On September 1, 2016, the Commission granted a petition for waiver filed by the California Independent System Operator Corporation (“CAISO”) requesting permission to treat the Bay Area Rapid Transit District (“BART”) as a Load-Serving Entity (“LSE”) for purposes of eligibility for Congestion Revenue Rights (“CRRs”) and resource adequacy responsibilities under the CAISO Open Access Transmission Tariff (“Tariff”).

BART provides public transportation services to the San Francisco Bay Area, and is an end-use consumer of power that is permitted by state law to purchase directly from wholesale suppliers. Currently, BART holds existing transmission contract rights (“ETCs”) with Pacific Gas & Electric Company (“PG&E”), which are contractual rights that permit BART to hedge against congestion in the CAISO day-ahead market. BART’s ETCs are due to expire at the end of 2016, and accordingly, BART inquired with CAISO about the possibility of converting its expiring ETCs into CRRs—a legal right under the CAISO Tariff that also permits the holder to hedge against congestion. In light of the fact that: (i) under the CAISO Tariff, only LSEs can participate in the CRR allocation process; and (ii) BART does not qualify as an LSE under the CAISO tariff, CAISO filed a petition with the Commission seeking waiver to permit BART to participate in the CRR allocation process.

In its September 1, 2016 order, the Commission applied its four-part test for analyzing requests for waiver of tariff provisions. Under that test, the Commission will grant waiver if: (1) the applicant acted in good faith; (2) the waiver is of limited scope; (3) the waiver addresses a concrete problem; and (4) the waiver does not have undesirable consequences, such as harming third parties.

Applying this test, the Commission determined that CAISO met the Commission’s test for granting a waiver of its Tariff provisions. In particular, the Commission determined that CAISO had acted in good faith in filing its petition, and noted that CAISO had stated its intent to develop and submit Tariff revisions to amend the definition of “LSE” to include entities like BART in the future. The Commission found the waiver request to be of limited scope, because it was only for a duration of four-months, was restricted to the definition of “LSE,” and applied exclusively to BART. The Commission also determined that the waiver request addressed a concrete problem, in that absent a waiver, BART would be exposed to congestion charge risk when its ETCs expire at the end of the year. Additionally, the Commission noted that a designation as an LSE would subject BART to certain resource adequacy rules applicable to LSEs under the CAISO Tariff, thereby ensuring that BART’s load would be covered by sufficient resource adequacy capacity. Lastly, the Commission found that granting the waiver would not have undesirable consequences, as it “effectively maintains the status quo because CAISO already includes BART’s ETCs in its modeling process for CRRs” and therefore “no other party will be harmed by granting CAISO’s request.”

A copy of the Commission’s order may be found here.