Retail Suppliers Seek Halt To CAISO Resettlement

March 18, 2020

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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Shell Energy North America (US), L.P. and the Alliance for Retail Energy Markets filed a motion at FERC seeking an emergency order immediately instructing the California ISO to cease its plans to, as described by petitioners, "unilaterally" issue invoices and resettle the market to address a FERC order on the re-allocation of must-offer generation commitment costs

As previously reported, most of the underlying costs (almost $100 million) at issue here relate to the South of Lugo path and whether it was considered a local or zonal constraint. Costs related to the constraint were initially assigned on a local basis, to only a single LSE, Southern California Edison. The constraint was later classified as zonal, which would allocate costs to additional LSEs.

As previously reported, FERC on rehearing found that it was appropriate for CAISO to administer market resettlements, with surcharges on a broader group of LSEs, due to the change to zonal allocation

See background on the proceeding, which dates back to 2004, here

Shell and AReM alleged that CAISO has stated an intent to complete resettlement prior to FERC acting on a compliance filing related to the rehearing order

Shell and AReM alleged, "CAISO appears to believe it can submit incomplete and delayed compliance filings to the Commission and issue invoices and resettle the market while the Commission’s review of such filings are on-going. It is the Coalition’s experience that once a market is resettled it is difficult to reverse. The Commission should issue an order prior to CAISO taking the unilateral actions it has announced instructing CAISO not to issue invoices or resettle the market without prior Commission approval."

Shell and AReM alleged, "The Coalition does not make this request lightly. It is seeking to avoid the circumstance that occurred previously in this proceeding in which CAISO took such unilateral actions and was found later by the Commission to have acted unlawfully and without authority. The Coalition respectfully requests that the Commission take action to halt CAISO’s unilateral market resettlement and require CAISO to come into compliance with the Commission’s directives in this proceeding. The Coalition is entitled to due process and a meaningful compliance filing review by the Commission before it is subjected to charges by CAISO – not after."

Shell and AReM alleged, "Given that CAISO has announced it will invoice market participants on March 31, 2020, the same day that it will make its compliance filing to the Commission, the Coalition respectfully requests that the Commission shorten the time for answers to this Emergency Motion to five (5) days and issue and order in advance of March 31."

Shell and AReM said, "... as CAISO has announced that it intends to undertake actions culminating in a market resettlement and rendering the compliance process a nullity, the Coalition, pursuant to Rule 212 of the Commission’s Rules of Practice and Procedure, hereby moves the Commission to issue an order by no later than March 30, 2020 instructing CAISO to follow the Commission’s compliance process and halt the submission of invoices to market participants and resettlement of the market until the Commission has 'review[ed] the compliance filing, as well as any responsive pleadings.' To ensure that the Commission has adequate time to consider the Coalition’s motion prior to the March 31 date on which CAISO has announced it will issue invoices, the Coalition also requests that the time for the filing of an answer to this motion be reduced to five (5) days."

Shell and AReM alleged that a first supplemental compliance filing submitted by CAISO is deficient

"For instance, the First Supplemental Compliance Filing provides a partial interest figure of $88,300,000 for minimum load cost adjustments. However, the filing provides virtually no information as to how this number was derived or how it will be allocated. With respect to start-up costs, CAISO explains that its ability to timely calculate valid amounts is hampered by: a lack of 'data accessibility,' the fact that 'the software system used to create the original statements is no longer available,' and the 'subject matter experts primarily responsible for the data' are unavailable. Nevertheless, CAISO plans to send invoices to affected entities on March 31, 2020 for an amount, inclusive of start-up costs, which it will disclose simultaneously with such invoices through a further supplemental filing. It will then, without Commission review or approval, unilaterally resettle the market on April 6, 2020," Shell and AReM alleged

Shell and AReM alleged, "The Commission previously made clear its intention to review any compliance filing prior to any charges being levied. The Commission stated: '[W]e will review the compliance filing, as well as any responsive pleadings, after that supplemental filing is made.' Moreover, in response to the Coalition’s concern that CAISO will act unilaterally, as it did several years ago, CAISO indicated that the Coalition will be 'free to submit any comments it wishes on the CAISO’s supplemental compliance filing.' Without consideration of parties’ right to comment on the further supplemental compliance filing or the Commission’s authority to review such filing, CAISO intends to issue invoices on March 31 and resettle the market on April 6, 2020. In other words, CAISO intends to conduct an invoicing and resettlement process on its own schedule without interference or approval by the Commission."

Shell and AReM alleged, "... in contravention of its prior assertions, CAISO now provides no indication it expects to respect a process by which parties are 'free to submit any comments' on the further supplemental compliance filing. Indeed, the Commission’s and the parties’ review will be without a purpose, as CAISO intends to issue invoices and resettle the market before any such review can take place. CAISO intends to issue invoices and file a document containing the interest figure on the same day -- March 31 -- and resettle the market less than a week later. It is self-evident that the timing contemplated by CAISO cannot accommodate a fair and orderly review by the Commission and the affected parties. CAISO’s intended process would negate the due process right to be heard that parties have in Commission proceedings."

Docket No. ER04-835-010 et al.

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