On November 4, 2015, the California Independent System Operator Corporation (“CAISO”) Board of Governors unanimously approved certain design changes to the western Energy Imbalance Market (“EIM”). These changes and enhancements are part of CAISO’s “year 1 phase 2 enhancements” – including items and issues that the CAISO originally determined would benefit from having six months of operational experience under the EIM to inform their resolution, as well as certain items that were deferred from phase 1 to allow for additional stakeholder input.

Following completion of phase 2 of the stakeholder initiative on the year 1 enhancements, CAISO’s management proposed to its Board of Governors that the following design changes be implemented: (1) modification of the allocation of congestion cost credits resulting from transfers of electricity between EIM entities; (2) modification of the market power mitigation process to always include EIM transfer limits; (3) specification regarding how EIM entities include imports and exports in their base schedules; and (4) permission for the CAISO to provide outage information on behalf of an EIM entity to the regional reliability coordinator.

Some stakeholders requested additional review of the proposed congestion credit allocation, but CAISO management determined that the proposal was necessary at this time to better align with the foundational EIM principle that congestion credits and costs should reside in the balancing area in which a constraint is located. With regard to the remaining market design enhancements for consideration, stakeholders broadly supported the proposed changes.

A copy of the CAISO’s press release regarding the approved enhancements can be found here.  The documents considered by the CAISO Board of Governors—including a supporting memo, presentation, and the motion to approve the enhancements—can be found here.