The California Independent System Operator (CAISO) is a not-for-profit public-benefit corporation responsible for operating the majority of California’s high-voltage wholesale power grid.  It has been established with the obligation to:  1) operate the state’s electric grid reliably and efficiently; 2) provide fair and open transmission access; and 3) facilitate effective markets and promote infrastructure development through the provision of timely and accurate information.
 
Considered a regional transmission organization, CAISO often cites other regional markets such as PJM and ERCOT as a good role model for how the California market should operate – and toward that end, CAISO has advanced a far-reaching market redesign proposal known as the Market Redesign and Technology Update (MRTU) to facilitate a transition toward a new energy market in California.

Fundamentally, NCPA members question the CAISO’s march toward markets, and believe this approach should be seriously questioned given the significant policy debacle and lasting economic impacts of our state’s previous incursion into the creation of new markets in the electricity industry – and the less than stellar results that have been achieved in this regard in other regions of the country. 

More specifically, NCPA members have significant concerns about the lack of meaningful stakeholder input that has been brought to bear in the establishment of this proposal – even though it entails significant changes with direct public impacts.  Moreover, the proposal includes highly complex computerized market systems that are not only questionable in their potential effectiveness, but have led to substantial new costs for all market participants and their consumers as we have worked to comply with the new market design. 

As we have heard more recently, others throughout the West are concerned that the CAISO’s proposals are certain to have significant and detrimental impacts throughout our region that have not been considered nor accounted for in the development of the MRTU proposal.  These concerns were recently highlighted in letters to the Federal Energy Regulatory Commission signed by 14 U.S. Senators. 

While the Federal Energy Regulatory Commission recently ruled that MRTU could proceed, the Commissioners highlighted the need to make important accommodations before it is finalized – including assurances of long term firm transmission rights, and a full testing of the programs before implementation.

Despite our serious concerns about the direction proposed in MRTU, NCPA, as a market participant, will continue to work in good faith with the CAISO as implementation of this proposal proceeds – with the goal of making the improvements needed to protect the interest of our state’s ratepayers, and to seek changes that will prevent problematic and lasting impacts throughout the region.