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Company Description: The Scope of the ISO
California’s restructured electricity industry is complex, with traditional utilities, private generating companies and state agencies each playing different roles and carrying different responsibilities. The California ISO, a not-for-profit public benefit corporation, is one link in this chain, but an important link. The ISO is the impartial operator of the state’s wholesale power grid—directing the flow of electricity between energy suppliers and the utilities that serve 30 million Californians.
For consumers, the California ISO makes sure the electrical needs of all customers are met around-the-clock—and that reasonable wholesale costs are fostered. For energy companies, the California ISO ensures equal access to 25,000 circuit miles of transmission lines and conducts open and fair markets that provide capacity and energy used as a last resort to balance the system.
Its Folsom control room and backup control room in Alhambra assumed computerized command of California’s wholesale power grid on March 31, 1998, acting as the traffic controllers for the long-distance, high-voltage power lines that connect California with neighboring states as well as Mexico and British Columbia. The ISO manages transmission lines that remain in the ownership of individual utilities, primarily investor-owned utilities. The ISO coordinates schedules for delivery of power, making sure the schedules are feasible, supervises transmission line maintenance programs and acts as the state’s transmission planner, identifying and approving enhancements transmission owners need to make that help maintain reliability of the grid.
The ISO operates a small fraction (less than 10 percent) of the total wholesale electricity marketplace—using markets only to allocate transmission space, maintain operating reserves, and match supply with demand. Those markets are watched closely by economists with the ISO’s Department of Market Analysis who keep a constant eye on wholesale prices, policing any signs of market power abuse. Additionally, the ISO’s Compliance Department monitors responses to the ISO’s dispatch instructions to see if market participants are meeting their obligations, imposing penalties for non-compliance.
The core functions of the California ISO: · Provide open and nondiscriminatory transmission service, and plan for California’s future transmission needs · Ensure safe and reliable operation of the grid · Operate energy markets in a responsive, flexible and transparent manner · Foster reasonable energy costs for California consumers
How does the California ISO operate the wholesale superhighway for electrons?
Forecasting power comes first. Via the Internet, the ISO publishes a forecast for the power consumers will need 24 hours in advance and then refines the forecast every hour….
Never buying or selling electricity itself, the ISO acts as an electronic auction house, coordinating roughly 40,000 arrangements for electricity every hour between buyers and sellers, tracking prices and running sophisticated settlement systems….
Schedules for electricity delivery are submitted to the ISO the day before the power is needed (power is purchased through non-ISO markets and through short term and long term contracts)...
The ISO runs the schedules through a complex computer system to mitigate congestion and account for reserves necessary to make sure the “lights stay on”….
Because electricity is the only commodity that must be consumed the instant it is created, the ISO takes a pulse of the power grid every four seconds to ensure there are enough electrons flowing to meet consumer demand for power….
As controller of about 20 transmission paths that crisscross the state, the ISO acts as the gatekeeper to the grid, determining how much power can flow at all of the import/export points….
If the ISO sees the demand for power climbing higher than anticipated, it can add additional power—from plants located both in and out of the state—to meet the need….
Power that is dispatched comes from generating units bid into the ISO’s electronic auctions that automatically that set a market clearing price aimed at fostering reasonable wholesale costs….