On April 21, 2017, the California Independent System Operator Corporation (“CAISO”) requested that FERC find CAISO’s current tariff just and reasonable, and that CAISO no longer needed to implement several outstanding directives that were issued in a 2006 order conditionally approving CAISO’s Market Redesign and Technology Upgrade (“MRTU”) tariff amendments, which were designed to, among other things, implement a nodal market in the CAISO footprint.

In its 2006 order approving the MRTU amendments, FERC directed CAISO to, among other things: (1) implement a two-tier allocation of real-time bid cost recovery uplift; (2) implement bid cost recovery changes to account for units running over multiple operating days; (3) implement multi-hour constraints in the residual unit commitment process; (4) assess whether and how to develop more flexibility for ancillary services substitution; (5) develop software functionality to support exports for ancillary services; and (6) undertake a stakeholder process to examine rebating the over-collection of transmission losses to renewable resources.

In its April 21, 2017 filing, CAISO noted that these directives were now more than a decade old, and that the CAISO system had undergone “numerous and substantial changes” since 2006.  Specifically, CAISO cited the new operational and market challenges that had arisen in recent years from the large number of variable energy resources and non-dispatchable behind-the-meter resources now interfacing with the CAISO-controlled grid.  Accordingly, CAISO stated that its operational and market needs today “are far different than contemplated in the September 2006 order,” and that the additional market modifications required to implement the remaining MRTU directives “will not help the CAISO address the challenges it faces today or in the near future,” like the need for greater flexible ramping capability.  CAISO stated that, in some instances, implementation of the remaining MRTU directives “may exacerbate the challenges the CAISO faces and lead to inefficient market outcomes.”

CAISO requested that the Commission find that: (i) four of the outstanding directives (1-4, as enumerated above) are unnecessary because CAISO’s current market structure is just and reasonable and does not require implementation of the directives; and (ii) CAISO has already adequately complied with the directive to develop software functionality to support exports for ancillary services (5), and has completed stakeholder discussions to examine rebating the over-collection of transmission losses to renewable resources (6), or, in the alternative, find these directives no longer necessary.

A copy of CAISO’s April 21, 2017 filing is available here.