Generators oppose idling power plants in California without compensation

By the OGJ Online Staff

HOUSTON, Aug. 10, 2001 — California independent generators say a new tariff filed at the Federal Energy Regulatory Commission by the state’s grid operator will cause additional air pollution and threaten the reliability of the electricity system.

Independent Energy Producers, a trade association based in California, filed a protest with FERC regarding the California Independent System Operator’s interpretation of an order earlier this summer concerning system-wide price caps and the so-called “must run” requirement.

The CAISO proposed that all generating units not scheduled to operate or not capable of responding to 10 minute dispatch orders remain in “hot standby.” This “idling” service would be uncompensated.

IEP likened the situation to someone calling a taxi and requiring it to sit outside one’s house idling just in case the taxi was needed. The taxi would only be paid for fuel and time if the taxi were actually used for travel.

“This approach would be an unprecedented waste of limited resources and would be contrary to prudent utility practices,” IEP stated in its filing.

The electric system should operate so the load on the system dictates the amount of capacity needed to meet demand and provide reserves. The CAISO has turned this system on its head by dispatching all units and ignoring the responsibilities of the utilities to secure adequate supplies ahead of time, IEP said. When there are inadequate supplies scheduled, emergencies are declared and certain price caps are imposed by the FERC order.

The CAISO interpretation gives an incentive to the utilities to not provide for power ahead of time through bilateral contracts. The CAISO will be forced to declare more emergencies and the stricter price caps can be applied.

The grid operator’s interpretation of the FERC order also means more air pollution for California. By requiring generation to idle, the total number of operating hours available to each power plant under the air permits will be rapidly “squandered”.

This wastes fuel, creates air pollution, and adds unnecessary wear and tear to the aged fleet of power plants in California, said IEP.

The forced idling also means that operating hours under air permits will be used up without the justification of demand threatening the future availability of needed generation supplies.

It also means that the CAISO is abandoning the ancillary services markets including replacement reserves because forced idling requires all units to provide reserves whether or not the units are selected to provide those services.

Finally, the CAISO proposed that all generator bids be subject to justification whereas IEP interprets FERC’s bid cap requirement to mean only bids above the proxy or mitigated price be subject to justification — not all bids. This requirement imposes extra burdens on generators, IEP said.

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