Temporary Suspension of Resource Operations BBB Issue Paper Stakeholder Conference Call May 19, 2017 9:00 a.m.–12:00 p.m. Pacific Time Keith Johnson Infrastructure and Regulatory Policy Manager
Agenda Time Item Speaker 10:00-10:15 Plan for Stakeholder Engagement Jody Cross 10:15-10:30 Background Keith Johnson 10:30-10:45 Scope of Initiative Keith Johnson 10:45-11:10 Existing Processes Deb Le Vine 11:10-11:45 Identified Issues Keith Johnson 11:45-12:00 Next Steps Jody Cross Page 2
PLAN FOR STAKEHOLDER ENGAGMENT Page 3
Stakeholder Process Temporary Suspension of Resource Operations POLICY DEVELOPMENT Additional Straw Papers Proposal Revised Draft Issue Straw Straw Final Board Paper Proposal Proposal Proposal Stakeholder Input We are here Page 4 Page 4
The plan is to present proposal to CAISO Board for approval on November 1-2, 2017. • To facilitate development of a final proposal, there will be several iterations of proposals – Straw proposal – Revised straw proposal* – Draft final proposal • Stakeholders are encouraged to provide written comments after each proposal is posted and discussed * Depending on how this initiative unfolds, it may be possible to go directly from straw proposal to draft final proposal Page 5
Stakeholder Process Schedule ccc Temporary Suspension of Resource Operations Document Date Milestone May 10 Post issue paper May 19 Hold stakeholder call Issue Paper May 30 Stakeholder written comments due June 21 Post straw proposal June 28 Hold stakeholder call Straw Proposal July 13 Stakeholder written comments due August 9 Post revised straw proposal * Revised Straw August 16 Hold stakeholder call Proposal August 29 Stakeholder written comments due September 11 Post draft final proposal Draft Final September 18 Hold stakeholder call Proposal October 2 Stakeholder written comments due Final Proposal November 1-2 Present for approval at Board meeting * Depending on how this initiative unfolds, it may be possible to go directly from straw proposal to draft final proposal Page 6
BACKGROUND Page 7
Some resource owners have requested ability for owner to temporarily suspend operation of its resource. • Initiative was identified in 2017 Stakeholder Initiatives Catalog • CAISO committed to hold a stakeholder process in 2017 – Explore opportunities to accommodate owner taking its resource out of service for extended period of time – When owner believes economic conditions cannot support its continued operation Page 8
Initiative will consider conditions where suspension may occur, and compensation, if any, if a request is denied. • Conditions under which owner may be able to take resource temporarily out of service – For non-physical reasons – Including economic reasons • Form of compensation, if any, CAISO would provide if it denies owner’s request • How permitting suspensions would interact with other requirements of tariff, contracts, grid and market operations Page 9
CAISO committed to undertake this initiative during the FERC process related a now-denied complaint. • On June 17, 2016 La Paloma Generating Company filed a complaint against CAISO • It submitted multi-month outage requests for several units because it did not anticipate continued operation of units would be economic • CAISO denied requests because – Outage requested on economic, rather than physical reasons – Request did not represent appropriate use of outage management system as allowed by tariff Page 10
Complaint (continued) • On October 3, 2016 FERC ruled CAISO’s denial of outages was reasonable under tariff – Only permissible reasons for outage include planned maintenance, new construction, or other work – Cannot grant requests for outages for economic reasons such as those at issue in complaint • Parties suggested FERC order CAISO to revise its tariff – To allow for outages based on economic considerations – Procure capacity if CAISO denies outage request (at least in case of non-resource adequacy capacity) • CAISO agreed to begin a stakeholder process in 2017 Page 11
SCOPE OF INITIATIVE Page 12
Scope of initiative is limited to addressing circumstances highlighted in La Paloma complaint. • Initiative will look at – Conditions under which CAISO may allow a Participating Generator to temporarily suspend operation of its resource for non-operational issues – What compensation, if any, should be paid if CAISO denies a request for suspension • Solution will likely involve process and new method(s) for requesting and reporting suspension of operations Page 13
