Analysis: Software fix pushed for imbalance market

OREANDA-NEWS. April 10, 2015. The operator of the western US energy imbalance market is eyeing software fixes and other procedural corrections for recurring price volatility and other problems that have plagued the new trading structure since it launched in November 2014.

But the California Independent System Operator (ISO) will have to persuade skeptical federal energy regulators and many market participants that there are no fundamental problems affecting participation in imbalance trading.

The ISO applies the same rules for balancing the energy imbalance market as or its internal dispatch, but discovered that the outcomes are vastly different.

PacifiCorp retains reliability functions for its own balancing area, so many units are held back for regulation and contingency reserves. The ISO's imbalance market dispatch model does not fully account for those units, and the projected market balance as a result is different from reality.

"We need to have recognition of all other units that are available but cannot be bid in. We did not realize before [the launch] we needed this capability," ISO renewable integration vice president Mark Rothleder said today at a technical conference the Federal Energy Regulatory Commission (FERC) held in Washington, DC to discuss the market's performance and problems.

Software fixes already allowed the ISO to better account for transmission constraints and available capacity in PacifiCorp territory, so the frequency of price spikes decreased in March. But progress has been uneven "and sometimes it degrades again and we have to go back and figure out what the problem is," Rothleder said.

ISO and PacifiCorp officials said at the meeting that market simulations before trading began could not have predicted all the problems.

But federal energy regulators want to impose more robust simulation and market analysis requirements before the imbalance market expands into Nevada and Washington State.