California ISO�s Winter �shocked� by FERC order

By the OGJ Online Staff

HOUSTON, Apr. 13--Terry Winter, CEO of the California Independent System Operator, said he was "shocked" the Federal Energy Regulatory Commission upheld a previous order requiring California electricity buyers be creditworthy.

Winter testified before a California Legislature House Committee on Government Reform earlier this week. The ISO had challenged FERC's Feb. 14 order to that effect. Generators then filed a complaint with FERC asking the federal regulators to force the grid operator to obey the order.

The ISO also had challenged the FERC order by pursuing a separate case in federal court. It obtained a temporary restraining order forcing generators to sell power in the real-time market even though Southern California Edison Co. and Pacific Gas & Electric Co. were not reimbursing the ISO for power purchased on their behalf.

On Apr. 5, a panel of the 9th Circuit Court of Appeals in San Francisco stayed the order and said it was likely the generators would prevail before the full appeals court. The next day FERC clarified its order.

The dispute between the generators and the ISO concerned the ability of the ISO to issue emergency power dispatch instructions to avert an emergency without regard to credit considerations.

"This will certainly complicate our ability to maintain the reliability of the interconnected grid," Winter said.

Even if the overwhelming majority of electricity is arranged for in advance, he said, unanticipated outages occur that force the ISO to buy power in the real-time market to keep the grid intact and the lights on.

"It is always necessary for the system operator to take actions to fine tune the alignment of supply and demand in real time," Winter said.

Recently, the ISO has come up short. The ISO has two choices, Winter said. It can curtail service or call up available generation with emergency dispatch instructions. But FERC�s Feb. 14 order said the ISO can no longer issue these emergency dispatch instructions without the backing of a creditworthy entity.

The situation has become even more problematic now that Pacific Gas & Electric Co. has filed for bankruptcy reorganization and Southern California Edison is waiting for a state-sponsored bailout. The state has stepped in as the buyer of last resort, but questions remain over whether the state will assume responsibility for paying for the all the power needed to run the system over and above what the utilities are self-generating.

Winter said the ISO will continue to issue dispatch instructions, despite the creditworthiness issue to avert or lessen a system emergency.

"It would be my hope that the generators who can help will do so, that they will recognize their public responsibility," he said. "If they choose not to respond it will be their choice, and they will bear the consequences."