APX is pleased to present a summer update on current and future activities of the CAISO Market Redesign and Technology Upgrade (MRTU). This issue includes:

• Market Simulation Progress
• APX MRTU Development: On Track
• Follow Up MRTU Readiness Assessments
• Congestion Revenue Rights: On Track

Integrated Market Simulation Release 2 (IMS R2) is in its eighth week of activity. Although progress has been made and useful testing is underway, there are still several significant issues.

As you know, IMS R2 is the first Simulation that reveals bid-to-bill functionality by taking a predetermined, limited and CAISO-scripted, static set of Day Ahead bids running them through the market software to produce settlement statements in an integrated process. 

During this Simulation, there have been some areas of success. For example, market participants can retrieve market results that are reasonable based on the bid set provided by the CAISO, and APX applications are working well.  In other areas the CAISO has struggled. For example, the CAISO has not been able to provide a corresponding settlement statement. In falling short of some of the objectives of the IMS R2, market participants are recognizing that there’s more work ahead on a longer timeline, especially with respect to settlements.

The current CAISO IMS R2 schedule, including an extension announced June 29th, targets July 20th as the end date of this phase of simulation.  APX and the majority of market participants active in the simulation had requested a minimum of 10 days of clean data to allow time to analyze results.  The CAISO has been receptive to the 10 day minimum but had been over optimistic regarding their ability to produce a settlement run with actual results.  On Friday July 13 the CAISO announced that they could not produce a settlement run with actual results in IMS R2 for some Day Ahead Charge Codes.  While this pushes certain aspects of settlements testing into later phases, APX has made good progress on development and testing with its next generation settlement application.

CAISO discussions have also been underway regarding the scope for IMS Releases 3 and 4.  IMS Release 3 and Release 4 were combined due to development issues that the CAISO was having with the Real-time market systems and the ability to meet the initial targeted start date for Release 3.  Due to uncertainty at the CAISO regarding the scope of the next phase of Simulation, the target start date has not yet been set. The CAISO has scheduled a planning session on July 25 to clarify the timeline and define scope.

In addition to the 144 bidding and settlement intervals that come with the real-time markets, the combined Release 3 and Release 4 (R3/4) Simulation brings outage management (SLIC), meter data (OMAR), load forecasting (ALFS) and other applications into play.  Needless to say, R3/4 is significantly ratchets up the complexity of the Simulation. In the planning sessions for R3/4, APX is a strong advocate of proceeding carefully and allowing adequate time for testing once stable expected results are achieved.  This is an ongoing discussion with the CAISO which is extremely sensitive to the impact that extending the Market Simulation would have on the overall implementation effort.

We welcome our clients’ participation during these Market Simulation phases. If you have any general questions regarding the next phases of market simulation or details about the details of what’s included in the scope, please feel free to contact Spence Gerber at (916) 351-9759.

The engine is in, the wheels are on and we’re ready to roll with our APX MRTU applications!  Like any market participant or solution provider, APX is dependent on the CAISO for documentation, must analyze that documentation, and seek clarification from the CAISO regarding certain aspects of MRTU changes, as well as rely on data provided and produced by the CAISO to test our development efforts. So it is no surprise that our release schedule closely follows that of the CAISO.

APX’s MRTU-ready settlement system is in beta mode, up and running with some of the MRTU charge codes that are in scope for IMS R2.  To the extent that the upstream CAISO source data is provided, the APX settlement application is providing both estimates and verification for key charge codes.  The estimation process utilizes bid/offer data, market results, public market data, and client provided meter data to generate expected results the day after the operating day, assuming all source data is available. The verification process calculates charge codes using the latest source data available and compares the amounts and underlying determinants to the CAISO values. It also highlights discrepancies that are out of tolerance. The APX Team is confident that we have accurately interpreted the MRTU Business Practice Manuals, and we continue to work through the CAISO data issues during the Simulation.

APX Platform Explorer is functioning in our “sandbox” environment and is populated with CAISO data files that are available and relevant in the current MRTU market simulation phase.  Data files are in their raw form, typically XML, and can be downloaded.  Additional reports will be made available too, based on client input.

For more information regarding MRTU application functionality and access to the APX Platform Explorer sandbox environment, please contact your account manager.

The CAISO is currently taking another check of market participant awareness and readiness of MRTU implementation activities.  While some of the questions that are being asked might seem to be stale, it is a very good opportunity for market participants to provide timely feedback to the CAISO.  The readiness assessments are predominately an effort conducted by the CAISO External Affairs group and business owners, rather than by people involved in the day to day implementation effort.  That gives them a different perspective and the opportunity for market participants to provide input on a different channel.

APX has provided its own readiness assessment to the CAISO, providing feedback especially in the area of market simulation participation and technical readiness.  If you would like assistance in filling out your readiness assessment, APX will gladly lend a hand.  Further, if you would like APX to join you in your conference call with the CAISO, we are available for that too.

Please contact Cris Gallegos if you have any questions about your follow up MRTU readiness assessment at (408) 517-2154.

CRRs appear to be on course for hitting the January 31, 2008 go live date.  The frenetic pace of the CRR effort is driven by the fact that the initial annual allocation, long term auction and initial annual auction must be completed months before the MRTU go live date.  As such, the CAISO CRR team has collected source verification data from load serving entities that are requesting CRR allocation and is in the process of verifying that data in preparation for annual allocation process.

There have been a fair number of requests from the CAISO to resolve data discrepancies and issues, yet based on what APX has seen, they seem to be relatively minor.  The next steps are to get data associated with the allocation requests loaded into the CAISO CRR software, load the updated network model, and start running the various tiers of the initial allocation process.

The July 6 FERC Order partially altered the treatment of Out of Control Area Load Serving Entities that requires re-submittal of source verification and contract data for those parties.  This will delay the CAISO start of the Initial Annual Allocation by two weeks.  Whether or not this delay will impact the entire CRR schedule isn’t known at this time.

If you have any questions about the CRR Allocation or Auction process, please contact Cris Gallegos at (408) 517-2154