CC 7882 Monthly CPM Capacity at Risk of Retirement Settlement

Settlements & Billing

Monthly CPM Capacity At Risk Of Retirement Settlement
(CC 7882)

Version 5.0

Table of Contents

1.Purpose of Document

2.Introduction

2.1Background

2.2Description

3.Charge Code Requirements

3.1Business Rules

3.2Predecessor Charge Codes

3.3Successor Charge Codes

3.4Inputs - External Systems

3.5Inputs - Predecessor Charge Codes or Pre-calculations

3.6CAISO Formula

3.7Outputs

4.Charge Code Effective Date

1.Purpose of Document

The purpose of this document is to capture the requirements and design specification for a Charge Code in one document.

2.Introduction

2.1Background

The Capacity Procurement Mechanism (CPM) provides an orderly, pre-approved means for the CAISO to procure backstop capacity where and when needed to meet Reliability Criteria or otherwise maintain reliable grid operations.

Although RA programs are in place under California law, and RA requirements have been established by Local Regulatory Authorities, there may be instances when RA Resources are not sufficient to meet all of the operational needs of the ISO and enable it to meet reliability criteria. This may occur as a result of LSEs failing to comply with RA requirements, LSEs procuring sufficient resources to meet their RA requirements established by Local Regulatory Authorities, but not meeting all of the ISO’s specific reliability needs, and unforeseen or changed circumstances affecting system conditions or grid operations. The ISO must have the appropriate tools at its disposal under such circumstances to maintain reliable operations. In particular, the ISO needs the ability to procure resources when such instances occur in order to maintain the reliability of the CAISO Balancing Authority Area. The Interim Capacity Procurement Mechanism (ICPM) has provided that ability and, therefore, the ISO is retaining the key features of the ICPM in conjunction with a few key modifications that will enhance the program.

In reviewing the performance of both the ICPM and the ISO’s new market systemover the first 18 months of their operation, the ISO has come to two key conclusions –(i) the ICPM has operated effectively and successfully in fulfilling its intended purpose, and (ii) the need for a backstop capacity procurement mechanism continues to exist.

While the use of ICPM has been rather limited, thepotential circumstances and needs that motivated its implementation are stillrelevant today. Moreover, given the significant operational requirements facing the ISOin the near future as a result of the integration of large amounts of variable energyresources, not seeking the continuation of someequally-effective type of backstop capacity procurement mechanism would be irresponsible. In order to assureits ability to operate the system reliably under diverse system conditions, the ISO musthave both a backstop capacity procurement mechanism comparable to ICPM and anExceptional Dispatch mechanism as permanent features of its market and operatingstructure. As variable energyresources that are on line increase, they will comprise a greater proportion of LSEs’ RA

capacity and load-serving capacity.. Since variable energy resources’ qualifying capacity is unpredictable due to several inherent constraints (e.g., weather conditions), they may be unable to provide their full RA capacity, which, in turn, could adversely impact system reliability. A backstopcapacity procurement mechanism enables the ISO to procure specific capacity neededin response to outages in order to maintain the ISO’s compliance with applicable

reliability criteria.

In addition to those aspects of ICPM which the ISO intends to retain, the CPM will feature several enhancements:

• A new CPM procurement category for resources at risk of retirement that the ISO has determined will be needed for reliability in the following year;
• The addition of two criteria the ISO can consider in selecting capacity for a CPM designation or Exceptional Dispatch from eligible resources that will allow ISO operators to exercise a preference for non-use-limited over use-limited resources and to consider each resource’s operating characteristics;
• Adjustment of CPM compensation when a CPM resource becomes unavailable during the CPM procurement period due to a maintenance outage;
• An updated price for backstop capacity.

For the methodology for CPM Compensation, the ISO shall use a CPM price of $55/kW-year as established using the CEC’s updated “Comparative Costs of California Central StationElectricity Generation Technologies” study, issued in 2009.

For the CPM Allocation, the existing ISO Tariff Sections 43.7.1 through 43.7.6 establish the method for allocating the costs of CPM capacity payments for each category of CPM designation. The allocation method for each CPM category is as follows:

• For insufficient Local Capacity Area Resources in an annual or a monthly RA Plan, the CPM costs are allocated pro rata to each Scheduling Coordinator for a deficient LSE based on the ratio of that LSE’s deficiency to the deficiency within the TAC area.
• For a collective deficiency of Local Capacity Area Resources in an annual RA Plan, the CPM costs are allocated to all Scheduling Coordinators of LSEs serving load in the TAC area in which the deficient local capacity area was located.
• For insufficient RA resources to comply with an LSE’s annual and monthly demand and reserve margin requirements, the CPM cost allocation is made pro rata to each LSE based on the proportion of its deficiency to the aggregate deficiency.
• For a significant event, Exceptional Dispatch, or resource at risk of retirement CPM, the costs are allocated to all Scheduling Coordinators for LSEs that serve load in the TAC area where the need for the designation arose, based on each Scheduling Coordinator’s percentage of actual load in the TAC area to total load in that area.

2.2Description

The CC 7882 (Monthly CPM Capacity At Risk Of Retirement Settlement) provides for the settlement of CPM Capacity that the CAISO procures in response to all CPM Capacity At Risk Of Retirement. When the CAISO procures CPM for reason of one or more CPM Capacity At Risk Of Retirement, this charge code outputs for each Scheduling Coordinator a single total amount (in $) for the payment owed to the Scheduling Coordinator for the CPM that the SC sold to the CAISO over a Trading Month. The CPM amount is associated with all CPM Capacity At Risk Of Retirement, all LSEs that the SC represents, all resources with which the SC has offered to supply the CPM, and all Trading Days of the Trading Month for which the capacity is supplied.

3.Charge Code Requirements

3.1Business Rules

3.2Predecessor Charge Codes

3.3Successor Charge Codes

3.4Inputs - External Systems

3.5Inputs - Predecessor Charge Codes or Pre-calculations

3.6CAISO Formula

The Monthly settlement of CPM for each Business Associate is derived according to the formulation below.

3.6.1BAMonthlyCPMRiskOfRetCapacitySettlementAmountBUU’m=BAMonthlyTotalCPMRiskOfRetCapacitySettlementAmountBOUU’m

3.6.2BAMonthlyTotalCPMRiskOfRetCapacitySettlementAmountBOUU’m = BAMonthlyResourceCPMRiskOfRetCapacitySettlementAmountBrtOUU’m

3.6.3BAMonthlyResourceCPMRiskOfRetCapacitySettlementAmountBrtOUU’m= (-1)*BAMonthlyResourceCPMCapacityDesignatedQuantity BrtOUU’m *BAMonthlyResourceCPMAvailabilityFOFactorBrtOUU’m*BAMonthlyResourceCPMCalculatedPriceBrtUU’m*BAMonthlyResourceCPMDailyShapingFactorBrtOUU’m*BAMonthlyResourceCPMPlannedAvailabilityPercentage BrtOUU’m

Where Exceptional Dispatch Type O in (ROR1, ROR2, ROR3)

3.6.3.1CAISOMonthlyCPMRiskOfRetCapacitySettlementAmountUU’m =CAISOMonthlyTotalCPMRiskOfRetCapacitySettlementAmountOUU’m

3.6.3.2CAISOMonthlyTotalCPMRiskOfRetCapacitySettlementAmountOUU’m =BAMonthlyTotalCPMRiskOfRetCapacitySettlementAmountBOUU’m

3.7Outputs

4.Charge CodeEffective Date