CAISO Monitor Says Bid Rule Changes Flawed

By Jason Fordney

CAISO’s Department of Market Monitoring criticized a recently proposed set of market rule changes as incomplete, urging a slower approach.

CAISO DMM Director Eric Hildebrandt | © RTO Insider

The department and other market participants recently submitted comments on CAISO’s straw proposal for its Commitment Cost and Default Energy Bid Enhancements (CCDEBE) initiative. The proposal is designed to more accurately reflect unit commitment costs and overhaul the way the ISO calculates the default energy bid (DEB), which replaces bids of units found to have market power. (See CAISO Developing New Bidding Rules.)

The Monitor said it continues to recommend that CAISO split the proposal into parts and that more time is needed to develop dynamic mitigation. “The development and implementation of dynamic mitigation of commitments costs is relatively complex and the ISO has made very limited progress on developing technical details of an approach for actually implementing this,” it said.

“Given the flaws and lack of detail in the ISO’s commitment cost mitigation design,” the Monitor does not support a proposal to raise the caps on market-based commitment cost bids above the current level of 125%.

One of CAISO’s rationale for the new program is incentivizing flexible resources. The grid operator says that overly constrained supply offers discourage participation by some resources in the ISO and the Western Energy Imbalance Market (EIM), where the changes would also apply.

There are three power suppliers subject to the DEB: Arizona Public Service and Berkshire Hathaway’s PacifiCorp and NV Energy. In comments filed Aug. 15, NVE said it supports increasing the flexibility of supply bids and reforming the DEB methodology “to ensure appropriate recovery of actual supply costs.”

The Western Power Trading Forum said it supports the concept of the revised proposal but asked for additional information on the frequency of mitigation. The…

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