Scope (continued) • Also will establish conditions under which switching operations from one balancing authority area to another would be allowed and how resource availability provisions would be applied • Scope does not include discussion of potentially allowing economic outages in general but are there other mechanisms to request temporary suspension of unit – CAISO’s position is outages submitted through outage management system should generally be taken only for situations where there is physical reason for change in status Page 14
EXISTING PROCESSES Page 15
Section 11 of BPM* for Generator Management includes three scenarios for retirement of resources. • Scenario 1 - Retiring unit wishes to reserve its deliverability and has either – Been approved for affidavit repowering process, or – Entered interconnection queue to be studied for repowering • Scenario 2 - Retiring unit wishes to reserve its deliverability but has not yet – Committed to or completed assessment for repowering, or – Entered interconnection queue after determination it is ineligible for affidavit repowering process • Scenario 3 - Retiring unit that will not repower and has no need to reserve its deliverability * “BPM” is acronym for Business Practice Manual. Page 16
Retiring unit has several conditions it must fulfill to retire unit and maintain its deliverability on grid. • BPM defines steps Participating Generator is required to take under each scenario • Applicable agreements must be revised • Unit must demonstrate actively engaged in construction of replacement generation within three years of retiring to retain its deliverability status • Annually CAISO will check on status of repowering progress • Suspending or mothballing a unit is similar to scenario 2 on previous slide Page 17
The current BPM has several timing considerations for suspensions. • Participating Generator must provide notice to CAISO – If unit is repowering and desires to retain its deliverability, 60 calendar days in advance of retiring so that CAISO can determine if unit is needed for reliability – If unit is permanently retiring and does not want to retain its deliverability, 90 calendar days in advance of retiring so that CAISO can determine if unit is needed for reliability • Under BPM for Generator Management, if unit does not operate at end of three-year period or cannot demonstrate that it is in active construction then it loses its full capacity deliverability status • CAISO only allows a unit to not generate for one year before CAISO requires Participating Generator to develop a plan Page 18
IDENTIFIED ISSUES Page 19
Thus far, the CAISO has identified seven issues. Issue Discussion Whether Whether CAISO may allow a Participating Generator Suspension to temporarily suspend operation of its Generating Unit Allowed for economic reasons, and conditions under which CAISO would grant request Whether If CAISO may allow a Participating Generator to Compensation temporarily suspend operation of its Generating Unit, Paid form of compensation, if any, CAISO would provide Participating Generator if CAISO denies request to take Generating Unit out of service Page 20
Thus far, the CAISO has identified seven issues. Issue Discussion Time Limits CAISO may want to establish a limit on minimum and maximum amount of time Generating Unit can suspend its operations • Amount of time might be tied to next resource adequacy (“RA”) procurement cycle and Participating Generator would need to reapply for suspension? Timeline CAISO will need to establish specific timeline for requesting suspended operation, allowing for CAISO evaluation of loss of unit for a period of time, and notification of approval and denial Page 21
Issues (continued). Issue Discussion “Return-ability” Is there a level of “return-ability” that would need to be maintained while Generating Unit is in suspension? Either skeleton crew on-site or x days to return to service? RA Treatment If Participating Generator has temporarily suspended (suspension) operation, it seems during that time period the Generating Unit should not be eligible to be used as RA resource in a RA showing RA Treatment Generating Unit that has suspended operations in one (“switching”) balancing authority area and is now operating in an adjacent balancing authority area should not be able to be counted as RA resource in the area for which it has suspended operation Page 22
NEXT STEPS Page 23
Next Steps • Request stakeholders submit written comments by close of business on May 30 – Use template provided on website at: Comment Template – Submit to mailbox: initiativecomments@caiso.com Page 24
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