CAISO, FERC Should Reveal Identities of California Gas Plants That Triggered Rolling Blackouts
Letter from Tyson Slocum to FERC, CAISO Officials
August 24, 2020
Chairman Neil Chatterjee
Federal Energy Regulatory Commission
888 First St NE
Washington, DC 20426
Steve Berberich, President and CEO
250 Outcropping Way
Folsom, CA 95630
Dear Chairman Chatterjee and President Berberich,
The identities of power facilities that experienced unplanned outages—serving an immediate trigger to Stage 3 emergency declarations on August 14 and August 15—must be made public, as it is in the public interest to do so. CAISO has justified its refusal to identify the names, claiming they don’t own or operate the assets—CAISO must therefore clarify whether they lack the authority to disclose the identities of assets on their grid, or if they are simply refusing to do so.
It is a common feature of non-power markets for the identities of significant production assets to be publicly identified when they experience unscheduled outages. For example, oil refineries are always publicly named when they go offline, as their outage has a significant impact on commodity trading markets.
CAISO also suspended a FERC-approved financial trading mechanism during the crisis out of concern that it was “detrimentally” affecting reliability of the grid. This admission that a key feature of CAISO market design actually inhibits reliability is a serious liability, and CAISO must detail the problems that led to the suspension of virtual trading.
On Friday, August 14, California ISO—the private corporation tasked by FERC to oversee the state’s power grid—declared a Stage 3 emergency, resulting in rolling blackouts for the state’s residents and businesses. While there are multiple contributing variables, a trigger for the August 14 emergency declaration was the unplanned outage at 2:56pm PST of 475 MW from a natural gas power plant, leading to a massive spike in real-time prices exceeding $1,000/MWh, “making that Friday the most profitable day ever to sell electricity from a gas-fired plant to the grid—until the following Monday, when prices rose even more”. This Stage 3 emergency declaration was the first since the 2000-01 deregulation crisis caused by systemic fraud and manipulation by power sellers and natural gas suppliers.
Identifying the names of power plants that helped trigger rolling blackouts is necessary for the public interest. The easiest method for power sellers to engage in market manipulation is through capacity withholding: creating artificial shortages to push prices sky high. The California market was plagued by such nefarious conduct during the prior deregulation crisis, and CAISO then—as now—refused to identify the culprits. It wasn’t until much later that the public learned that power plants controlled by Enron and others intentionally shut down the power plants to trigger rolling blackouts.
The unplanned outages of natural gas power plants that contributed to the August 14 and August 15 rolling blackouts may very well have been inadvertent and accidental. But the public must know the identities of the power plants that experienced unplanned outages, or that were unavailable when called upon in the run-up to Stage 3 emergency declarations. President Donald J. Trump tweeted that “In California, Democrats have intentionally implemented rolling blackouts — forcing Americans in the dark. Democrats are unable to keep up with energy demand.” With the issue now becoming political, it is necessary to publicly identify the owners of power facilities that experienced failures that triggered the blackouts.
It is important to note that additional Stage 3 emergencies were averted because millions of California families and businesses stepped up and curtailed their demand, easing the emergency conditions. California families and small businesses responded when needed, but the same cannot be said for anonymous power generators.
In addition, on Sunday August 16—after the second Stage 3 emergencies in as many days—CAISO suspended “virtual bidding”, a key component of its FERC-approved market, because trading activity was “detrimentally” affecting CAISO’s ability to reliably operate the grid. FERC had approved CAISO’s ability to suspend such trading on June 2, 2016 when it “may run contrary to the efficient economic solution of the market.” CAISO must explain the circumstances that led this key trading market to “detrimentally” impact reliability.
Tyson Slocum, Energy Program Director
Public Citizen, Inc.
 Mark Chediak and Naureen S. Malik, “The Day California Went Dark Was a Crisis Years in the Making,” Bloomberg, August 22, 2020.
 Chris Martin and Naureen S. Malik, “The Blackout Trade: How a Power Market Went Dark in California,” Bloomberg, August 20, 2020, www.bloomberg.com/news/articles/2020-08-21/the-blackout-trade-how-a-power-market-went-dark-in-california
 155 FERC ¶ 61,224, Docket No. ER16-1649, issued June 1, 2016, at 80.