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www.caiso.com │ 250 Outcropping Way, Folsom, CA 95630 │
916.351.4400
California Independent System Operator Corporation
January 9, 2020
The Honorable Kimberly D. Bose Secretary Federal Energy
Regulatory Commission 888 First Street, NE Washington, DC 20426 Re:
California Independent System Operator Corporation Docket:
ER15-2565-
Energy Imbalance Market Special Report – Transition Period –
September 2019 for BANC-SMUD.
Dear Secretary Bose: The Department of Market Monitoring (DMM)
hereby submits its Energy
Imbalance Market (EIM) special report on the transition period
of Balancing Authority of Northern California (BANC) during its
first six months of participation in the EIM for September 2019
BANC joined the energy imbalance market on April 3, 2019 with the
Sacramento Municipal Utility District (SMUD) as a member with the
balancing authority.
Please contact the undersigned directly with any questions or
concerns
regarding the foregoing.
Respectfully submitted, By: /s/ Eric Hildebrandt Eric
Hildebrandt Director of Market Monitoring California Independent
System
Operator Corporation 250 Outcropping Way Folsom, CA 95630 Tel:
(916) 608-7123 Fax: (916) 608-7222 [email protected]
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www.caiso.com
California ISO
Report on energy imbalance market issues and performance:
Balancing Authority of Northern California for September
2019
January 9, 2020
Prepared by: Department of Market Monitoring
California Independent System Operator Corporation
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Department of Market Monitoring – California ISO January
2020
Report on Energy Imbalance Market Issues and Performance 1
Executive summary
Pursuant to the Commission’s October 29, 2015 Order on the ISO’s
energy imbalance market (EIM), the ISO filed a report on November
12, 2019 covering the period from September 1 through September 30,
2019 (September report) for the Balancing Authority of Northern
California (BANC) in the energy imbalance market.1 BANC joined the
energy imbalance market on April 3, 2019. BANC participates in the
energy imbalance market with the Sacramento Municipal Utility
District (SMUD) as a member within the balancing authority.
This report provides a review by the Department of Market
Monitoring (DMM) of energy imbalance market performance for the
BANC balancing authority area during the period covered in the
ISO’s September report. This is the final report for the transition
period for the BANC balancing authority area, completing on
September 30, 2019. Key findings in this report include the
following:
Prices in the BANC area tracked similarly to prices within the
ISO. In the BANC area during the month, prices averaged $35.54/MWh
in the 15-minute market and $32.61/MWh 5-minute market.
The BANC balancing authority area did not fail the upward or
downward sufficiency test during any interval in September.
The frequency of valid under-supply infeasibilities was
infrequent during September, occurring during only two 5-minute
market intervals, and never in the 15-minute market. There were no
valid over-supply infeasibilities for the BANC area during
September.
On average for the month, transition period pricing decreased
average 5-minute market prices by less than $0.25/MWh. Transition
period pricing did not impact 15-minute market prices for the BANC
area during September.
Section 1 of this report provides a description of prices and
power balance constraint relaxations and section 2 discusses the
flexible ramping sufficiency test.
1 The ISO’s September 2019 Report was filed at FERC and posted
on the ISO website on November 12, 2019:
http://www.caiso.com/Documents/Nov12-2019-EIM-TransitionPeriodReport-BANC-SMUD-Sep2019-ER15-2565.pdf.
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Department of Market Monitoring – California ISO January
2020
Report on Energy Imbalance Market Issues and Performance 3
1 Energy imbalance market prices
Figure 1.1 and Figure 1.2 show hourly average 15-minute and
5-minute prices during September for BANC compared with prices in
the ISO at the Pacific Gas and Electric (PG&E) default load
aggregation point.
Average prices in the BANC area tracked very similarly to prices
at the Pacific Gas and Electric (PG&E) default load aggregation
point within the ISO. Price separation between these two areas
occurred infrequently with the exception of a small number of
intervals in early September when the CAISO BAA failed the upward
sufficiency test. In the BANC area during the month, prices
averaged $35.54/MWh in the 15-minute market and $32.61/MWh 5-minute
market.
