As the little battle boils in New York state over the shape of the Independent System Operator's power auction, across the country in California the ISO has just launched a day-ahead and real-time market much like New York's, and PJM's, and the Midwest ISO's, and New England's. It took a really long time to get there -- recovering from the 2000-2001 power crisis required slogging through years of process, technology and interest-group negotiation. But it seems that the launch pleased a lot of people.
Back at power-crisis time, California was the pioneer. It did have a day-ahead and a real-time power auction, but it was run by the Power Exchange, not the ISO. The ISO did what ISOs were originally envisioned doing: It operated the transmission system. The power auction was done only on three zones, not the hundreds or thousands of nodes that exist in other ISO markets. And since the crisis, the ISO has run only a real-time balancing market, not a day-ahead. And it's had only the three zones.
Until now. Finally finished its famed Market Redesign and Technology Upgrade, Cal-ISO's got nodes, too. So pricing is done at about 3,000 locations. And it has both day-ahead and real-time, just like the other guys. And utilities, and others, just jumped right into the auction on the first day.
Bilateral physical trading volumes on IntercontinentalExchange dropped hugely -- from 85,200 MWh at the SP15 point on Monday to 10,800 MWh Tuesday, when the day-ahead auction started. Then Wednesday, bilateral physical volumes fell still more. ISO CEO Yakout Mansour told our colleague Daniel Guido that he didn't envision bilaterals always so reduced.
It's not going to be perfectly smooth, everybody agrees. Settlements may be rocky for a time. There are some odd things happening late at night to cause a congestion component of the locational marginal price to appear uniformly across the system.
But for better, or for worse (for those who think the single market-clearing price auction is a bad thing for ultimate customers), California is now in the same market mode as the other ISOs. And for smart grid aficionados, the new technology is supposed to make the system better able to ... be smart. Once again, California, which led the pack in developing a market back in the last century, is back as a modern player. Still playing catch-up for a time, but in the park.
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