News April–June 2007
News Release: April 19, 2007 | View Printable PDF Version |
Docket No. ER06-615-00, et al. |
Commission largely reaffirms approval of California electricity market reforms
The Federal Energy Regulatory Commission today largely reaffirmed a prior order
approving power market reforms in California, reiterating the Commission's view that
the reforms are necessary to help prevent a recurrence of the energy crisis that roiled
California and neighboring Western states in 2000 and 2001.
The Commission granted in part and denied in part petitions for clarification and
rehearing of its September 2006 order approving a filing by the California Independent
System Operator (CAISO) to implement its proposed Market Redesign and Technology
Upgrade (MRTU) tariff. While today's order accepted several suggestions that will
further improve the MRTU tariff, the Commission stood by its prior finding that MRTU
is just and reasonable.
Chairman Joseph T. Kelliher observed: "Our goal throughout our lengthy review
of the MRTU proposal has been and continues to be avoiding a repeat of the energy crisis
that occurred seven years ago. The MRTU tariff further fixes flaws in the California
market design that contributed to the crisis and should help promote electricity supply
additions that will help avert future shortages."
In today's order, the Commission stated that it "continues to believe that [the
MRTU tariff will help avert a repeat of California's energy crisis] by, among other
things, ensuring sufficient resources, fixing flawed market rules, increasing price
transparency, improving transmission congestion management, enhancing market power
mitigation and streamlining the CAISO's daily operations."
The Commission said that it remains sensitive to the "seams" concerns raised by
parties outside the CAISO-controlled grid, noting that the Commission held a technical
conference in Arizona late last year to solicit input on the issue. Today's order notes that
the conference was "informative and helpful."
While the conference identified several pre-existing seams issues in the West,
conference participants "generally agreed there were no new seams issues created by the
MRTU proposal that necessitated a delay in its implementation in 2008," the
Commission said. Today's order addresses the various seams issues in detail.
"We find that it is imperative that the CAISO and neighboring control areas
continue to work collaboratively to mitigate or resolve the pre-existing seams issues. We
believe this structured approach is necessary to bring stakeholders to the table and their
issues to closure. Resolving these issues will serve to ensure greater service reliability
across the Western interconnect at the lowest reasonable rates for consumers," the
Commission said.
Significant elements of the MRTU tariff that the CAISO plans to implement as of
January 31, 2008, include:
- A day-ahead market for trading and scheduling energy;
- A more effective transmission congestion management system;
- Improved market power mitigation measures;
- System improvements to increase operational efficiency and enhance reliability;
- A more transparent pricing system;
- The opportunity for demand resources to participate in the CAISO markets under comparable requirements as supply; and
- A process that respects the resource adequacy requirements established by the states or local regulatory authorities, with provisions to allow the CAISO to procure additional capacity to meet forecasted needs.
R-07-24
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