On June 2, 2016, FERC conditionally accepted revisions to the California Independent System Operator Corporation’s (“CAISO”) tariff to facilitate the participation of aggregations of distribution-connected or distributed energy resources in CAISO’s energy and ancillary services markets. The proposed revisions are effective June 3, 2016, subject to CAISO submitting a compliance filing.
In a March 4, 2016 filing proposing the changes, CAISO explained that its proposed tariff revisions would enable resources connected to distribution systems within CAISO’s balancing authority area to form aggregations of 0.5 MW or more, and participate in CAISO’s energy and ancillary services markets. According to CAISO, this change is significant because, under the currently-effective tariff, resources must meet a minimum size requirement of 0.5 MW in order to participate in CAISO markets. CAISO added that by allowing distributed energy resources to aggregate to the 0.5 MW threshold, these resources will no longer be excluded from participation by virtue of falling below the individual resource size restriction.
In its June 4, 2016 order, FERC concluded that “overall . . . CAISO’s proposed initial framework to facilitate participation of aggregations of distribution-connected or distributed energy resources in CAISO’s energy and ancillary services markets is just and reasonable . . . ” However, FERC noted that while CAISO’s proposal provides that a distributed energy resource provider (“DER Provider”) who fails to follow a dispatch instruction will face financial penalties in the form of uninstructed imbalance energy, no such provision exists in CAISO’s proposed tariff revisions. Similarly, FERC noted that CAISO’s proposed tariff revisions do not contain its pricing methodology for single and multiple node aggregations. In order to address these concerns, FERC directed CAISO to submit its compliance filing within 30 days of FERC’s order to include tariff language stating: (i) that CAISO will impose uninstructed imbalance energy charges on a DER Provider who fails to follow a dispatch instruction; and (ii) the pricing methodology for both single and multiple node aggregations.
Lastly, FERC directed CAISO to submit an informational report on implementation efforts six months after the effective date of the proposed tariff revisions, and to conduct market performance reviews of distributed energy resources on at least an annual basis for a period of three years after the effective date of the proposed tariff revisions.
A copy of the June 2, 2016 order may be found here.