Executive Corner
Chuck King, California ISO Vice President
Market Development and Program Management

The delays connected to market simulation testing for the Market Redesign and Technology Upgrade (MRTU) program are certainly a disappointment for the California ISO.  Despite the team’s best efforts and hard work over the holidays and in the weeks since, sufficient system stability and performance have eluded us.  Yet, we remain steadfast in our commitment to provide market participants with a functional and rich simulation experience, and the decision to delay the start of the next market simulation reflects this commitment.

Our frustration with the problematic implementation of such a complex and massive project was assuaged by the comments of several market participants at the January Board of Governors’ meeting.  The unanimous support expressed for our efforts and the collaborative tone of the remarks was greatly appreciated by the ISO Board, management and staff.  The “road to MRTU,” while long and at times uncertain, has certainly served to unite us all with a common goal – to do it right, not fast – and that in itself is a tremendous outcome.

The ISO is now targeting a February 19th start date for Integrated Market Simulation (IMS) Update 2.  We continue to rigorously test our new systems in preparation for this target start date, which will be confirmed on or before February 12th.  System stability and performance are crucial and a premature launch of market simulation without them would be unproductive.  We are working hard to ensure satisfactory system operations that will allow market participants to focus on their own systems in a manner that makes the most productive use of everyone’s time.

A new Go Live date for MRTU will be identified following a reintroduction of market simulation, confirmation that initial results are satisfactory and coordination with market participants about their overall readiness status.  The critical nature of system stability and performance to the success of MRTU cannot be over emphasized.  Therefore, a final decision about a new Go Live date will have to wait until we get a few weeks of market simulation testing behind us and can confirm that all the program components needed for a successful launch are in place.

In the meantime, many other aspects of MRTU readiness continue both inside the ISO and with market participants. Inside this newsletter, you will learn more about the status of market simulation preparations, certification processes underway for MRTU and the new ISO Quick Response Team. 

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Start of Market Simulation Targeted for Feb. 19

The California ISO is targeting Tuesday, February 19th to resume MRTU Integrated Market Simulation with the introduction of Update 2 systems and functionality.  Several system integration and performance issues are currently being addressed to ensure a successful simulation experience.  A final decision on a new start date for Update 2 will be announced on or before February 12th.

To facilitate a meaningful and productive simulation for market participants, the ISO is working to secure the following requirements in preparation of the Update 2 launch:

1. STABILITY:  All core applications must consistently run within market timelines.
2. PERFORMANCE:  All systems must demonstrate acceptable response times.
3. END-TO-END TESTING:  Systems must run end-to-end consistently and with quality results that produce accurate settlements statements.
4. QUALITY of SOLUTIONS:  Pricing solutions need to be within tolerances.

At the January Implementation Workshop, several market participants volunteered to spend time on-site at the ISO, dial into their corporation’s MRTU systems and perform real-time testing of the new Update 2 system environment.  Dates and a testing approach for this session are in discussion for further development.  The ISO is very appreciative of participants’ willingness to help in this way.  Trouble-shooting potential connectivity and performance issues up front will certainly help to “pave the way” for a successful simulation.

Market Simulation Update 2 was scheduled to begin January 2nd but was delayed due to system performance issues and additional program complexities encountered during internal testing:

• An increased number of transmission corridors to provide additional operational flexibility.
• A fine-tuning of the market power mitigation process to provide quality solutions within acceptable timeframes.
• An increased number of external resources within the system to provide market participants with accounting flexibility.
• A significant upgrade to the web services layer that broadcasts and receives data between the applications to better support MRTU systems.

New Quick Response Team has (or will find) the Answers

Market participants face a myriad of issues and hurdles when testing new interfaces and systems in MRTU market simulation.  Questions arise on a daily basis about system availability and validation of simulation results.  Fast, accurate and detailed answers from the ISO are needed in order to remain engaged in the process.  In December, the ISO formed the Quick Response Team (QRT) and dedicated additional resources to address these types of participant questions and issues.

The mission of the QRT is simple:
Focus on customers’ MRTU questions and deliver the technical and business support needed
to maximize customer participation in market simulations.

Led by ISO Director of Customer Services and Industry Affairs Don Fuller, the QRT is comprised of Subject Matter Experts (SMEs) and a network of liaisons assigned to work directly with participants to better understand and address their specific testing issues. 

“QRT works daily to prioritize issues and focus resources on their resolution,” says Fuller. “Working in concert with the MRTU market simulation and testing teams, QRT is adding faster technical support and more timely responses. “

MRTU Validations: Making Sure It’s All Done Right

The scope of MRTU is immense with market changes that are both broad and deep for both market participants and the ISO.  As we all work feverishly to implement the new design and technology, we must make sure that the end product will consistently produce accurate results which are fully consistent with the approved tariff.  To provide this assurance, the ISO has enlisted three of the industry’s largest and most respected organizations to validate new MRTU business systems.

Software Certification
The first major initiative is designed to make sure that the MRTU software is working consistently with the rates terms and conditions of the ISO Tariff and that there is traceability from the tariff to software requirements, test processes and results.

The ISO has engaged Science Applications International Corporation (SAIC), a firm with significant experience in software systems validation, to manage this project.  Once complete, the software certification will assure regulators, market participants and the ISO that the primary MRTU systems—Congestion Revenue Rights (CRR), Market Quality System (MQS), Scheduling Infrastructure and Business Rules (SIBR), Integrated Forward Market (IFM) and Real Time Market (RTM)—implement the tariff accurately.

The timing of this certification is especially notable.  While other system operators have completed similar certifications, the California ISO is the first to initiate the process before the start of the market.  That means market participants and the ISO will know from the beginning that the MRTU software does the job it was designed to do.

Price Validation
One of the major benefits of MRTU is the introduction of Locational Marginal Prices (LMPs) to identify the value of serving energy at specific locations.  But, the benefit will only come to pass if the prices are accurate.  The ISO has been working with LECG, one of the nation’s leading economic consulting firms, to complete a price validation analysis to validate that:

1. Energy and Ancillary Services schedules are consistent with market participants’ bids.
2. Market software calculates the correct LMPs based on the bids.
3. Units are committed properly.
4. Uneconomic adjustments, activities based on factors other than market bids, are consistent with rules and also produce correct prices.

Completion of this price validation study ensures that the price information generated by MRTU and communicated to market participants is consistent with the information submitted by participants through their bids and is calculated properly according to the market design.  Market participants will have an opportunity to review a draft of the report and ask questions of LECG at an upcoming Implementation Workshop.

Settlements Audit
The MRTU settlements process is “where the rubber meets the road,” since that is where market systems determine how money flows from buyers to sellers.  Clearly, an accurate flow of market dollars is crucial and so the ISO has retained PriceWaterhouseCoopers (PwC) to complete an independent audit of MRTU settlement systems.  Similar to the other validations, the settlements audit will make sure that the MRTU Settlements and Market Clearing (SaMC) software calculates all of the charges paid by and to market participants are accurate and consistent with the tariff.  However, unlike the other validations, the ISO cannot complete the settlements audit ahead of time.  This project must wait until MRTU launches and becomes the way of doing business; at that time PwC will provide an audit opinion verifying that market charges are consistent with the ISO Tariff.