On April 30, 2018, the Commission granted the California Independent System Operator Corporation’s (“CAISO”) request for a limited waiver of a specific section of CAISO’s Tariff to allow CAISO to: (1) process out-of-time annual recertifications for certain resources as “Acquired Resources” for the 2018 resource adequacy compliance year, and (2) provide certainty to those resources that their Resource Adequacy Availability Incentive Mechanism (“RAAIM”) exemption for the 2017 resource adequacy compliance year will not be unwound.

In 2009, CAISO developed the resource adequacy Standard Capacity Product, which provided a standard definition for resource adequacy with defined performance incentives. The Standard Capacity Product exempted certain resources (known as “Acquired Resources”) from the aforementioned performance incentives if the associated resource supply contract existed prior to June 28, 2009 — the theory being that such existing contracts likely contained agreed-upon performance incentives. In November 2016, CAISO replaced the Standard Capacity Product with the RAAIM, but retained the exemption from performance incentives for Acquired Resources, and established a process by which such resources could be recertified as Acquired Resources going forward.

In its February 14, 2018 petition requesting waiver, CAISO explained that it had experienced implementation issues regarding the recertification process for Acquired Resources in the first two years of RAAIM, and that, as a result, certain resources stood to lose their Acquired Resource status and be subject to RAAIM. Accordingly, CAISO requested waiver of a specific section of its Tariff to permit these resources to submit out-of-time requests to recertify as Acquired Resources for the 2018 resource adequacy compliance year, and to provide certainty to those resources that their RAAIM exemption for the 2017 resource adequacy compliance year would not be unwound. CAISO urged the Commission to grant its requested waiver by applying the four-part test that the Commission has previously used in granting similar requests: (1) the applicant acted in good faith; (2) the waiver is of limited scope; (3) the waiver addresses a concrete problem; and (4) the waiver does not have undesirable consequences, such as harming third parties. CAISO argued that its waiver request satisfied all four of these elements.

In its April 30, 2018 order, the Commission granted CAISO’s request. Specifically, the Commission found that CAISO had acted in good faith because it had submitted the waiver request once it had determined that the resources at issue risked losing Acquired Resource status due to confusion regarding the recertification process in the transition to RAAIM. The Commission also found the waiver to be limited in scope because it granted CAISO one-time authority to process a defined set of out-of-time Acquired Resource recertifications, and to assure those resources that their RAAIM exemptions for the 2017 resource adequacy compliance year would remain intact. Further, the Commission found that the waiver request addressed a concrete problem, in that that the resources at issue risked losing their Acquired Resources status. Finally, the Commission found that granting the requested waiver would not have undesirable consequences, such as harming third parties, and instead would maintain the status quo for Acquired Resources, because, among other things, no new resources would be given Acquired Resource status through the waiver.

A copy of FERC’s order is available here.