The CAISO recently issued Part 2 of its Resource Adequacy Enhancements Straw Proposal and stakeholders met with the CAISO this week to discuss the paper and get further clarifications on the initial skeletal structure provided.

As part of the process, the CAISO reviewed the counting rules in other ISO/RTOs and found that most ISO/RTOs use the effective forced outage rate of demand, or the probability that a resource will be unavailable due to forced outages or forced deratings when there is demand on the unit to operate, to assess resource availability up front.  The CAISO plans to take from the best practices, including a review of resources’ forced outage rates to include in RA valuation and ultimately reduce the reliance on RAAIM.  The CAISO’s admittedly ambitious schedule aims to wrap up the policy development and get board approval by the end of the year, anticipating implementation for RA year 2021.

The proposal includes three main topics:

(1) RA counting rules and assessments: The CAISO proposes a new framework that assesses the forced outage rates for resources and is considering how to incorporate these rates in RA assessments. The CAISO is not proposing to adjust NQC, as this will still be important for local RA assessments and studies and must offer obligations, but to also annually publish unforced capacity (UCAP) values, or the installed capacity that is not on average experiencing a forced outage or derating. The intention is to develop RA rules that incentivize the procurement of reliable resources rather than only the cheapest and to encourage showing all RA capacity that is under RA contract, as opposed to the minimum amount as is currently incentivized under the RAAIM framework. The CAISO is exploring options to develop UCAP for all resource types that do not rely on ELCC methodology (solar and wind), as it intends to rely on CPUC ELCC methodology where applicable. Proposals will be included in the revised straw proposal.

Additionally, the CAISO continues to explore a new planned outage substitution concept where planned outages will not be required to provide substitute capacity if LSE’s available unforced capacity exceeds the minimum UCAP threshold. Further, the CAISO believes it is possible to eliminate forced outage substitution as UCAP values will provide incentives for timely maintenance and quick repairs. Resources shown for RA capacity will continue to have a must offer obligation.

(2) Backstop capacity procurement: The CAISO’s proposal includes three pathways for new CPM authority for individual deficiencies including (a) LSE specific UCAP test (b) system UCAP test and (c) capacity incentive mechanism. The CAISO may also modify the competitive solicitation process to implement it with daily granularity as it may be used to allow scheduling coordinators to backstop planned outages in the future.

(3) RA import capability provisions: The CAISO is evaluating whether the current allocation process timing causes barriers for new LSEs beginning operations and commencing RA compliance. It will also consider potential enhancements to the Available Import Capability Assignment including (a) considering modifications to allow for release and relocation or transfer of unused import capability after initial monthly RA showings (b) incorporating an auction or other market based mechanism and (c) enhancing the provisions for reassignment, trading, or other forms of sales of import capability among LSEs.

The CAISO is accepting comments on these proposals until March 20 and anticipates posting a revised straw proposal on May 20.

As always, our attorneys can provide counsel regarding the impact of the proposed changes on your business and work with you to participate in this process.