The Federal Energy Regulatory Commission (FERC) has accepted the California ISO’s tariff amendments related to the Variable Operations and Maintenance (VOM) Cost Review stakeholder initiative. The VOM initiative updates the default values for variable operations and maintenance adders that are used in the calculation of default energy bids and commitment costs. The initiative also adds explicit principles to the tariff for categorizing operations and maintenance costs to better differentiate between fixed and variable costs.

These tariff amendments will take effect on a staggered basis with the earliest effective date being on May 17, 2021. In anticipation of the new default VOM adder values, the ISO is encouraging scheduling coordinators to consider whether they would like to negotiate adders under the updated cost framework introduced in the VOM initiative. The first phase of these negotiations begins on May 17, 2021. The tariff amendment establishing new default adders values and the new cost categorization principles will become effective on Jan. 1, 2022.

If a scheduling coordinator decides that they would like to negotiate VOM adders under the updated framework, the ISO would like to highlight the following:

• Phased approach to negotiations: the negotiations will be split into two phases,
  • Phase 1 lasting from May 17 to June 18. For applications submitted during this phase, the ISO will aim to complete the negotiations before Jan. 1, 2022. Approved VOM adders under the new framework will take effect on Jan. 1, 2022.
  • Phase 2 lasting from June 19 to December 31. For applications submitted during this phase, the ISO gives no assurance that they will complete the negotiations by Jan. 1, 2022. These applications will be completed on a first-come first-serve basis. Hence, the ISO encourages scheduling coordinators to submit their applications in Phase 1.
• Updated guidance: the ISO has posted guidance on the Release Planning webpage in the form of an updated Attachment L of the Business Practice Manual for Market Instruments. This guidance covers:
  • The updated cost framework, cost categorization principles, and new default values.
  • The treatment of currently negotiated variable operations and maintenance adders and major maintenance adders under the updated cost framework. Currently, negotiated adders will be grandfathered under the new framework but scheduling coordinators may find the updated default values more appropriate for their resources.
  • The process to submit applications for negotiated VOM adders under the updated cost framework. In summary, applications for negotiated variable operations and maintenance (O&M) adders should be submitted via a Customer Inquiry and Dispute Information (CIDI) ticket with Case Record Type “Negotiated Rate Application” and Application Type “MMA”. Scheduling coordinators should add the text “NEW O&M FRAMEWORK in the CIDI ticket description and should use the new template available at http://www.caiso.com/Documents/Variable-Operations-and-Maintenance-Adder-Application-Template.xlsx. Please review the detailed guidance in the updated Attachment L prior to submitting the CIDI ticket.
• General questions: any general questions regarding the VOM initiative should be submitted via a CIDI Inquiry ticket with a request that the ticket be allocated to the Market Analysis team.
• Resources:
  • The approved tariff amendment has been posted on the ISO’s Regulatory webpage at http://www.caiso.com/Documents/May12-2021-Order-VariableOperations-Maintenance-ER21-1266.pdf.
  • Negotiations guidance is available in the updated Attachment L. This represents a draft Business Practice Manual (BPM) and has not gone through the ISO’s formal Proposed Revision Request process. An updated application template is also available on the Release Planning webpage.