Progress Report on Regional Marginal Loss Surplus Allocation Impact Study
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Summary:
Progress Report on Regional Marginal Loss Surplus Allocation Impact Study. For Discussion at the CAISO Stakeholder Meeting on August 17, 2006
Extract:
Introduction
Adoption of full Locational Marginal Prices (LMPs) reflecting the marginal cost of transmission losses as well as congestion, as implemented in MRTU, will result in a surplus of revenue associated with marginal losses (marginal loss surplus or MLS). The original MRTU design as filed by the CAISO on July 23, 2003 proposed to allocate the MLS to the CRR Balancing Account to help ensure revenue adequacy for settlement of CRRs. Some Market Participants, particularly Existing Transmission Contract (ETC) and Transmission Ownership Rights (TOR) holders, expressed dissatisfaction with that design since they did not expect to be CRR holders and therefore would not benefit from allocation of the MLS to the CRR Balancing Account, although they would contribute to the MLS. Others were concerned about delaying the refund of surplus MLS funds in the CRR Balancing Account until the annual balancing of that account. In the course of discussions with the stakeholders during 2005, the CAISO proposed its now current proposal for the distribution of MLS, which is included in the MRTU Tariff filed on February 9, 2006 (CAISO MRTU Tariff 11.2.1.6). The current proposal is to allocate the MLS pro-rata to all Measured Demand, i.e., based on each Scheduling Coordinator's (SC) internal demand plus exports relative to the total CAISO control area demand plus total exports.
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