California ISO notes lower transmission congestion

Transmission congestion in the California ISO power grid was lower in 3Q15 compared with the previous quarter, with a relatively minimal impact on average prices, according to a Nov. 16 report from the California ISO Department of Market Monitoring.

There were planned transmission outages in 2Q15 that contributed to congestion in the South-to-North direction on the Path 15 transmission line. The outages began in mid-March and continued until early June.

“Congestion declined significantly in the third quarter with the completion of these outages,” the report said.

Congestion increased the average day-ahead price and 15-minute price in the Pacific Gas & Electric area during 3Q15 by about 0.5 percent and 0.4 percent, respectively, with an even smaller impact in the areas of Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric. PG&E is the utility unit of PG&E Corp.

Congestion occurred more frequently in the day-ahead market than in the 15-minute market, the report said.

Overall, day-ahead prices during 3Q15 were stable and lower than last year in both peak and off-peak periods, with low natural gas prices being the primary factor.

Challenges in load forecasting affected prices throughout 3Q15, with real-time prices seeing price spikes when the load forecast was below actual load conditions. During the peak summer load hours when the load was underestimated in the day-ahead market, “the difference tended to be off by a lot” due to temperature forecasts being affected by strong El Nino effects, the Department of Market Monitoring said.

The load forecasts, which included behind-the-meter rooftop solar resources, were also affected by record precipitation and regional monsoonal cloud cover in Southern California during 3Q15, the report added.

The load forecast uncertainty led operators to, at times, increase unit commitment target levels and make exceptional dispatches in order to ensure reliability.

The report noted that the revenue inadequacy from congestion revenue rights, which are financial instruments that enable market participants to hedge congestion costs based on locational marginal prices, declined from $45 million in 2Q15 to $35 million in 3Q15. The revenue shortfall is considerably smaller than 3Q14, when it was $90 million, due to the California ISO adopting several measures to address revenue inadequacy in 2014.

Even with the improvement, the department recommended that the California ISO continue to investigate other steps to address revenue inadequacy, including limiting the amount of revenues that could be transferred from load-serving entities to CRR holders through uplift.

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