[Federal Register Volume 76, Number 246 (Thursday, December 22, 2011)]
[Notices]
[Pages 79676-79677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32765]



[[Page 79676]]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER11-4580-000]


California Independent System Operator Corporation; Supplemental 
Notice of Agenda and Discussion Topics for Staff Technical Conference

    This notice establishes the agenda and topics for discussion at the 
technical conference to be held on February 2, 2012 to discuss issues 
related to the California Independent System Operator Corporation's 
(CAISO) proposal to eliminate convergence bidding at intertie 
scheduling points.\1\ The technical conference will be held from 9 a.m. 
to 4:30 p.m. (Eastern Time) in Hearing Room 1 at the Commission's 
headquarters, 888 First Street NE., Washington, DC. The technical 
conference will be led by Commission staff.
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    \1\ Cal. Indep. Sys. Operator Corp., 137 FERC ] 61,157 (November 
25, 2011 Order).
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    The topics and related questions to be discussed during this 
conference are attached. The purpose of the technical conference is to 
provide Commission staff and interested parties an opportunity to 
discuss CAISO's proposal to eliminate convergence bidding at intertie 
scheduling points in detail. No formal presentations will be made other 
than an opening presentation by CAISO; however, parties will be 
encouraged to participate in the discussion along with Commission 
staff. All interested parties may file written comments following the 
technical conference.
    The technical conference will be open for the public to attend, and 
advance registration is not required. The conference will be accessible 
via telephone on a listen-only basis. For information regarding 
telephone access to the conference and to specify whether you will be 
dialing into the conference, please email [email protected] no 
later than 5 p.m. (Eastern Time) on Monday, January 30, 2012. You will 
then receive a confirmation email containing a dial-in number and a 
password. Staff requests that, to the extent possible, individuals 
calling from the same location share a single telephone line.
    FERC conferences are accessible under section 508 of the 
Rehabilitation Act of 1973. For accessibility accommodations please 
send an email to [email protected] or call toll free 1-(866) 208-
3372 (voice) or (202) 208-8659 (TTY), or send a fax to (202) 208-2106 
with the required accommodations.
    For more information on this conference, please contact Moon Athwal 
at [email protected] or (202) 502-6272 or Colleen Farrell at 
[email protected] or (202) 502-6751.

    Dated: December 16, 2011.
Kimberly D. Bose,
Secretary.

Agenda for the Technical Conference Discussing CAISO's Proposal To 
Eliminate Convergence Bidding at Intertie Scheduling Points February 2, 
2012

Opening Remarks

9 a.m.-9:15 a.m.--Greeting and Opening Remarks.
9:15 a.m.-10 a.m.--Opening Presentation by CAISO.

Discussion

    Discussion on the following issues will be led by Commission staff, 
with questions on each topic to be raised by staff and interested 
parties in attendance. Commission staff and CAISO will be seated at 
tables located at the front of the hearing room. Staff does not 
anticipate any formal presentations during these discussions; however, 
parties should plan to participate in topics of specific interest to 
them. The objective of the technical conference is to obtain new 
information on and discuss these topics, including information on 
alternative proposals. Please note that although specified time periods 
have been allotted to discussion topics, we will continue to move 
forward to discussion topics as soon as discussion on the prior topic 
has concluded. There will be a lunch break.

Discussion of the Performance of Convergence Bidding at Intertie 
Scheduling Points and Internal Nodes

--What have the total aggregate monthly values of the real-time 
imbalance energy offset been since April 2009?
--CAISO claims that, out of approximately $102 million total real-time 
imbalance energy offset costs, the offsetting convergence supply bids 
at intertie scheduling points and convergence demand bids at the 
internal nodes have contributed a total of $53 million since February 
2011.\2\ Meanwhile, SESCO Enterprises LLC, West Oaks Energy, LLC, and 
XO Energy CAL, LP (collectively, Financial Marketers) argue that when 
the offsetting bids are removed convergence bidding contributes only 
$34.9 million of the $53 million to the total real-time imbalance 
energy offset, and they argue that this value is declining.\3\ What has 
been the monthly contribution of convergence bidding at intertie 
scheduling points to the real-time imbalance energy offset since 
February 2011? What has been the monthly contribution to the total 
real-time imbalance energy offset of convergence bidding when 
offsetting bids submitted within the same scheduling coordinator are 
isolated since February 2011?
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    \2\ CAISO Filing at 14.
    \3\ Financial Marketers Protest at 7.
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--What has been the impact of the elimination of convergence bidding at 
intertie scheduling points, pursuant to the November 25 Order, in terms 
of the real-time imbalance energy offset and convergence/divergence of 
prices?
--CAISO argues that convergence bidding at the interties has led to 
divergence between day-ahead and real-time prices.\4\ Western Power 
Trading Forum (WPTF) argues that there has been convergence between 
day-ahead and real-time prices (hour ahead scheduling process prices 
and real-time dispatch prices).\5\ Please explain in greater detail the 
effects of convergence bidding at the internal nodes and interties. For 
example, under the current market design:

    \4\ CAISO Filing at 3.
    \5\ WPTF at 14.
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    [cir] Has there been convergence or divergence of day-ahead and 
real-time prices on the internal nodes? Please explain whether there is 
convergence or divergence based on daily data, monthly data, or other. 
How do these metrics differ?

