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Richard Brooks

Co-Founder and Lead Software Engineer Reliable Energy Analytics LLC

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Successful developer of Energy Industry B2B and Cyber security standards at North American Energy Standards Board (NAESB) (www.naesb.org) since 1995; ANSI Meritorious Service Award Recipient;...

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Nov 25, 2020 1:49 pm GMTNov 25, 2020 1:58 pm GMT
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California ISO Report on system and market conditions, issues and performance: August and September 2020

This report provides additional analysis and some recommendations based on DMM’s own independent analysis. This report also covers periods through September 7, during which CAISO energy demand was forecast to be higher than August 14 and 15, but further load curtailments were avoided due to a combination of different market conditions and steps taken by the CAISO and other entities.

Source: caiso.com

I'm still going through this report posted on 11/24 from the California ISO Market Monitor regarding the causes of the August outages and resulting market effects, but one item in particular caught my attention, see below. I place this observation in the category of "Practice trumping theory"

The CAISO market was structurally uncompetitive during the high load days in August. Although prices were very high during the high load days in August, analysis using the CAISO’s day-ahead market software indicates that system wide mitigation of imports and gas-fired resources during this period would not have lowered prices. This reflects the fact that gas-fired and other resources that may be subject to mitigation were generally infra-marginal in re-runs of the day-ahead market using cost-based bids, and that high prices were set by demand response and other resources not subject to mitigation.

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Matt Chester on Nov 25, 2020

high prices were set by demand response and other resources not subject to mitigation

Was this impact of demand response anticipated?

Richard Brooks on Nov 25, 2020

Not sure, Matt. It looks like one of those unintended consequences when economic theory meets economic reality.

Bob Meinetz on Nov 25, 2020

"I place this observation in the category of Practice trumping theory.'"

I place CAISO's observation in the category of "Another Smoke-And-Mirrors Excuse Invented by California Regulators to Distract From the Inept Failure of Their State's 'Renewable Portfolio Standard.'"

"....resources that may be subject to mitigation were generally infra-marginal in re-runs of the day-ahead market using cost-based bids blah blah..."

Either that, or..."CAISO didn't have enough reliable power when it was needed by the people who were paying for it"?

What caused outages in mid-August isn't nearly as complicated as CAISO would like to make it seem.

Richard Brooks on Nov 26, 2020

Bob, I can always count on you to add a little humor to my day. Happy Thanksgiving and Cheers.

Bob Meinetz on Nov 27, 2020

And you to mine, Richard. Happy Thanksgiving backatcha!

Rick Engebretson on Nov 28, 2020

Bob, may I try rephrase your excellent comment as, "We hear the politics, but we want to see the physics."

Richard Brooks on Nov 28, 2020

Close enough.

Rao Konidena on Nov 28, 2020

Richard,

I went and looked into the Market Monitoring and Mitigation Business Practice Manual (BPM) of MISO on Demand Response Resources. Here is what our BPM says, section 9.2 of BPM 09:

"It is difficult, if not impossible in some cases, to determine appropriate Reference Levels for DRRs and apply mitigation to them using the conduct and impact approach. Therefore, in order to monitor DRRs for potential market power, the IMM will:
1) Monitor DRRs in a manner comparable to Generation Resources;
2) Notify FERC of any behavior by a DRR that the IMM has reason to believe has violated applicable market rules;
3) Assess and report on uplift charges associated with any make-whole payments paid to these DRRs; and
4) Assess and report on the market effects of DRRs in MISO’s markets, including any market benefits and perceived market power risks, as part of its annual State of the Market Report."

DRRs are demand response resources at MISO. We have DRR Type I, which is a block load and DRR Type II, which is a range.

I am wondering with this piece of information, whether we are setting up market monitoring and mitigation for failure if it is already difficult to start with - monitoring and mitigating demand response?

Richard Brooks on Nov 28, 2020

Hi Rao, it is indeed very difficult to verify DRR performance. When I worked at ISO-NE we had to develop a consumer baseline tracking system in order to extrapolate DRR performance when an event was called. There is a margin of error in the process, because you cannot meter electricity that didn't flow, so you have to do a best guess of what amount of electricity the consumer would have consumed, based on the observed basline data, if not for the DR event occurring. Extrapolated performance is determined by subtracing actual metered result at time(t) from the baseline for time(t).

Thank Richard for the Post!

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