Figure 1.1 Average hourly 15-minute price (September 2019)
$0
$10
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$110
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
24
Aver
age
hour
ly p
rice
($/M
Wh)
Balancing Authority of Northern California
Pacific Gas and Electric (ISO)
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Department of Market Monitoring – California ISO January
2020
4 Report on Energy Imbalance Market Issues and Performance
Figure 1.2 Average hourly 5-minute price (September 2019)
All power balance constraint relaxations that occurred in
September were subject to the six-month transition period pricing
that expired on October 1, 2019. The transition period pricing
mechanism sets prices at the highest cost supply bid dispatched to
meet demand rather than at the $1,000/MWh penalty parameter while
relaxing the constraint for shortages, or the -$155/MWh penalty
parameter while relaxing the constraint for excess energy.2 Power
balance constraint relaxations can be grouped in the following
categories:
Valid under-supply infeasibility (power balance constraint
shortage). These occurred when the power balance constraint was
relaxed because load exceeded available generation. The ISO
validated that ISO software was working appropriately during these
instances.
Valid over-supply infeasibility (power balance constraint
excess). These occurred when the power balance constraint was
relaxed because generation exceeded load. The ISO validated that
ISO software was working appropriately during these instances.
Load conformance limiter would have resolved infeasibility. The
load conformance limiter automatically reduces the size of an
operator load adjustment and sets prices at the last economic
signal when the conditions for the limiter are met.3 During the
transition period, the limiter does not
2 When transition period pricing provisions are triggered by
relaxation of the power balance constraint, any shadow price
associated with the flexible ramping product is set to $0/MWh to
allow the market software to use the last economic bid
dispatched.
3 The ISO implemented an enhancement to the load conformance
limiter, effective February 27, 2019. With the enhancement, the
load conformance limiter triggers by a measure based on the change
in load adjustment from one interval to the next, rather than the
total level of load adjustment.
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
24
Aver
age
hour
ly p
rice
($/M
Wh)
Balancing Authority of Northern California
Pacific Gas and Electric (ISO)
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Department of Market Monitoring – California ISO January
2020
Report on Energy Imbalance Market Issues and Performance 5
change price outcomes because transition period pricing is
applied during these intervals instead. However, in these cases,
the load conformance limiter would have resolved the infeasibility
had transition period pricing not been in effect.
Correctable infeasibility. These occurred when the ISO software
relaxed the power balance constraint concurrent with a software
error or data error that resulted in a price correction or would
have triggered a price correction if transition period pricing were
not active.4
Figure 1.3 shows the monthly frequency of under-supply
infeasibilities in the 5-minute market and 15-minute market. As
shown in Figure 1.3, the frequency of valid under-supply
infeasibilities was infrequent during September, occurring during
only two 5-minute market intervals, and never in the 15-minute
market.
There were no valid over-supply infeasibilities for the BANC
area during September. In addition, there were no intervals when
the load conformance limiter would have triggered for the BANC
balancing authority area had transition period pricing not been in
effect.
Figure 1.3 Frequency of under-supply power balance
infeasibilities by month Balancing Authority of Northern
California
4 Section 35 of the ISO tariff provides the ISO authority to
correct prices if it detects an invalid market solution or issues
due to
a data input failure, occurrence of hardware or software
failure, or a result that is inconsistent with the ISO tariff.
During erroneous intervals, the ISO determined that prices
resulting under transition period pricing were equivalent to prices
that would result from a price correction, so no further price
adjustment was appropriate.
http://www.caiso.com/Documents/Section35_MarketValidationAndPriceCorrection_May1_2014.pdf.
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
Apr May Jun Jul Aug Sep Apr May Jun Jul Aug Sep
2019 2019
15-minute market 5-minute market
Perc
ent o
f int
erva
ls
Valid under-supply infeasibility (shortage)Load conformance
limiter resolved infeasibilityCorrected or invalid
infeasibility
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Department of Market Monitoring – California ISO January
2020
6 Report on Energy Imbalance Market Issues and Performance
Figure 1.4 and Figure 1.5 show the average monthly prices in the
15-minute market and 5-minute market with and without the special
transition period pricing provisions applied to mitigate prices in
the BANC area during September.5 On average for the month,
transition period pricing decreased average 5-minute market prices
by less than $0.25/MWh. Transition period pricing did not impact
15-minute market prices for the BANC area during September.