    [cir] Has there been convergence or divergence of day-ahead and 
hour-ahead scheduling process prices on the interties? Please explain 
whether there is convergence or divergence based on daily data, monthly 
data, or other. How do these metrics differ?

--What are the total aggregate monthly values representing the impact 
of the price inconsistencies that result from the dual intertie 
constraint? \6\ What has the monthly trend been, and what is the driver 
of the trend?
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    \6\ The dual intertie constraint refers to the fact that, on the 
interties, CAISO only considers physical transactions when 
determining unit commitment, but considers both physical and virtual 
transactions to establish prices.
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--Does implicit convergence bidding cause problems (i.e., reliability 
concerns)? Has convergence bidding at intertie scheduling points aided 
in limiting or eliminating implicit convergence bidding (i.e., 
cancelling

[[Page 79677]]

physical import or export schedules)? If so, how has the elimination of 
explicit convergence bidding at intertie locations impacted the 
occurrence of implicit convergence bidding?
--Have there been any reliability impacts, price spikes, or price 
divergence from eliminating explicit convergence bidding at intertie 
scheduling points?
--Have there been benefits observed from permitting convergence bidding 
at intertie scheduling points? What evidence has there been of the 
benefits?
--How has convergence bidding been used to hedge congestion on intertie 
scheduling points?
--How has convergence bidding been used to hedge delivery risk on 
intertie scheduling points? What are physical resources losing by not 
being able to hedge their physical positions using virtual bidding at 
intertie scheduling points? Please provide examples of any other 
practices that are impacted by not being able to submit convergence 
bids at intertie scheduling points.
--CAISO states that a rule prohibiting offsetting internal and external 
virtual bids would be ``easily undermined by collusive transactions.'' 
\7\ In order to understand the motivation for ``collusive 
transactions,'' please provide aggregate values that represent the 
maximum actual monthly profit of a virtual bidder submitting offsetting 
virtual supply bids at the interties and virtual demand bids at the 
internal nodes.
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    \7\ CAISO Filing at 17.
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Discussion of the Dual Real-Time Market Structure (Scheduling and 
Pricing Interties in the Hour-Ahead Scheduling Process, and Scheduling 
and Pricing Internal Nodes in Real-Time Dispatch)

--Has the hour-ahead scheduling process price been consistently below 
the day ahead price since April 2009? Has there been a predictable 
pattern of price difference in certain hours? How has that pattern been 
affected, if at all, since convergence bidding was allowed?
--What are the contributing factors to the real-time dispatch price 
being higher than hour-ahead scheduling process price (i.e., 
forecasting errors, operator biasing, ramping flexibility procurement, 
hourly interchange scheduling)? How do these factors impact the ability 
of convergence bidding to result in price convergence on internal nodes 
and intertie scheduling points?
--WPTF states that on July 6, 2011, the loss of an external resource 
contributed to an increased number of market participants declining 
hour-ahead scheduling process awarded schedules to import power. WPTF 
states that, instead of considering whether resources within CAISO 
could replace the lost energy at cost-effective prices, CAISO continued 
to dispatch increasing quantities of imports, inflating the hour-ahead 
scheduling process price.\8\ Is this an accurate representation of the 
events on July 6, 2011? In general, what impact does the dual real-time 
market structure have on CAISO's operations and pricing trends? How 
does scheduling in the hour-ahead scheduling process based on 
forecasted conditions impact prices and scheduling at the internal 
nodes in real-time dispatch?
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    \8\ WPTF Protest at 18.
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--What are the disadvantages and advantages of settling imports and 
exports at the real-time dispatch price?

    Discussion of alternative proposals: Please evaluate the 
alternatives proposed by protestors and discussed by CAISO in its 
filing as described below, as well as any others, to eliminating 
convergence bidding indefinitely at intertie scheduling points. Please 
be prepared to discuss whether these alternatives could be implemented 
and how the alternatives will address the costs identified by CAISO 
that are attributed to convergence bidding at intertie scheduling 
points.

--Prohibit offsetting internal and external virtual bids.
--Implement a settlement rule that would neutralize the price arbitrage 
of the hour-ahead scheduling process and real-time dispatch.
--Modify the timing of convergence bidding liquidation and settlement. 
For instance, CAISO states that it considered keeping day-ahead awarded 
virtual supply and demand positions in the hour ahead scheduling 
process.
--Modify the existing allocation of the real-time imbalance energy 
offset to measured demand, to more accurately reflect cost causation.
--The approach utilized in the New York Independent System Operator to 
settle the interties.\9\
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    \9\ NYISO is a net importer and schedules imports and exports in 
the hour-ahead process, similar to CAISO's hour-ahead scheduling 
process. Where there is no congestion on external interfaces, NYISO 
will settle imports and exports at the time-weighted average of the 
real-time price at the relevant proxy bus. Imports receive a bid 
production cost guarantee if the real-time price is lower than their 
offer price. CAISO Filing at 18.
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--Pay as bid or pay the greater of the bid or the real-time dispatch 
price.

4:15 p.m.-4:30 p.m.--Closing Remarks.

[FR Doc. 2011-32765 Filed 12-21-11; 8:45 am]
BILLING CODE 6717-01-P