California ISO to increase reliability reviews of proposed plant shutdowns

Dive Brief:

The Board of Directors of California's grid operator Nov. 2 approved a slate of changes intended to enhance grid reliability, including assessing more frequently whether a generation asset is needed for reliability.
The ISO will now consider twice a year whether units facing retirement are necessary for future reliability; previously, the operator only made that call in November.
The ISO board also approved a management recommendation to enter into a reliability must-run contract with the Metcalf Energy Center, which the operator determined was necessary for grid stability.

Dive Insight:

The board approved a proposal to enable generating resources facing potential retirement to request that the ISO assess whether they are necessary for future reliable grid operations earlier in the year, "so they can plan the orderly retirement of the facility."

If the grid operator determines the resource is necessary for reliability, it will make a procurement designation and execute an administrative contract allowing the plant to continue operating with cost-of-service-based compensation. The ISO said it will now consider making those designations twice yearly, adding a new window in April in addition to the current November window.

The board also approved entering into a reliability must-run contract with the Metcalf Energy Center, "which is needed to maintain grid stability." The Calpine-owned facility may be offered a utility contract in 2018, the board said.

Additionally, the board approved changes to the program that ensures plants providing energy under the state’s resource adequacy program will have the incentive to be consistent with offering its energy to the wholesale market.

"The adjustments also help to ensure that these resources will arrange for replacement resources should they be forced out of service," the board noted. "These changes will help ensure that plants meet their obligations to offer energy to the market especially during peak load conditions."

Amid the changes aimed at reliability, the California ISO's board also voted to give itself a pay raise. But the retainers it pays remain on the low side when compared to other grid operators, and had previously remained unchanged for more than a decade.

"The increase in compensation to $40,000 per year is well below the retainers paid to the governing boards of the nation’s other independent grid operators," the ISO board said in a statement.