13 November 2007 – 139 days to MRTU market launch on March 31, 2008

 

In This Issue

Executive Corner with Karen Edson, California ISO Vice President External Affairs

IMS Continues the Test Drive

New Portal Simplifies Access to ISO Information

MRTU Cutover & Reversion Plan in Development

Client Perspective: Preparing Business Processes for the Big Change
Chuck King, VP Market Development & Program Management

Executive Corner
Karen Edson, California ISO Vice President External Affairs

Welcome to the November issue of MRTU Homestretch. On behalf of the California ISO, I want to offer my heartfelt thanks to stakeholders and staff for their tireless efforts to prepare for the Market Redesign and Technology Upgrade (MRTU). Getting ready for MRTU has been a monumental undertaking, and the ISO and our customers are in the final stages of implementation plans for the March 31, 2008 program launch. Months of policy development meetings have given way to implementation workshops. Hundreds of hours of stakeholder discussions on Business Practice Manuals and Tariff language have yielded to system testing and market simulations. Together, the ISO and our stakeholders have transitioned our combined energies from design to implementation. And, despite a few speed bumps along the way, I hope you feel like I do that the journey has been both constructive and collaborative.

With a little more than four months remaining, the ISO team is actively engaged at all levels throughout the organization, with a resolute focus on a successful MRTU implementation. We are continuing our executive level outreach meetings to help ensure that all program challenges–internal to the ISO and at participant sites–are identified and successfully addressed. This is the most recent aspect of the support provided by the ISO. In addition, we have taken a number of steps in recent months to improve the readiness status of both the ISO and market participants by:

  • Disseminating readiness information about system interfaces, market simulation, settlements processes and more at MRTU meetings and implementation workshops.
  • Evaluating and updating market simulation strategies for testing of new systems, including:
    • Revising the testing schedule to ensure better system stability and functionality.
    • Adding SIBR-Lite to the testing environment to facilitate additional bid structure testing before entering the Integrated Market Simulation (IMS).
    • Validating testing scenarios and market data prior to IMS to provide increased transparency of issues encountered during testing.
  • Posting weekly market simulation report cards, monthly readiness status updates and publishing this newsletter, the MRTU Homestretch to provide more senior-level communication.
  • Providing training to more than 1,000 stakeholders in 25 training sessions hosted in Folsom and other locations across the U.S.
  • Completing 82 individual assessments of participants’ status and following-up with personalized readiness action plans.

As we approach next year’s launch, it is critical that the ISO and stakeholders remain diligent in preparing our people, processes and technologies. We must continue to collaborate on MRTU training, market simulation and system interfaces. If you have any questions about the readiness state of your firm or the ISO, or if you are uncertain that your organization is participating fully in readiness activities, please contact your ISO Account Manager or Client Representative. We’re in this together. Please take every advantage of the support we can provide.

Again, we appreciate the spirit of teamwork and collaboration demonstrated in support of MRTU. We look forward to a successful launch on March 31 of next year.

Signature

 

MRTU Readiness Snapshot

  
 

The following are brief summaries of recent readiness milestones and activities:

  • This month, the ISO files with the Federal Energy Regulatory Commission (FERC) to finalize the change management process associated with MRTU Business Practice Manuals (BPMs).  Keep an eye on the ISO website for proposed Tariff changes, revised BPM drafts and the actual filing document–all of which can be found at:  http://www.caiso.com/17ba/17baa8bc1ce20.html.
  • MRTU training courses currently available for registration include:

    The 200-level series  February 11-14, 2008
    Bid to Bill courseMarch 11-13, 2008

    Additional information on MRTU training–along with a series of computer-based training modules–can be found at: http://www.caiso.com/docs/2005/10/07/200510071157559066.html

MRTU readiness activities are designed to address the People, Process and Technology requirements for conducting business within the new MRTU markets. A monthly “dashboard” Status Report is filed with the Federal Energy Regulatory Commission (FERC) and is available on the ISO website. The ISO Calendar also provides MRTU meeting and implementation details.

 

IMS Continues the Test Drive

MRTU Integrated Market Simulation (IMS) is like a test drive of the market – providing market participants a chance to get used to the new market before it becomes the way of doing business.  “Overall, I’m pleased with the results we’ve seen in IMS,” said MRTU Program Manager Debi Le Vine.  “We knew going into it that there would be some bumps along the way.  But, despite the challenges, we’re working hard to ensure that IMS validates what is working, shows what needs to be fixed and keeps us on track to go live on March 31, 2008.”

Although the results have been promising, seven weeks of MRTU Integrated Market Simulation Release 3 (IMS-R3) have also highlighted some differing expectations about the IMS effort and the limitations of relying on numbers alone.   Overall, the numbers show that the effort has gone well and continues to do what it was supposed to do—show what works and what needs to be fixed.  But, market participants have also raised concerns that don’t appear in the hard numbers:

  • More than 70 SCs participated during the first six weeks, representing an average of 78 percent of the generation capacity in the ISO-controlled grid retrieving data.  That means that most of the market is engaged in IMS, a very encouraging result.
  • The Day-Ahead Market has been available through the user interface 95 percent of the time when IMS was supported and 93 percent of the time through the Application-Program Interface (API)–better than the target availability of 85 percent.  But, there have been problems with scheduling Inter-SC Trades and with 24x7 system availability.
  • The Automated Dispatch System (ADS)–how market participants receive their real-time dispatches–was available 97 percent with a target of 98 percent.  Also, total system availability (24x7) of the Scheduling Infrastructure Business Rules (SIBR) was 96 percent and the Business Associate Portal Interface (BAPI) 94% where the target was 98 percent. The good news is during the support hours of 8 a.m. to 5 p.m., all applications met the 85 percent target availability.
  • The Real-Time Market availability averaged 87 percent of the intervals in the first six weeks, again higher than the target of 70 percent.  However, participants have noted that some market results were published late and that they have not been able to validate all of the settlements results yet.
  • As of November 8th, no “critical” issues remain open (critical is defined as preventing most or all participants from moving forward), but three “very high” and 102 “high” issues were open (high is defined as requiring immediate attention and/or preventing some participants from moving forward). The ISO is working hard to resolve these issues with 40-50 new issues coming in daily.

One of the new features of recent IMS-R3 activities has been the transition to “semi-structured” testing when market participants can input their own bids.  Previously, participants submitted the same bids repeatedly under different market conditions so that the ISO could verify that the market software would produce consistent results.  Adding the flexibility to submit more customized bids allows participants to test scenarios more similar to ones they may use when the markets go live.  Plus we have been able to execute eight of the scenarios requested by participants. 

“Market participants have been working very hard to test the MRTU systems, identify variances and test the fixes after they have been installed by the ISO,” said Le Vine.  “The ISO very much appreciates everyone’s efforts.”  As we move into IMS-Update 1 on November 13th and Update 2 on December 17th, participants can look for enhanced market functionality and additional charge codes to validate.  “We’ve made a lot of progress, but still have a ways to go to demonstrate that the market will work the way it’s designed,” said Le Vine.  “With a continued effort from participants like the one we have seen over the past weeks and months, we can arrive at March 31st with confidence in the new market design.”

The ISO continues to hold biweekly conference calls on Mondays and Thursdays to review IMS progress.  More information about IMS can be found at http://www.caiso.com/1bd7/1bd7ebbc72fc0.html. 

New Portal Simplifies Access to ISO Information

MPPThe December 17th update of the MRTU market simulation environment will include a revamped portal with new art and graphics. The new Market Participant Portal (MPP) provides centralized access to ISO applications and information. It is a secure web site managed through a single multi-application digital certificate that reduces the number of passwords and URLs needed to interact with the ISO. 

The new portal includes links to eight ISO applications such as SIBR (for submitting market bids and self-schedules), SLIC (for logging outage information), CMRI (for receiving market results), BAPI (for settlements statements) and more.  Public information from caiso.com and OASIS is also included, providing convenient access to the ISO meeting calendar and market notices.

Future development plans for the MPP include customization capabilities that will enable users to personalize displays to their own needs and an expanded menu of ISO information and systems.

MRTU Cutover & Reversion Plan in Development

The California ISO has drafted a cutover plan to facilitate an orderly transition to the new MRTU markets and supporting systems.  The detailed plan addresses the following implementation issues surrounding the March 31, 2008 launch of MRTU:

  1. A specific timetable of system activities supporting the cutover to new systems.
  2. A detailed list of responsibilities for said activities.
  3. Communication vehicles to be used to keep the ISO and participants coordinated throughout the transition.
  4. Reversion criteria and a plan to be used should grid operations be compromised to the extent that the current system must be reinstated.

“MRTU is mission critical for the ISO and many others, so crafting and coordinating a smooth transition is crucial,” says ISO Market Operations Manager Greg Ford who is co-managing the cutover process.  “Communication beforehand to set clear expectations and to coordinate during the actual transition is so important.  ISO teams from the MRTU project, Information Technology and Client Services will all be working very closely with participants to ensure a successful changeover.”

While the ISO is doing all it can to ensure a successful transition to the new MRTU markets, it is also prudent to document contingency plans to be used in the unlikely event that a return to current systems is required.  If the ISO is unable to reliably and accurately dispatch the markets in accordance with the MRTU Tariff and processes described within MRTU Business Practice Manuals, the reversion plan may be enacted.  This will only be considered under extreme system conditions such as the chronic unavailability of major systems or a significant failure to meet reliability performance standards.

A draft plan was posted to the ISO website in mid-October as a starting point for stakeholder discussion. A period of comment concluded in early November and the next step in finalizing the plan will be a presentation at December’s MRTU Implementation Workshop, followed by development of detailed plans for each application affected by MRTU.  A “table top” exercise for market participants to walk through plan components is also being planned for the January 2008 timeframe.  The initial draft of the MRTU Cutover Plan is available at: http://www.caiso.com/docs/2005/06/21/2005062113583824742.html#1c7c981d4620.

Client Perspective: Preparing Business Processes for the Big Change

Getting ready for MRTU implementation requires a lot of technology changes and testing.  But, there is a lot more that goes into the transition for market participants, as well as for the ISO.  Specifically, businesses that are changing from the current market design to the MRTU design need to make sure that their business processes will support using the new technology and systems to achieve their business objectives. We spoke with MRTU Project Manager Spence Gerber from APX, Inc., one of the scheduling coordinators preparing for the transition to MRTU, to understand their perspective on business process changes

Homestretch: APX is in somewhat of a unique position in that you don’t participate directly in the electricity market, but you support other entities that do.  What are your greatest challenges in helping your clients prepare for the transition to MRTU?
Gerber:

Our main priority right now is getting our clients familiar with our market applications so that they can align their business processes with the ISO markets. We are also being very proactive in educating our clients through seminars, newsletters and professional services engagements. We are encouraging our clients to participate in market simulations and working with them to ensure their participation is meaningful.  As we continue to roll out incremental features and functionalities to support MRTU transactions, active participation will provide them the ability to become more familiar with the tools and provide them a better understanding of how to use them to meet their own business objectives.

One of the most important things for our clients—and probably all market participants—is to understand how the Day-Ahead Energy Market will work because it will have significant financial ramifications.  It’s completely new for the ISO market, and whether an entity wants to take a position in the market or simply schedule their own resources, they need a solid understanding of how to schedule the transaction to stay within their financial risk tolerances.
Homestretch: Some of the businesses preparing for MRTU are using vendors to provide software and/or systems for all or part of the MRTU interface.  Are there specific concerns related to integrating processes designed by outside entities?
Gerber:

One of the most important things for any entity that’s working with a vendor is to be highly engaged through the development, testing and implementation process.  If they can try out the software tools early in the testing and development process, they will be in a better position to suggest changes early enough that the vendor may be able to make modifications and identify any “show stoppers” early in the development cycle. Integration of existing processes and business cases becomes significantly more critical the closer we get to go live.  The more familiar they are with the tools available, the more they can focus on understanding the market and how the changes are going to impact their business.

