California ISO, PUC take steps to bolster summer reliability

by Paul Ciampoli
APPA News Director
March 29, 2021

The California Independent System Operator (CAISO) and California Public Utility Commission (CPUC) last week announced steps to bolster reliability in the state this summer.

The ISO’s Board of Governors on March 24 approved market and operational refinements to prepare for possible prolonged heat events like those that led to rotating power outages last summer, CAISO said.

The enhancements, shaped by stakeholder input gathered over the past three months, are on track to be in place by summer 2021.

“These enhancements were developed in close coordination with state agencies and stakeholders throughout California and the West,” said Elliot Mainzer, ISO president and CEO, in a statement.

“The enhancements are designed to better equip our energy markets and power grid for extreme weather, while complementing the efforts of California’s regulatory authorities and utilities to develop new clean energy resources. We are committed to strong collaboration with our many state and regional partners to achieve reliable system operations this summer and beyond.”

Mainzer discussed CAISO’s preparation for this summer in a recent episode of American Public Power Association’s Public Power Now podcast.

CAISO said policy changes approved by the ISO Board of Governors at its meeting are designed to:

• Strengthen compensation incentives for hourly imports to deliver during tight supply conditions;
• Provide more accurate price signals reflective of tight supply conditions and dispatch of emergency demand response;
• Establish an interim minimum state of charge requirement to ensure resource adequacy storage resources have sufficient energy available on the tightest supply days;
• Ensure sufficient capacity is procured in advance of planned outages; and
• Streamline the grid interconnection process to expedite new supply.

The Board action advanced two ISO stakeholder initiatives: Market Enhancements for Summer 2021 Readiness and phase one of resource adequacy enhancements.

A final set of improvements for managing export and wheel-through scheduling priorities –part of the Market Enhancements for Summer 2021 Readiness initiative –will be considered by the EIM governing body for its advisory consent and the Board of Governors for its approval during special meetings planned for April 2021.

“These enhancements are intended to improve reliability while respecting transmission open access principles,” CAISO said.

Earlier this month, the ISO’s Western Energy Imbalance Market (EIM) Governing Body approved enhancements that fall within its scope of authority.

“These changes will help ensure balancing authority areas participate in the Western EIM with sufficient resources and improve the real-time market’s operational modeling,” the grid operator said.

The enhancements were then approved by the Board of Governors as part of the consent agenda at their meeting last week.

Meanwhile, the ISO said it anticipates close to 1,500 megawatts of new storage available for dispatch by this summer, bringing total capacity to nearly 2,000 MW.

The ISO is upgrading capabilities to manage these new resources and building a suite of tools giving grid operators visibility into the storage fleet, it said.

The ISO said it is also enhancing rules to ensure that storage is sufficiently charged when providing ancillary services.

In another move to shore up summer grid reliability, the ISO board designated the Kingsburg Cogeneration Plant as a reliability must-run resource (RMR) to comply with North American Electric Reliability Corporation (NERC) and Western Electricity Coordinating Council’s (WECC) reliability standards.

The ISO’s recent supply analysis shows that without the 34.5-MW plant, the ISO may be unable to maintain system-wide reliability, especially later in the evening when solar resources are no longer available but demand remains high.

The board previously designated the Midway Sunset Cogeneration power plant as a reliability must-run resource, ensuring its availability this summer.

CAISO said the refinements chiefly result from findings and recommendations of a joint final root cause analysis, using the events of summer 2020 to identify areas for improvement.

CAISO, the CPUC and California Energy Commission in January 2021 issued a final root cause analysis of the August 2020 heat wave and rotating outages in the state.

Looking forward, the ISO is about to launch its Energy Storage Enhancements Initiative, with an issue paper scheduled to be posted in April, kicking off a stakeholder initiative process with the goal of upgrading optimization, dispatch, and settlement of energy storage.

CPUC

Meanwhile, the CPUC on March 25 ordered utilities to implement a suite of programs to decrease energy demand and increase energy supply during critical hours of the day to ensure reliability in the case of an extreme heat event in the summers of 2021 and 2022.

The decision requires the state’s major investor-owned utilities to collectively procure at minimum 1,0000 MW of demand- and supply-side resources for this summer.

More than 500 MW in supply-side resources have already been contracted for at the direction of previously approved Decision by the CPUC.

The CPUC’s March 25 decision will activate approximately 500 additional MW in demand-side resources such as demand response and batteries by this summer, the Commission said. By summer 2022, demand-side resources are expected to increase in total to nearly 1,000 MW by way of this decision.

The decision is the most recent action in a proceeding the CPUC opened in November 2020 in response to the mid-August 2020 extreme heat event that required CAISO to initiate rotating power outages to prevent sustained, wide-spread service interruptions.

To ensure grid reliability this summer, the CPUC has ordered several new initiatives and enhancements to existing programs.

To help ensure enough electricity resources are available to serve customers during times of peak and net peak energy use, the CPUC ordered utilities to procure a minimum of an additional 2.5 percent of resources for all customers in their territories, representing an effective increase of the planning reserve margin from the existing 15 percent to 17.5 percent.

This change will result in minimum demand- and supply-side resource targets for this summer of 450 MW for Pacific Gas and Electric Company (PG&E), 450 MW for Southern California Edison (SCE), and 100 MW for San Diego Gas & Electric (SDG&E).

For supply-side resources, utilities must give preference to storage contracts and upgrades in the efficiency of existing generation resources, and for contract terms that are shorter in duration.

To lower energy demand during the peak and net peak usage hours during a grid emergency, the CPUC ordered PG&E, SCE, and SDG&E to pilot an emergency load reduction program that would give demand response providers and other companies providing new services to manage electricity demand, the ability to demonstrate how their programs can support the grid.

The pilot program will compensate customers for voluntarily reducing demand on the power system when called upon to do so by the CAISO in the event of a grid emergency. “This program will serve as a layer of insurance on top of existing resource adequacy plans and will give grid operators a new tool among the existing demand management programs to address unexpected power system conditions,” the CPUC said.

The CPUC also ordered utilities to modify their critical peak pricing programs, which charge a higher price for electricity consumption during peak hours on selected days.

The CPUC ordered several modifications to the programs to ensure the program is more effective and responsive to the critical hours of a grid emergency, including shifting the critical peak pricing event window for residential and non-residential customers to the hours of 4 p.m. to 9 p.m., increasing the maximum number of critical peak pricing events allowed per year, and providing customer education with a focus on increasing participation.

In addition, the CPUC ordered modifications to existing demand response programs to expand participation, including temporarily allowing year-round enrollment in utility “interruptible programs” that allow for industrial and large commercial customers to pay a lower rate in exchange for allowing the utility to curtail their energy usage when energy demand is high and the reliability of the electric grid is threatened.

The CPUC also increased demand response program enrollment incentives to attract new customers, as well as allow SDG&E to expand and enhance its AC Saver program by allowing residential net energy metering customers to enroll, as well as incentivizing smart thermostat manufacturers to increase the number of participating thermostats.

The CPUC also reinstated the Flex Alert paid media program “to educate consumers about the positive impacts of conservation, help customers understand grid conditions, and inform customers of the need to conserve when energy demand is high,” it said.