FERC, in an order issued on Sept. 1, granted the California ISO’s (Cal-ISO) request for limited waiver to treat the Bay Area Rapid Transit District (BART) as a load-serving entity for the purposes of eligibility for congestion revenue rights (CRRs) and resource adequacy responsibilities under the Cal-ISO’s open access transmission tariff.
The Cal-ISO, in its petition filed in July, had also requested expedited consideration of its waiver request so that the waiver could become effective on Sept. 2, to allow BART the opportunity to participate in the 2017 CRR and resource adequacy processes, which begin in September.
BART is a special purpose transit district that operates a public transportation system in the San Francisco Bay Area, FERC added. BART is an end-use customer that consumes power to meet its mandated service obligations and has special status under California state law not to rely on a utility to serve its load. FERC also noted that BART holds existing transmission contract rights (ETCs) with Pacific Gas and Electric that expire at the end of 2016. As of Jan. 1, 2017, BART will no longer be able to use its ETCs to hedge against congestion in the Cal-ISO day-ahead market and has inquired with the Cal-ISO about converting its expiring ETCs to CRRs under the Cal-ISO’s tariff.
Under the Cal-ISO’s tariff, only load-serving entities are eligible to participate in the CRR allocation process, FERC added, noting that the Cal-ISO’s tariff defines a load-serving entity as any entity that, for instance, serves end users within the Cal-ISO balancing authority area, or is required by California state or local law to sell electricity to end users within the Cal-ISO balancing authority area.
While BART does not serve end users of electricity, nor is it a federal power marketer and, therefore, does not qualify under the current definition as a load serving entity, upon expiration of its ETCs, BART will pay transmission access charges and face exposure to congestion costs for the power that it takes from the Cal-ISO grid to serve its own load.
Without waiver, the Cal-ISO asserted that BART will not be able to convert its ETCs to CRRs because it is not a load-serving entity, FERC added. Therefore, according to the Cal-ISO, BART will either be exposed to congestion costs or incur the cost of purchasing CRRs in the monthly auction to cover its exposure to congestion. The Cal-ISO said that not allowing BART to participate in the annual allocation process, which begins in September, is problematic because the transmission capacity freed up by the expiration of BART’s ETCs could be used to allocate CRRs to other load-serving entities, making it less likely or more expensive for BART to obtain the CRRs it needs in the monthly auctions.
FERC added that going forward, the Cal-ISO noted that it plans to begin a stakeholder initiative to explore amending its tariff definition of a load-serving entity to capture entities like BART that are permitted by state or local law to purchase their own power at wholesale, instead of rely on a retail service provider, and that pay the Cal-ISO’s transmission access and congestion charges.
To ensure that BART can participate in the CRR and resource adequacy processes throughout the fall of 2016, and in anticipation of BART becoming a load-serving entity in 2017, the Cal-ISO requested waiver of these sections of its tariff:
- The tariff definition of “load-serving entity” as it applies to BART, including incidental references to “load-serving entity” or an obligation to serve load concerning CRRs
- The tariff definition of “load-serving entity” as it applies to BART, including incidental references to “load-serving entity” concerning the submission of resource adequacy plans
FERC also noted that the Cal-ISO argued that its waiver request is of limited scope as it will apply to one market participant, BART, for a limited amount of time – the balance of 2016, pending the Cal-ISO’s planned tariff amendment. The Cal-ISO also contended that its waiver request remedies a concrete problem by allowing BART to participate in the first CRR allocation process that begins in mid-September 2016, so that it does not incur congestion charges when its ETCs expire at the end of the year.
FERC said that it grants the Cal-ISO’s petition for waiver, effective Sept. 2 through Dec. 31, as requested, adding, “We find that [the Cal-ISO’s] unopposed petition to waive its tariff definition of a load-serving entity as it applies to BART for the remainder of 2016, so that BART may participate in the CRR allocation and resource adequacy processes, satisfies” certain criteria.
Granting the waiver, for instance, ensures that BART’s load is covered by sufficient resource adequacy capacity and that BART is subject to the resource adequacy rules that apply to other load-serving entities.