UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION California Independent System Operator Corporation ) ) ) Docket No. ER13-872-000 MOTION TO INTERVENE AND COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY ON PROPOSED CAISO TARIFF REVISIONS ADDRESSING TREATMENT OF MARKET PARTICIPANTS WITH SUSPENDED MARKET-BASED RATE AUTHORITY Pursuant to Rules 211 and 214 of the Rules and Regulations of the Federal Energy Regulatory Commission ( Commission or FERC ), 18 C.F.R. 385. 211, 214 (2012), and the Errata Notice Extending Comment Period issued by the Federal Energy Regulatory Commission ( Commission or FERC ) on February 7, 2013 in the above-captioned docket, Southern California Edison Company ( SCE ) hereby submits its Comments on the California Independent System Operator s ( CAISO ) February 1, 2013 proposed Tariff Revisions Addressing Treatment of Market Participants with Suspended Market-Based Rate Authority ( Amendment ). I. MOTION TO INTERVENE SCE, a wholly owned subsidiary of Edison International, is an investor-owned utility, subject to the Commission s jurisdiction. SCE s principal place of business is 2244 Walnut Grove Avenue, Rosemead, California 91770. SCE is a Transmission owner and operator, and
thus is affected by the outcome of this proceeding, as it relates to frequency regulation and dispatch. As such, SCE has an immediate interest in the outcome of this proceeding. SCE s interest cannot be represented by any other party and, consequently, SCE respectfully requests that the Commission grant SCE permission to intervene in this proceeding. SCE hereby reserves its rights to raise substantive issues regarding all aspects of this proceeding, and to file additional comments, as warranted by the proceeding. SCE designates the following person for service on the Commission s service list in this proceeding: Erin K. Moore Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, CA 91770 (626) 302-6848 erin.moore@sce.com II. COMMENTS SCE appreciates the CAISO s efforts to address the implementation issues related to the Commission s November 14, 2012 order in Docket No. EL12-103 (the Order ) 1 suspending the Market-Based Rate ( MBR ) authority of JP Morgan Ventures Energy Corporation ( JPMVEC ) for a period of six months, beginning on April 1, 2013. SCE strongly supports the CAISO s proposal, and agrees with its contention that the Commission should accept the CAISO s proposal with minor modifications discussed below instead of the plan set out in JPMVEC s filing. 2 JPMVEC s proposal is drafted in such a way as to be contrary to the bidding regime established by the November 14 order and to the Commission s stated purpose to penalize JPMVEC, rather than to reward it. 3 In contrast, the CAISO s proposal is intended to ensure that a MBR-suspended participant can recover its costs as it continues to participate in the 1 JP Morgan Ventures Energy Corp., 141 FERC 61,131 (2012). 2 Concurrently with the instant filing, SCE is also submitting more detailed comments on the JPMVEC filing in Docket No. ER13-830-000. 3 CAISO Filing at p. 10.
CAISO market during its period of suspension, but is unable to receive a windfall through alternative bidding behavior. Specifically, SCE agrees with the CAISO that replacing the MBR of a suspended participant such as JPMVEC s $0/MWh bids with cost-generated bids based on a resource s proxy cost 4 is appropriate. As the CAISO correctly points out: if the ISO were to dispatch JPMVEC resources based on a zero price bid, these resources would be dispatched out of the merit order that would result if these resources had been bid into the ISO s markets based on marginal costs. This would be contrary to the principles underlying efficient dispatch of the ISO system. 5 Moreover, this would be contrary to general principles of fairness, and would penalize other Market Participants and their ratepayers, who would bear the burden of any additional costs imposed by such dispatch. 6 SCE further supports the CAISO s proposal to limit Ancillary Services ( AS ) bids, Residual Unit Commitment ( RUC ) bids, and transition costs to either self-scheduling or bidding $0/MWh. 7 This will allow these resources to be fully compensated for their costs, but not reward them with a potential for high profit on these services. SCE appreciates the CAISO s clarification that startup and minimum load bids for a MBRsuspended entity will be limited under its proposal to the proxy post option (under which the seller may submit start-up and minimum load bids each operating day up to the cost-based levels reflecting fuel and variable operating costs at minimum load), and will not be allowed the registered cost option (under which a seller may register values for start-up and minimum load bids on a monthly basis, as much as 200% of its fuel and variable operating costs). 8 As with other elements of the proposal, this allows the MBR-suspended seller to recover its costs, but will not allow it a potential for excessive profit during this period during which its rates were suspended. 4 Id. at pp. 11-14. 5 Id. at p. 11. 6 For example, because it would depress the market clearing price, some resources might elect not to bid into the CAISO market, thereby requiring the CAISO to incur added costs to obtain replacement resources. 7 CAISO Filing at pp. 15, 17-18. 8 Id. at pp. 15-17.
Additionally, SCE believes that payment for energy should be capped at the LMP for resources awarded economically in CAISO s market processes. However, at this time, SCE believes that FERC should have the discretion, on a case by case basis, to specify whether payments for energy from suspended participants are based on the LMP or the DEB, if less than the LMP, when awarded based on CAISO s normal market processes. Finally, SCE supports the Commission acting on the CAISO s filing in an expedited manner, so that the suspension can be in effect without harm to the CAISO markets or reliability, on April 1, 2013. III. CONCLUSION For all of the foregoing reasons, SCE respectfully requests that the Commission grant SCE s Motion to Intervene and allow it to be a party to this proceeding. Furthermore, SCE requests that the Commission accept the CAISO s proposed tariff amendment with SCE s modification allowing additional FERC discretion to ensure that a MBR-suspended participant can recover its costs as it continues to participate in the CAISO market during suspension, but is unable to obtain a windfall through alternative bidding behavior.
Respectfully submitted, JENNIFER R. HASBROUCK GARY CHEN ERIN K. MOORE By: Erin K. Moore Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770 Telephone: (626) 302-6848 Facsimile: (626) 302-3540 E-mail: erin.moore@sce.com Dated: February 20, 2013
CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing MOTION TO INTERVENE AND COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY ON PROPOSED CAISO TARIFF REVISIONS ADDRESSING TREATMENT OF MARKET PARTICIPANTS WITH SUSPENDED MARKET- BASED RATE AUTHORITY upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Rosemead, California, this 20 th day of February, 2013. Case Analyst SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770 Telephone: (626) 302-6846