settlement with CAISO's real-time market settlement and eliminates inappropriate cost-shifting between EIM BAAs that could occur when imbalance energy is wheeled through multiple EIM BAAs. FERC also found that CAISO's BCR proposal was just and reasonable because the it removes uninstructed imbalance energy and unaccounted for energy quantities from the BCR uplift allocation that are not clearly drivers of BCR costs. FERC noted that this revised methodology aligns the EIM BCR uplift allocation with CAISO's real-time market BCR uplift allocation.
In its second set of EIM enhancements, CAISO proposed to allow EIM participants the option not to have CAISO settle unaccounted for energy within an EIM participant's BAA, which results in a charge or credit to the affected EIM entity and can cause potential cost shifting in an EIM entity's unaccounted for energy settlement. CAISO also proposed to move the final hourly EIM base schedule submission deadline from 40 minutes to 30 minutes before the start of each operating hour and running an additional resource sufficiency test 30 minutes before the hour. CAISO explained that moving the timeline 10 minutes closer to the start of each operating hour would allow base schedules and the EIM's resource sufficiency test to include more timely and accurate information than currently used, which would lead to lower amounts of uninstructed imbalance energy.
FERC agreed that updating the calculation for EIM participants' unaccounted for energy was just and reasonable because it avoids unnecessary cost shifts among EIM participants' transmission customers. FERC further found that that allowing EIM participants to submit timely and accurate base schedules closer to the operating hour is an improvement over the current Tariff rules.
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