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California Grid Operator Seeks NatGas Storage Rule Changes at FERC

The California Independent System Operator (CAISO) has asked FERC to approve two tariff changes designed to overcome current limitations that have been caused by the limited operations at the Aliso Canyon natural gas storage facility north of Los Angeles.

CAISO has asked the Federal Energy Regulatory Commission to make the change effective Nov. 30, the start of the traditional winter season for gas storage.

The loss of the 86 Bcf capacity Southern California Gas Co. (SoCalGas) storage facility is "expected to continue to stress the gas system in Southern California," said CAISO’s Keith Casey, vice president, market/infrastructure development. "In addition, physical gas limitations can exist throughout the CAISO and western energy imbalance market (EIM) balancing areas."

As a result, CAISO said in a filing to FERC last week that it is seeking to make the maximum natural gas burn constraint permanent throughout the balancing areas in the western EIM.

As of Sunday (Oct. 1), Portland General Electric began full participation in CAISO's real-time EIM.

Last July, the 3,600-acre Aliso Canyon facility was cleared by the California Public Utilities Commission and Division of Oil, Gas and Geothermal Resources (DOGGR) to reopen at limited capacity following months of rigorous inspections and well analysis by state engineering and safety enforcement experts. The limited reopening was designed to “protect public safety and prevent an energy shortage in Southern California,” officials said at the time.

In the FERC filing, CAISO said its experience over the past 12 months has shown that the use of the maximum gas burn limits have proven to be both "prudent and particularly effective." Also based on  an interagency task force study completed earlier this year, limitations resulting from the loss of Aliso Canyon's full operations are expected to "continue to stress" the gas system in Southern California.

One set of the tariff revisions sought by CAISO would extend indefinitely three existing temporary measures -- day-ahead market gas index, adjustments to commitment cost caps and default energy bids, and after-the-fact fuel cost recovery measures.

The second set of proposed changes would be made permanent and apply western-wide: maximum gas constraint, employing market power mitigation tools in constrained areas, virtual bidding, and pre-pay day-ahead information.

On an ongoing basis, gas cost estimates would be increased to calculate the CAISO real-time market commitment costs bid cap and default energy bids for generators on the SoCalGas and San Diego Gas and Electric Co. gas systems.

"This allows generators' real-time bid prices to better reflect gas system limitations and gas prices," Casey told FERC.

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