On September 7, 2017, FERC accepted an Implementation Agreement between the California Independent System Operator Corporation (“CAISO”) and Powerex Corp. (“Powerex”), setting forth the terms under which CAISO will work toward Powerex’s participation in CAISO’s Energy Imbalance Market (“EIM”).
The EIM enables entities outside of the CAISO balancing authority area (“BAA”) to participate in the CAISO-administered real-time market for imbalance energy. The Implementation Agreement establishes the preparatory activities necessary to enable Powerex—a Canadian corporation with its principal place of business in Vancouver, British Columbia—to participate in the EIM, and is the first agreement to permit an entity with resources located in a BAA outside of the United States to participate in the EIM.
On June 9, 2017, CAISO submitted the Implementation Agreement for filing. In its filing, CAISO stated that it was working with Powerex to develop an EIM participation framework that “accounts for the unique legal and regulatory considerations that arise from Powerex’s EIM participation with resources and load in Canada, while continuing to preserve all CAISO functional tariff obligations necessary for EIM participation.” CAISO explained that the anticipated participation framework would provide for: (1) voluntary offers from residual BC Hydro (Powerex’s parent company) flexible generation; (2) intra-hour deviations in load and generation in the BC Hydro BAA; and (3) transmission arrangements to support EIM transfers. CAISO stipulated that BC Hydro would not assume a participant role or undertake commercial activities in the EIM, but would supply certain data and information directly to CAISO that is needed for Powerex’s participation. CAISO also stated that the Implementation Agreement required Powerex to pay CAISO a fixed implementation fee of $1,923,955, subject to the completion of specified milestones. Lastly, CAISO stated that, similar to the approach taken in the CAISO-PacifiCorp EIM Implementation Agreement, the Implementation Agreement adopted eight “principles” to guide the negotiation and implementation of the agreements that will be necessary to support Powerex’s participation in the EIM. On August 9, 2017, the Implementation Agreement was accepted for filing, suspended for a nominal period, to become effective August 15, 2017, subject to refund and further Commission order.
In its September 7, 2017 order, FERC accepted the Implementation Agreement, effective August 15, 2017. FERC noted that the implementation fee was based on CAISO’s estimate of the costs it would incur if it were to configure its real-time energy market to function as an EIM available to all BAAs within the Western Electricity Coordinating Council and appropriately allocated a portion of that projected overall cost to Powerex in an amount proportionate to Powerex’s benefits from the EIM. FERC also found that CAISO had adequately addressed concerns expressed in the proceeding regarding modifications of the Implementation Agreement to include another party, and that stakeholders would have additional opportunities to comment as the specific terms and conditions of the framework under which Powerex will participate in the EIM were further developed and filed with FERC.
A copy of the FERC order can be found here.