1. Update on CAISO / PacifiCorp Energy Imbalance Market
Presentation to WECC Seams Issues & Market Issues Subcommittees
October 10, 2013
Jim Price, Senior Advisor, Market Development & Analysis, CAISO
Additional info:

2. Presentation overview: PacifiCorp implementation and EIM stakeholder process are in progress
2013
2014
Implementation agreement
FERC
review
Implementation work
System testing market simulation
Board authorization 3/20/2013
Filing 4/30/2013
FERC acceptance 6/28/2013
Process Merger
Go live 10/1/2014
tariff language
EIM stakeholder process
FERC
review
Expand on principles in the MOU
Establish the project description and schedule
Description based on EIM straw proposal
Schedule identifies project tasks
Board authorization 11/8/2013
Filing
FERC acceptance
Stakeholder meetings:
4/11/2013 – Folsom
6/6/2013 – Folsom
7/9/2013 – Phoenix
8/20/2013 – Portland
9/30/2013 – Folsom

3. March 2012: CAISO proposed a scalable approach for implementing Energy Imbalance Market (EIM)
No critical mass required – each participant can enter EIM when ready
Preserves participants’ autonomy and current practices
Balancing authorities balance and provide their own ancillary services
Balancing authorities can trade bilaterally
Participants retain all physical scheduling rights
Flexible modes of participation are available
BAA 1
BAA 2
BAA 3
Confidential - Attorney Work Product - Prepared in Anticipation of Litigation

4. CAISO proposed a scalable approach for implementing Energy Imbalance Market (EIM)
network modeling
transmission monitoring
BAAs
bidding/self-scheduling
intra-hour dispatch
settlements

5. Benefits of Energy Imbalance Market
Leverages existing CAISO market
Enhances reliability through improved situational awareness in CAISO and EIM footprint
Captures the benefits of geographical diversity of load and resources
Potentially reduces reserve requirements
Provides easy entry/exit for EIM participation

6. Major changes through stakeholder process include:
Refined definitions and roles of participants
Replaced initial processes with process for EIM Participating Resources to submit hourly base schedules and resource plans via Market Operator, with EIM Entity review and adjustments
Several refinements in offset & neutrality cost allocations
Refined under- and over-scheduling provisions
Provisions for unit commitment and flexible ramping
Refined approach for Greenhouse Gas (GHG) compliance

7. Energy Imbalance Market key definitions
EIM Entity is a balancing authority, representing one or more EIM Transmission Service Providers that make transmission available to EIM, that enables the EIM to occur in its balancing authority area (BAA). By enabling the EIM, real-time load and generation imbalances within its BAA will be settled through the EIM.
EIM Entity determines eligibility of resource types, and required transmission service, within its BAA. (15-minute economic bids on its interties? Dynamic transfers?)
EIM Participating Resource is a resource located within the EIM Entity BAA that is eligible and elects to participate in the EIM.
In the 5-minute market, eligible resources may include generators, participating loads & demand response, non-generator resources, and dynamic transfers.
In the 15-minute market, imports and exports may also be eligible.

8. EIM builds on FERC Order 764 for financially binding 15-minute functions in real-time market
CAISO
EIM
Day Ahead Schedule
Base Schedule
(basis of financial
settlement)
15-Minute Unit Commitment & Energy Schedule, and Incremental AS Awards
15-Minute Unit Commitment & Energy Schedule
Real-Time Dispatch
Real-Time Dispatch

9. Market input data As needed Prior to operating hour (T-75 minutes)
Resource operational characteristics
Network model topology
Static contingencies observed
Prior to operating hour (T-75 minutes)
Economic bids and hourly base schedules
Ongoing
Transmission and generation outages
15-minute base schedules
Load and VER forecasts
Dynamic contingency list
Actual ETC/ATC scheduling limits and ETC uses

10. EIM design includes functionality to submit base schedules and review/approve resource plans

11. Timeline: Submission of hourly base schedules and resource plans
Market 1
Market 2
Market 3
Market 4
T-75: Deadline for EIM Participating Resources to submit real-time bids & base schedules.
Market Operator publishes advisory results at T-60. (Balanced? Feasible transmission?
Sufficient flexible ramping?)
Base schedules can be revised up to T-55.
T-45: Market Operator publishes advisory results.
T-40: EIM Entity may adjust base schedules.
T-20: E-Tag deadline for intertie hourly transmission profile and
energy schedule for Market 1 T
T = Start of the Hour
T-37.5: Start of Market 1 optimization
EIM Entity Scheduling Coordinator has full visibility of all base schedules at all times.

12. Load Scheduling
Options for load forecast for establishing base schedule:
Use ISO forecast, or
Use EIM Entity’s forecast, subject to under- & over-scheduling charges when errors exceed 5% threshold
EIM Entity defines Load Aggregation Points (LAPs)
For example, internal to the CAISO LAPs are defined by large utility service territories
The number of LAPs must be weighed against the availability of multiple granular load forecasts
CAISO will determine Load Distribution Factors (LDFs) using its state estimator
CAISO uses LDFs to distribute LAP forecast to individual nodes within the network model.

