California's grid operator is facing scrutiny over unclear calculations and questionable benefits in its new day-ahead electricity market, according to comments filed by regulators and utilities in August. Staff from the California Public Utilities Commission's Energy Division questioned the math behind load adjustments made by the California Independent System Operator, including a 592.50 megawatt adjustment on June 11 and a 3,590 MW adjustment on August 4. A group of six California cities also challenged the market's value, noting that the Extended Day-Ahead Market generated just $11.38 million in total benefits during its first two months while requiring "extremely high resource commitments" from the grid operator and market participants.
The CPUC staff's concerns centered on load adjustments that seemed inconsistent with published requirements. On June 11, when the day-ahead load forecast stood at 37,000 MW, CAISO made a 592.50 MW adjustment even though its operating procedure calls for full procurement of Imbalance Reserve Up capacity only when load exceeds 42,000 MW. The August 4 adjustment raised even bigger questions: moving from covering 90% of potential outcomes to 97.5% of outcomes resulted in an additional 3,590 MW procurement, which staff noted is "four times as much of the requirement" and increases the total nearly fivefold from roughly 900 MW to 4,400 MW. The Six Cities group—Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside—pointed out that of the $5.96 million in gross benefits that went to the CAISO balancing authority area in May and June, the grid operator transferred $2.67 million in congestion revenues to PacifiCorp, representing about 45% of the attributed benefits.
According to energy analyst Michael Cade, "the strongest element of Energy Division's comments is that currently available public data don't allow stakeholders to reproduce the calculations behind some of the CAISO's key results." The CPUC staff asked CAISO to explain the methodology behind its load adjustments and to share counterfactual results comparing the CAISO day-ahead market with the EDAM day-ahead market at the next Market Performance and Planning meeting. Powerex Corp., a wholesale electricity marketer, filed comments on August 14 asking CAISO to report congestion revenue based on where market participants actually paid the congestion cost, noting it's unclear how much of the $37.6 million in congestion revenues tied to constraints in the California ISO balancing authority area were paid by participants in PacifiCorp's territories.
The scrutiny comes as CAISO's Extended Day-Ahead Market, which launched in May as the Western region's first day-ahead market, operates with just one non-CAISO participant. PacifiCorp joined at launch and remains the sole outside member, though Portland General Electric is set to join on October 1. The Six Cities called for an ongoing cost-benefit analysis for EDAM and argued that benefits received from participating in the market should be "at least roughly proportional to responsibility for market costs." CAISO's next Market Performance and Planning Forum is tentatively scheduled for October 29, where stakeholders will be watching to see whether the grid operator provides the transparency and methodology details they've requested.