On May 19, 2014, FERC granted the California Independent System Operator Corporation’s (“CAISO”) petition for limited waiver of certain sections of its tariff that apply a minimum performance threshold to resources providing regulation services. CAISO had requested the waiver because a significant number of resources were failing to meet the minimum threshold.  FERC approved the requested waiver, finding that the waiver was limited in scope, resulted in no undesirable consequences, and benefited customers.

In 2012, CAISO proposed tariff revisions in compliance with Order No. 755, regarding compensation for frequency regulation services.  CAISO’s proposed changes established a minimum performance threshold for regulation providers.  Specifically, CAISO proposed to measure a resource’s accuracy by sending control signals in four-second increments and averaging a resource’s responses over 15-minute intervals during the calendar month.  If the resource failed to achieve a minimum threshold of 50 percent accuracy each month, CAISO required the resource to be recertified.  On September 20, 2012, FERC conditionally accepted CAISO’s proposal and directed CAISO to conduct an operational review using one year of data after the proposal’s implementation. 

On January 10, 2014, CAISO requested a limited waiver of the minimum performance threshold because a large number of resources failed to meet the threshold, although CAISO argued that the overall performance of the resources under the threshold did not impact the reliable operation of the grid.    Because resources were providing reliable service while failing the threshold, CAISO sought to suspend the threshold in order to evaluate its calculation, which is based on a simple average of accuracy adjustments over a month.  CAISO also believed that a limited waiver was necessary to assess the reasons resources were performing below the threshold.

In the May 19 Order, FERC found the waiver was limited in scope because it applies for the limited time period from June 1, 2013 through December 31, 2014.  FERC also found that granting the waiver would not result in undesirable consequences, but instead would result in benefits to customers, because (1) the participation of resources that failed the threshold had no effect on system reliability; (2) requiring these resources to recertify might cause operational disruptions; and (3) the waiver will provide CAISO time to work with stakeholders to study the efficacy of the threshold design. 

A copy of the order is available here.