Thursday, February 21, 2019

CAISO’s CRR Market Yields Summer Surpluses

CAISO’s congestion revenue rights market showed unusual surpluses this summer because of higher congestion rents on Path 26, a major transmission line leading into Southern California.

In particular, there was a roughly $50 million surplus in August with sizable surpluses in July and September as well.

A CAISO forum addressed market performance and planning Wednesday. | CAISO

Deficits in the CRR market were far more typical than surpluses in 2017 and 2018. The atypical CRR revenue adequacy in August and September was one of the more notable revelations in CAISO’s Market Performance and Planning Forum on Wednesday.

“The main reason for the CRR surplus was congestion on Path 26,” said Rahul Kalaskar, the ISO’s manager of market validation analysis.

Kalaskar said there were high flows north to south this summer because of higher temperatures and gas prices. That led to higher energy prices and more expensive congestion pricing, boosting overall congestion revenues.

“The main reason for this high congestion is you had high gas prices, and there were some days where you had local outages,” Kalaskar said.

Western wildfires — and the threat of wildfires — created market uncertainty and contributed to higher prices, he said. Exceptional dispatches (out-of-market operations to ensure adequate generation) spiked in July and August in the ISO’s territory but diminished as the threat of fire and higher loads passed.

Other findings showed integrated forward market prices (which include day-ahead prices) in July and August spiking well above those in real time, but September saw a return of normal patterns. CAISO price correction events stayed high in August and September and Energy Imbalance Market-related price corrections surged in September too.

— Hudson Sangree