13. Base schedule should be balanced prior to start of real-time market
Load forecast from prior slide
Resource plans: base schedules
Self-scheduled resources
Intertie schedules
Base generation schedules
Resource plans also include:
Ancillary services reservations protected from dispatch
Operational characteristics (e.g., ramp rate)
Economic Bids =
Base schedule must be balanced or they will be adjusted prior to start of EIM.

14. Ancillary service requirements
EIM Entity remains responsible for meeting ancillary services requirements per NERC and WECC, dispatching contingency reserves, and managing load reductions
Reserve deployment & sharing schedules
Capacity to meet reserve sharing obligations is included in the resource plans used for base schedules. The capacity is protected for dispatch through EIM.
EIM Entity is responsible for its share of DCS compliance
EIM Entity deploys operating reserves and regulation in conformance with NERC, WECC, and reserve sharing group policies
If reserves are dispatched, they will be subject to EIM imbalance settlement until reflected in the base schedule

15. Market optimization uses the economic bids submitted at T-75 minutes
CAISO will provide advisory feedback on schedules up to the binding 15-minute market, so base schedules can be developed without congestion
15-minute process builds on FERC Order No. 764
Multi-interval Security Constrained Unit Commitment, with 15-minute interval granularity
Imbalance energy = difference between base schedule and 15-minute schedule
5-minute dispatch process
Multi-interval Security Constrained Economic Dispatch, with 5-minute interval granularity
Imbalance energy = difference between 15-minute schedule and 5-minute dispatch

16. Congestion management
CAISO will manage congestion in EIM by automatically activating constraints, before flows approach capacity
This allows the EIM dispatch to try and resolve the congestion
Alerts the EIM Entity that they may be required to initiate UFMP
Once activated, constraint will be enforced to maintain flows below the limit
EIM will coordinate with WECC’s Unscheduled Flow Mitigation Procedure (UFMP) and Enhanced Curtailment Calculator (ECC)
If EIM Entity initiates UFMP, CAISO will reflect the affected schedules in EIM dispatch, and enforce constraint limits as requested by RC.

17. EIM Entity identifies resource constraints to address reliability issues which cannot be modeled
CAISO will not issue exceptional dispatch instructions to EIM Entity resources
CAISO’s dispatch will reflect reliability constraint within EIM area until the base schedule can be updated
Any resource constraint for reliability will be settled at the EIM LMP

18. Publication of prices and other information
Locational marginal prices for 15-minute market and RTD will be published on OASIS for all nodes and LAPs.
Binding transmission constraints and shadow prices will be published on OASIS
LMP marginal cost of congestion component reflects congestion contribution from binding network constraints
Additional market data will be published as in ISO market
Some data are subject to a non-disclosure agreement

19. EIM settlement and accounting
Settlement metering is required for generators. Options:
CAISO Metered Entity, Scheduling Coordinator Metered Entity
Allocation of uplift costs will minimize comingled charges between ISO and EIM Entities to the extent possible.
Unaccounted-for energy
Inadvertent energy
CAISO will maintain a dynamic schedule to track energy between EIM Entities and CAISO
Net scheduled interchange change every 5 minutes through the dynamic schedule to ensure AGC control accuracy
Hourly energy is updated on the e-Tag within 60 minutes of the end of the operating hour
EIM Entity responsible for tracking and administering payment for inadvertent energy via WECC process

20. EIM administration Administrative Costs Forecasting Services
Administrative rate of $0.19 per MWh volume as calculated by:
Generation = max (5% of gross generation, generation imbalance energy), plus
Load = max (5% gross load, load imbalance energy)
Startup costs equal $0.03 times an EIM Entity’s total annual energy usage
Forecasting Services
CAISO load forecast is included in Administrative Rate
VER forecasting available for $0.10 per MWh
Dispute resolution is through Customer Inquiry, Dispute and Information (CIDI)
Market monitoring provided by CAISO

21. Transmission Service
Transmission capacity is made available through EIM Entities, and communicated through dynamic e-Tag and transmission registry:
EIM Participating Resources can offer their contracted capacity
Network service within EIM Entities allows redispatch up to available network capacity
TSPs make uncommitted capacity available
Reciprocity: Since transfer capability will be limited, as made available through EIM Entities, initial design proposes no charge for transmission for EIM transfers between EIM Entities
EIM stakeholder process will continue discussion of transmission rate design for EIM transfers

22. CAISO is committed to ensuring EIM design will properly account for Greenhouse Gas (GHG) costs
Entities that import energy to California have obligation to surrender compliance instruments to California Air Resources Board (CARB)
ISO will inform EIM Participating Resources of their net incremental EIM transfers to California for CARB compliance
The market optimization will consider GHG costs using GHG bids submitted by EIM Participating Resources

23. Process for New EIM Entities
Encourage interested parties to engage as early as possible
Implementation details depend on system complexity and timing of commitment
Future implementations will occur on an annual commitment cycle with month lead time
Implementation requires significant network modeling changes
Must align with CAISO spring and fall software release cycle
New entrants pay start up fee ($0.03 per MWh of demand)
Payment will be established through implementation agreement filed with FERC

24. Guiding objectives for governance drive toward a long-term independent EIM
Prompt & direct input
Adaptable structure
Promote successful implementation
STEP 1
STEP 2
Stakeholder Transition Committee
Roles:
Advise on EIM matters
Propose independent EIM structure
Independent EIM structure