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CAISO Summer Simulation Finds No Major Congestion Issues

A grid operation simulation designed as a dress rehearsal for this summer in California reveals that there are "no major congestion issues" based on the schedules submitted in response to the simulation, which was overseen by the California Independent System Operator (CAISO), Yakout Mansour, CAISO's CEO, told reporters last Wednesday. The final results of the simulation were set to be released last week.

"So at least what was scheduled seemed to be overly deliverable," Mansour said in an appearance at the National Press Club in Washington, DC. "It's not like it was coming from the North Pole or something -- it was all deliverable and within capacity."

The simulation also shows that the state continues to "depend highly" on imports, Mansour noted. "It's still the same historical number -- it's just over 9,000 MW of imports that we depend on and we'll continue to depend on imports."

The simulation has been undergoing some "fine tuning," he said, adding that "you will see the full results over the next day or two." He said that "I have not seen something that is overly surprising in terms of the results," but there were items that needed to be "filled in" before he departed for the nation's capital.

"There is enough capacity in the state," Mansour said. "There's enough generation capacity in the state to handle the situation. What we're going by is how the entities are contracting, are scheduling, from those facilities, but there is enough capacity in the state." More specifically, there's enough capacity to meet all the schedules, including imports.

Mansour noted that this is the first time that the ISO has initiated such a simulation, "which is not just assuming that all the resources that are there are deliverable and contracted for. What we did is we asked all the participants and the scheduling coordinators that are operating in California to submit schedules" as they would submit "in a hot summer day in the California market."

The CAISO CEO said that "the cooperation and the collaboration for that effort was remarkable," noting that there were over 50 entities that participated in the simulation and submitted data.

Mansour said that if it is a normal summer this year -- the "one-in-two" average year CAISO has previously referenced -- "we're prepared for it with reasonable additional reserve in the north and tighter reserve in the south, but in both cases we will be able to do well." If it is an adverse year "in terms of very hot and what we refer to as one-in-ten, the north should still be OK, but the south will be a bit short."

Efforts related to preparing California's grid for this summer is one of four short-term priorities that CAISO has, Mansour noted. The other three short-term priorities are: (i) CAISO's market redesign and technology upgrade effort; (ii) the revisiting and redesigning of the stakeholder engagement process; and (iv) CAISO's corporate organizational realignment.

Meanwhile, a reporter quizzed CAISO officials on whether they would consider raising the current $250/MWh soft price cap, adding that from what she understands, the cap is rarely getting hit, if at all recently.

"The price cap of $250 isn't being hit," said Anjali Sheffrin, CAISO's market analysis director. "But I believe what the generators' perspective is that, say come the summer we have some extreme weather and because they don't have long-term contracts, they're depending on their revenues coming from those few price spikes. I think their perspective is they would appreciate it if the price cap was higher, so that they earned more revenues during those few price spikes," she said.

CAISO's perspective "is we would like to continue to have generators and load-serving entities contract and not depend on price spikes as being the main revenue source."

At a later point, Mansour commented on the possibility of Powerex not participating in California's energy market this summer in the wake of the latest legal action taken against the company by California Attorney General Bill Lockyer.

Alleging a "conspiracy" to restrain trade that violates the state's antitrust laws, Lockyer last month filed a lawsuit against the British Columbia provincial electric utility's marketing arm, Powerex, and Public Service Company of New Mexico (PNM), claiming they used "Enron-devised" trading schemes to inflate wholesale electricity prices during the West's 2000-2001 crisis.

"Powerex did, I think, publicly say...that because of the allegations, that they are seeking not to participate in the market anymore," the CAISO official noted. "We're still hoping that Powerex will participate in the market," he said, noting that the company is "one of our good suppliers and we know that we're one of their good customers."

Prior to coming on board at CAISO, Mansour served as a senior executive with British Columbia Transmission Corp. An engineer, Mansour served as BC Hydro's vice president for grid operations and inter-utility affairs before assuming his role with BC Transmission when it was created two years ago in a reorganization of the Canadian province-run electric utility. Powerex is BC Hydro's marketing arm.

As for regional transmission organization (RTO) formation in the western part of the country, Mansour said that the possibility of "something coming out in the Northwest is probably 50% or slightly higher than 50% in my mind, at least." He said these odds are "quite an improvement from what they used to be."

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