On October 22, 2014, the Commission denied a complaint filed by Powerex Corp. seeking relief from $937,927.33 in imbalance energy charges assessed against it by the California Independent System Operator Corporation (“CAISO”) for its failure to deliver prescheduled energy during a 2013 wildfire in California and Nevada.
In its May 30, 2014 complaint, Powerex contended among other things that it was assessed unjust and unreasonable imbalance energy charges by CAISO for a failure to deliver prescheduled energy during the August 18, 2013 Spring Peak Fire, which caused transmission outages and corresponding reductions on the Pacific DC Intertie. Specifically, Powerex alleged that CAISO had failed to determine that the fire qualified as an “Uncontrolled Force” under the CAISO tariff—a determination that would have relieved Powerex of an obligation to pay imbalance charges for its failure to deliver the power it had prescheduled in the day-ahead market.
Section 14.1 of the CAISO tariff provides that market participants will not be deemed to be in default of any tariff obligation “if they are prevented from fulfilling that obligation due to the occurrence of an Uncontrollable Force.” The tariff includes “fire” within this definition. In its complaint, Powerex argued that the fire and subsequent inability to deliver its power over the Pacific DC Intertie on August 18, 2013 were circumstances beyond its control, and it should therefore be protected from imbalance energy charges assessed under this section of the CAISO tariff.
In its June 30, 2014 answer to the Powerex complaint, CAISO argued that section 14.1 of the tariff was inapplicable because the Uncontrollable Force provision excuses a market participant from being in default of a tariff obligation. According to CAISO, Powerex was in default of a financial obligation—the payment of imbalance energy charges. CAISO argued that this financial obligation, arising from a deviation from the day-ahead schedule, was simply a consequence of market participation rather than a failure to meet a physical performance obligation under the tariff, and a risk that market participants may take into account when determining their bids. CAISO contended that the Spring Peak Fire did not prevent Powerex from meeting this financial payment obligation.
In denying Powerex’s complaint, the Commission held that Powerex had failed to demonstrate: 1) that CAISO’s assessment of imbalance energy charges was unjust, unreasonable, or unduly discriminatory or preferential; or 2) that CAISO had violated its tariff in assessing the charges. The Commission reasoned that Powerex, like other market participants, was aware of the risk of transmission outages and derates and the associated risk of submitting financially-binding schedules into the day-ahead market. The Commission concluded by acknowledging confusion among various stakeholders as to the applicability of section 14.1, and encouraged CAISO to work with stakeholders through its administrative pricing initiative to clarify the interplay between the Uncontrollable Force provision of section 14.1 and CAISO’s settlement rules.
A copy of the Commission’s order may be found here.