The California ISO is proposing market rule and procedural changes necessary to ensure reliable grid operations for summer 2021. The ISO has the responsibility for ensuring that its markets are operated efficiently and prevent the exercise of market power, while also ensuring rational price formation and scarcity pricing. The ISO has heard important perspectives from stakeholders throughout California and the West on these important topics. As a result, the ISO is proposing several market rule changes to better prepare for this summer’s challenges. Recognizing the dual objectives of mitigating system market power and providing rational scarcity pricing, the ISO is continuing to pursue implementation of its System Market Power Mitigation initiative along with proposed enhancements to scarcity pricing signals, subject to approval of its Board of Governors. Finally, the ISO continues to prepare to implement its compliance with FERC Order No. 831 and the related import bid verification and pricing parameters approved by the Board of Governors.

Please find below, important updates on initiatives related to the summer 2021 readiness efforts:

1)    FERC Order No. 831 and related import bidding and market pricing parameters changes – The ISO is targeting June 2021 implementation of both of these changes, subject to FERC’s approval of the ISO’s request for an extension of the compliance with Order No. 831. In the event FERC denies the request for the extension, the ISO will implement Order No. 831 on March 21, as currently required by FERC in its order available at http://www.caiso.com/Documents/Sep21-2020-Letter-Order-Accepting-FERC-Order-No-831-Revisions-ER19-2757.pdf, and will implement the related import bidding and market pricing parameters in June 2021. Information on the initiative is available at https://stakeholdercenter.caiso.com/StakeholderInitiatives/FERC-Order-831-Import-bidding-and-market-parameters.

2)    Market enhancements for summer 2021 readiness - Subject to approval by its Board of Governors, the ISO is targeting June 2021 for implementation of the following proposed market rule changes:

1. export and load scheduling priorities
2. including reliability demand response resources in real-time pre-dispatch
3. management of resource adequacy storage resources during tight conditions
4. import and export settlement rules to incentivize imports during tight conditions
5. enhancements to the energy imbalance market resource sufficiency evaluation to better account for resource availability and system needs.

The ISO’s proposals are available at https://stakeholdercenter.caiso.com/StakeholderInitiatives/Market-enhancements-for-summer-2021-readiness. The ISO is also considering possible changes to enhance performance and outage management of resource adequacy resources.

3)    System market power mitigation and additional proposed changes to enhance scarcity pricing signals– Subject to approval by its Board of Governors, the ISO is targeting August 2021 for implementation of its proposed system market power mitigation rules along with the proposed scarcity pricing provisions to improve incentives and increase supply during tight system conditions. The ISO’s system market power mitigation proposal is available at https://stakeholdercenter.caiso.com/StakeholderInitiatives/System-market-power-mitigation. The ISO’s two proposed enhancements to scarcity pricing signals are:

1. improve day-ahead market scheduling incentives and incentives for resources to be available in real time, and
2. improve real-time market incentives when grid operators arm load to meet contingency reserves

Information on these enhancements are available at https://stakeholdercenter.caiso.com/StakeholderInitiatives/Market-enhancements-for-summer-2021-readiness.

The ISO will host a market enhancements for summer 2021 readiness workshop on Jan. 27where further details on these topics will be discussed. Details about the meeting is available at http://www.caiso.com/Documents/MarketEnhancements-Summer2021ReadinessStrawProposalCall012721.html.