Like many of our clients, market participants are active and operate in other regional markets besides the ISO. Since all regional markets are unique from a technical perspective, vendors designing software or systems need to understand how the APIs (Application-Program Interfaces) and file structures differ market to market. To minimize the variables that our clients have to think about and allow them to concentrate on implementing their business strategies, APX has developed our applications to keep the look and feel consistent across all markets.
Homestretch: How can a business be sure that they can manage the entire MRTU business cycle from bidding, through receiving market results and dispatch instructions and on through to settlements?
Gerber: It is critical that participants understand the entire MRTU process bid-to-bill.  The challenge in doing this is that everybody has a “day job” running their business on top of preparing for MRTU.  So, we all need to set realistic expectations about what we can do.  Having said that, though, each of the market participants will need to leverage and optimize the market simulation phases using a vendor’s MRTU application or the ISO provided MRTU market applications to understand how data will flow through the whole cycle.
Homestretch: That brings us to the MRTU Integrated Market Simulation (IMS) process: how important is participating in market simulation to defining MRTU business processes?
Gerber: I think participating in market simulation is vital for everyone, and critical for those entities that have not previously participated in a market based on Locational Marginal Prices (LMPs).  Some of our clients participate in other North American electricity markets, and are familiar with how to adapt their business practices to an LMP market structure.  Those entities will focus on the nuances of the ISO market, relative to the others.  And, some entities will be able to adapt their current business practices to the MRTU structure with relatively minor changes.  But, unless a participant takes advantage of the hands-on opportunity of market simulation, they might find it challenging to operate their business after MRTU goes live. In addition to providing software solutions, APX works hand in hand with our clients to educate them on these ISO nuances and guide them through the process of assessing the impacts and opportunities on their business.
Homestretch: Settlements is where “the rubber meets the road.”  What should market participants be watching for to make sure that their market transactions will settle properly?
Gerber: As I mentioned before, understanding the financial aspects of the Day-Ahead Energy Market will be critical for everyone.  Entities that are marketing energy will need to know how their bids and offers will flow through the market.  Those that simply want to self-schedule resources will need to ensure that resources are clearing the market and that they understand (settlements) Charge Code 6011 (Day Ahead Energy, Congestion and Loss Settlement).
Another important consideration is gaining a clear understanding of the “lesser” settlements charge codes.  With more than 130 separate charge codes, it would be tempting to assume that some of them will be insignificant.  That may be the case, but participants won’t have a way to estimate the impact of those charge codes unless they work the entire bid-to-bill process through market simulation.  What we all want is to be able to create a business case in market simulation that’s as close as possible to real market conditions so we can see whether we need any behavioral changes to mitigate settlement impacts.  Of course, that also puts a major responsibility on the ISO to have the charge codes available in market simulation as early as possible.
Homestretch: Many market participants are quite good at developing expertise through market experience and adapting quickly to market changes.  How important is it to document the business processes behind an entity’s market expertise?
Gerber: Like most aspects of the market, there is no one-size-fits-all for documentation.  Some entities have a rigorous documentation practice while others are less so.  The important thing is that each entity tests their new processes so they know what to expect and so they can make corrections as necessary. 
Homestretch: If you could give market participants one bit of advice on getting their internal business processes ready for MRTU GO LIVE, what would you tell them?
Gerber:

Probably the most important thing for any participant to do in preparing for MRTU is to spend time understanding the market design so they can do a gap analysis and know what is changing.  Then, they can plan how they will make the needed changes.  Some parts of their business may not change significantly (consider that the market timelines will not change dramatically from the current timeline) but other parts may need major modifications.  The key will be to understand the new market.

We also need to consider other forces that affect our businesses outside of MRTU, such as Resource Adequacy requirements that will affect the amount of contracting for energy.

Keep in mind, too, that although the most time-sensitive need is preparing for the cutover to MRTU, that’s not the end of the process.  Once the new market begins, all of us will need to analyze the market’s performance.  Some entities may decide to change their business practices, for example, by procuring energy in the Day-Ahead Market to supplement long-term contracting, once they see how the market performs.  This is a long-term commitment for both market participants and the ISO. Again, APX will be there to help our clients optimize their business performance in the new market environment.

 

Contact Us

Email boxes are available to receive MRTU questions regarding:

Other MRTU questions can be addressed to:

MRTUImplementation@caiso.com
or
Your California ISO Account Manager or Client Representative