FERC to Hold Technical Conference on California Capacity Market

The California Independent System Operator (CAISO) has been projecting a shortage of downward and upward load-following capability as early as 2017.  On July 12, 2013, the Federal Energy Regulatory Commission (FERC) announced a technical conference to be held on July 31, 2013,  in Sacramento, California, to address the State of California’s need for flexible capacity and local reliability in the two-to-five-year forward period.  In addition, the panelists will address a proposal released by CAISO and the California Public Utilities Commission to (1) augment the existing year-ahead resource adequacy procurement obligations for all load-serving entities (LSEs) by establishing procurement obligations two and three years prior to a delivery year; (2) develop a CAISO-run capacity auction to provide a voluntary platform for LSEs to procure additional forward capacity beyond what they procure bilaterally; and (3) provide an annual long-term reliability planning assessment, focused on the four-to-10-year forward period. The technical conference is a result of FERC’s order in Docket No. ER13-550 earlier this year, encouraging CAISO and its stakeholders “to focus on the development of a durable, market-based mechanism that provides incentives to ensure that resources with the adequacy and operational needs CAISO requires are available to meet system needs.”  Such efforts may result in new market opportunities for generation owners.

A copy of the CAISO / CPUC proposal is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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