California grid can trim imbalance market fee

OREANDA-NEWS. March 17, 2015. Federal energy regulators will allow California's primary grid operator to change the fee structure for its new energy imbalance market because the current mechanism has resulted in over-collecting charges meant to cover administrative costs.

The imbalance market allows market participants outside of the California's grid to sell their ability to adjust generation up or down over five-minute intervals to balance short-term load changes. The market has faced a rocky start since launching last year with the participation of PacifiCorp utilities and has required regulatory changes to avoid price spikes and encourage greater participation.

The latest change, which the Federal Energy Regulatory Commission approved on 13 March, will reduce charges that were three times higher than what California's grid operator needed to cover its administrative costs. The grid operator said over a two-week period in early November it collected nearly \\$218,000 in administrative charges when it only needed about \\$75,000.

The initial fee structure was \\$0.19/MWh based on the volume of all energy traded in the imbalance market, but the grid operator realized the charges were excessive.

The new fee structure, which goes into effect retroactively starting on 15 January, uses the same \\$0.19/MWh rate but only applies to 5pc of the total supply and demand of all participants in the energy imbalance market. The grid expects this new structure will allow the market to remain revenue neutral.