United States: FERC Accepts Modifications To CAISO's RAAIM Charges And Payment Methodology

Last Updated: April 4 2018
Article by Adrienne Thompson and Jasmine C. Hites

On March 29, 2018, FERC issued an order accepting proposed modifications to the methodology used to evaluate the availability of resource adequacy ("RA") resources and resulting charges and payments under the Resource Adequacy Availability Incentive Mechanism ("RAAIM") administered by the California Independent Operator Corporation ("CAISO"). In the order, FERC agreed that CAISO's proposal addressed identified problems such as overweighting certain types of resource adequacy capacity and discouraging parties from providing other types of capacity.

To ensure resource adequacy within the CAISO balancing authority area, CAISO and local regulatory authorities require load serving entities ("LSEs") to acquire certain types and amounts of RA capacity. For example, LSEs must acquire a certain amount of "generic/system RA" for serving forecasted load plus a reserve margin, as well as "flexible RA," that must be capable of quickly ramping up and down to manage system variabilities. In turn, CAISO's tariff also imposes must-offer obligations on the resource adequacy resources themselves.

Since 2015, CAISO has administered a bid-based settlement mechanism for resource adequacy resources to meet their must-offer obligations or otherwise substitute for unavailable resources (see October 12, 2015 edition of the WER). As part of the RAAIM settlement process, resources are charged or penalized depending on whether they are available during their must-offer obligation periods—called availability assessment hours. The availability assessment hours vary by RA type, with generic/system RA required to be available for a pre-determined set of five consecutive hours corresponding with peak demand periods, and flexible RA required to be available from five to 17 consecutive hours, depending on the flexible RA subcategory. For overlapping capacity obligations—i.e., when a resource is obligated to provide generic/system and flexible RA—CAISO assesses availability based on the more restrictive must-offer obligation.

Shortly after first administering the RAAIM settlement process, CAISO realized that, because the methodology treated each availability hour equally, flexible RA was disproportionately advantaged because it often had more capacity hour obligations than generic/system RA resources. CAISO also noticed that the RAAIM's focus on average MW amount within a given availability assessment hour could lead to resources designating a minimal flexible RA MW amount with a maximum hourly amount, thereby minimizing their penalties but reducing incentives to provide capacity at other times.

In a Federal Power Act section 205 filing on January 29, 2018, CAISO proposed three RAAIM reforms to address these problems. First, instead of equal treatment across the board, CAISO proposed to treat each MW equally within its availability assessment period. Second, CAISO proposed to calculate each resource's average monthly availability through separate assessment for generic/system RA capacity and flexible RA capacity. Third, CAISO proposed to calculate RAAIM non-availability charges and availability incentive payments based on the number of days in as month that the resource has an obligation to provide generic/system and/or flexible RA. Additionally, CAISO argued that it was unnecessary and impracticable to segment non-availability penalty charges according to RA type, instead of continuing to use a single non-availability penalty charge.

Various parties intervened to comment on or protest CAISO's changes. Notably, Southern California Edison ("SoCal Edison") protested CAISO's plan to retain a single penalty assessment for overlapping generic/system and flexibility capacity, arguing that it would discourage resources from participating at all if they are penalized for not providing one type of resource, while another type is fully provided for within an assessment hour. A public interest group, Public Citizen, Inc., argued that CAISO did not properly consider how the changes would financially impact retail consumers.

FERC upheld CAISO's proposal and granted an April 1, 2018 effective date, as requested in the filing. FERC found that CAISO's proposed methodology revisions would improve incentives for resource adequacy resources to meet their must-offer obligations and provide substituted capacity. As a result of the changes, FERC observed, resources would no longer be able to distort the RAAIM settlement process by relying on minimal amounts of flexible RA to offset the non-performance of larger amounts of generic/system RA. In so doing, FERC rejected SoCal Edison's argument in favor of targeted non-performance penalties, noting that, although it might support resources' ability to recover costs, such a scheme would introduce unnecessary complexity and potentially dampen incentives for resources providing overlapping capacity. FERC also noted that CAISO lacked data on bilateral resource adequacy contracts to be able to fully implement targeted penalties. FERC similarly rejected Public Citizen's comments, noting that RAAIM does not directly affect retail rates and that the record did not indicate otherwise.

A copy of FERC's order can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Adrienne Thompson
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions