Energy Law

California ISO Launches Long-Awaited New Market

By Tracy Davis

After protracted delays, the California Independent System Operator (ISO) launched operations in its long-awaited, new wholesale market on April 1, 2009.  The ISO touted its new "Market Redesign and Technology Upgrade" (MRTU) market as making the wholesale power grid in California "more high-tech, friendlier to diverse resources, and sending key signals for when and where to expand infrastructure."  The ISO also believes the new market will allow it to be more efficient at buying, selling, and delivering power, and to prepare for technological advances in the future, such as smart grid and demand response technology.  Among the new features in the MRTU market are:  (1) a day-ahead energy market; (2) a full network model that analyzes generation and transmission schedules a day in advance to manage or avoid bottlenecks in real-time; (3) locational marginal pricing, which prices electricity based on the costs of generating and delivering electricity at particular locations; and (4) financial transmission rights (known as "congestion revenue rights").

The ISO originally began redesigning its market following the California energy crisis of 2000-2001, and sought approval from FERC for the MRTU market design in February 2006 with an original proposed start-up date of November 2007.  Following technical issues with the market design and lengthy administrative proceedings before FERC, market implementation was postponed until April 1.

Full post as published by Energy Legal Blog on April 03, 2009 (boomark / email).