Figure 1.4 Average prices by month – Balancing Authority of
Northern California (15-minute market)
5 A detailed description of the methodology used to calculate
these counterfactual prices that would result without transition
period pricing was provided on p. 7 of the January 2017 report for
Arizona Public Service from DMM:
http://www.caiso.com/Documents/May1_2017_Department_MarketMonitoring_EIMTransitionPeriodReport_ArizonaPublicService_Jan2017_ER15-2565.pdf
$15
$20
$25
$30
$35
$40
$45
Apr May Jun Jul Aug Sep
2019
Aver
age
mon
thly
pric
e ($
/MW
h)
Balancing Authority of Northern California priceBalancing
Authority of Northern California price without transition period
pricingPG&E price
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Department of Market Monitoring – California ISO January
2020
Report on Energy Imbalance Market Issues and Performance 7
Figure 1.5 Average prices by month Balancing Authority of
Northern California (5-minute market)
$15
$20
$25
$30
$35
$40
$45
Apr May Jun Jul Aug Sep
2019
Aver
age
mon
thly
pric
e ($
/MW
h)
Balancing Authority of Northern California priceBalancing
Authority of Northern California price without transition period
pricingPG&E price
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Department of Market Monitoring – California ISO January
2020
Report on Energy Imbalance Market Issues and Performance 9
2 Flexible ramping sufficiency test
The flexible ramping sufficiency test ensures that each
balancing area has enough ramping resources over each hour to meet
expected upward and downward ramping needs. The test is designed to
ensure that each energy imbalance market area has sufficient
ramping capacity to meet real-time market requirements without
relying on transfers from other balancing areas.
When the energy imbalance market was initially implemented there
was an upward ramping sufficiency test. In November 2016, the ISO
implemented an additional downward ramping sufficiency test in the
market with the introduction of the flexible ramping product, which
replaced the flexible ramping constraint. If an area fails the
upward sufficiency test, energy imbalance market imports cannot be
increased.6 Similarly, if an area fails the downward sufficiency
test, exports cannot be increased. In addition to the sufficiency
test, each area is also subject to a capacity test. If an area
fails the capacity test, then the flexible ramping sufficiency test
automatically fails as a result.7
Limiting transfers can impact the frequency of power balance
constraint relaxations and, thus, price separation across balancing
areas. Constraining transfer capability may also impact the
efficiency of the energy imbalance market by limiting transfers
into and out of a balancing area that could potentially provide
benefits to other balancing areas.
The ISO implemented multiple enhancements to the flexible
ramping sufficiency test during 2019. First, a tolerance threshold
was implemented effective February 15, 2019, that allows an energy
imbalance market entity to pass the test if the insufficiency is
less than either of 1 MW or 1 percent of the requirement8. A second
enhancement, implemented on May 6, 2019, evaluates sufficiency test
results and limits transfers on a 15-minute interval basis rather
than for the entire hour.
Figure 2.1 shows the monthly frequency that BANC failed the
sufficiency test in the upward or downward direction. The BANC
balancing authority area did not fail the upward or downward
sufficiency test during any interval in September.
6 Business Practice Manual for the Energy Imbalance Market,
August 30, 2016, p. 45-52:
https://bpmcm.caiso.com/BPM%20Document%20Library/Energy%20Imbalance%20Market/BPM_for_Energy%20Imbalance%20Market_V6_clean.docx.
7 Business Practice Manual for the Energy Imbalance Market,
August 30, 2016, p. 45.
8 Market Notice - EIM Resource Sufficiency Enhancements 1%
Threshold Implementation, February 8, 2019:
http://www.caiso.com/Documents/EIMResourceSufficiencyEnhancements-1-ThresholdImplementation-021519-Active-MAPStage.html
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Department of Market Monitoring – California ISO January
2020
10 Report on Energy Imbalance Market Issues and Performance
Figure 2.1 Balancing Authority of Northern California flexible
ramping sufficiency test failures
0.0%
0.5%
1.0%
1.5%
2.0%
Apr May Jun Jul Aug Sep Apr May Jun Jul Aug Sep
2019 2019
Upward sufficiency test Downward sufficiency test
Perc
ent o
f int
erva
ls
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