CAISO Proposes Flexible Ramping Product

by Latham & Watkins LLP

The California Independent System Operator (“CAISO”) has taken a significant step toward proposing a new ancillary service known as the “Flexible Ramping Product” as part of its market design.  With increasing levels of variable energy resources on the CAISO-controlled grid, maintaining power balance requires increased ramping capability, as the variable outputs of the renewable resources may increase the magnitude of 5-minute to 5-minute net load changes.  In a Straw Proposal issued June 2, 2014, the CAISO proposes to use the Flexible Ramping Product to address these emerging operational challenges relating to maintaining power balance in real-time dispatch.  In doing so, the CAISO emphasized that while its existing regulation service product could be called upon to address forecast uncertainties, procuring more regulation service is problematic from an economic and market efficiency perspective both because the generating capacity of some resources must be reserved to provide regulation service and because more real-time dispatch prices will be compensated at administratively-set penalty rates.  The CAISO stated that its Flexible Ramping Product is designed to deal with uncertainties that are realized before the binding real-time dispatch using a market-based design to procure ramping capacity in the CAISO’s day-ahead market, fifteen-minute market and real-time dispatch.

In December 2011, the CAISO implemented a flexible ramping constraint interim compensation methodology as part of its five-minute market optimization for real-time dispatch to procure sufficient ramping capability, pending development through a stakeholder process to evaluate the creation of a flexible ramping product procured through economic bids.  Under the CAISO’s current market rules, resources that resolve a constraint are compensated at the shadow price, which is the marginal unit’s resource specific opportunity cost.  The Flexible Ramping Product will replace the existing flexible market constraint and provide the CAISO with a means to procure sufficient ramping capacity through economic bids.  The Straw Proposal issued last week describes the CAISO’s market design proposal for a flexible upward and downward ramping product.  

In the Straw Proposal the CAISO observes that the fleet of units determined in the real-time unit commitment process is sometimes not positioned with sufficient ramping capability and flexibility in real-time dispatch to handle the 5-minute to 5-minute system net demand and supply changes.  Under current market design, the CAISO has to rely on frequency regulation services to resolve power imbalance in real-time after the imbalance has caused a frequency deviation or an area control error. While frequency regulation services are capable or correcting power imbalances, over-reliance on frequency regulation to compensate for inadequate ramping capability may, as discussed above, lead to economic and market inefficiencies.   

To ensure the procurement of adequate flexibility and ramping capacity while improving economic and market efficiency through economic bidding for the provision of ramping services, the CAISO proposes an upward and downward flexible ramping product to meet 5-minute to 5-minute net system demand changes, or net system movement, in real-time dispatch.  Through the Flexible Ramping Product stakeholder process, the CAISO will also evaluate allocating costs to generation and load in accordance with cost causation principles.  The Straw Proposal discusses product design, procurement and settlement procedures, example scenarios, and other issues. 

Resources capable of providing the proposed Flexible Ramping Product may include natural gas-fired power plants, energy storage, demand response, and other flexible resources.  The proposed schedule for the remainder of the Flexible Ramping Product stakeholder process is provided below.



Post Straw Proposal

June 2, 2014

Stakeholder Meeting

June 9, 2014

Stakeholder Comments Due

June 23, 2014

Post Revised Straw Proposal

August 13, 2014

Stakeholder Meeting

August 20, 2014

Stakeholder Comments Due

September 3, 2014

Post Draft Final Proposal

September 23, 2014

Stakeholder Conference Call

September 30, 2014

Stakeholder Comments Due

October 14, 2014

Board of Governors Meeting

December 18-19, 2014


Written by:

Latham & Watkins LLP

Latham & Watkins LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.