CAISO CRR Auctions

Congestion revenue rights (CRR) are financial instruments used by entities in the CAISO markets, primarily, to hedge against congestion costs in the CAISO day-ahead market (DAM). CRRs are mainly obtained through CRR allocations and CRR auctions. CAISO DAM is heavily influenced by physical system conditions such as hydro capability, transfer limits, transmission upgrades, major generation and transmission outages, imports and load conditions.

Fundamental modeling with LCG’s UPLAN Network Power Model (UPLAN-NPM) gives key insights into the effect of these types of fundamental factors on market outcomes without requiring many assumptions to be made. Moreover, UPLAN can simulate market volatility based on uncertainty of certain inputs.

For every CRR forecast, Full Network Model (FNM) networks published by CAISO CRR team are imported to UPLAN and a comprehensive generator database, transmission system modeling including interfaces and contingencies, natural gas and load forecast gathered from multitude resources are used in the simulation.

One of the interesting features of the UPLAN CRR forecast is to analyze the impact of transmission constraints on the nodal prices. Based on the imported transmission network, UPLAN generates shift factors which determine the “electrical distance” of transmission lines and interfaces to every node in the system. Contribution of a constraint on the Marginal Congestion Component (MCC) price of a node is calculated by multiplication of the constraint shadow price and its shift factor to the node. As an example, Figure 1 depicts congestion of Gate-Midway 230 kV line at a particular hour which is mainly due to the outage of Gates 500/230 kV 3-winding transformer. MCC price of every node is shown by different colors. This binding constraint causes a positive MCC in the PG&E area while changing the MCC in SCE and SDG&E areas towards the negative side.

Congestion of Gate-Midway 230 kV line

About LCG Consulting

With 30 years of experience, LCG Consulting offers a full range of consulting services and specialized software products for energy producers, suppliers and traders seeking to optimize resources in a cost effective fashion. The UPLAN suite of models is used extensively to conduct market studies for electrical systems throughout the world.

Call LCG at (650) 962-9670x110 or for additional information.

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