2. Background

In Decision (D.) 10-12-034, we granted the utilities interim authority to participate in convergence bidding in California Independent System Operator (CAISO) markets, under three uniform authorized bidding strategies, applicable to all utilities. These uniform rules are intended to provide broad consistency among the utilities, but each utility will also have discretion to allocate bidding activities among the three available bidding strategies.

As set forth in D.10-12-034, the first convergence bidding strategy allows utilities to use convergence bids to hedge risks associated with generation outage and load uncertainty. The second convergence bidding strategy allows utilities to use convergence bids to hedge against uncertainty regarding renewable generation scheduling. The third category allows the utilities to guard against market manipulation that can impact wholesale electricity prices. These three strategies are intended to allow the utilities to take measures to benefit ratepayers by mitigating market price volatility and market manipulation, and improving the pricing of renewable resources in the CAISO's day-ahead market.

PG&E's Petition for Modification requests clarification of two issues; one, that the first strategy allows for the submission of convergence bids related to certain long-start generation units, and two, that all three strategies allow for bids to be submitted at interties as well as at nodes or locations where utility resources or loads are located.

Southern California Edison Company (SCE) filed a response in support of PG&E's Petition for Modification. The Commission's Division of Ratepayer Advocates (DRA) also filed a response, noting that it was not sure the Petition for Modification was necessary, but DRA did not oppose it. DRA also provided alternate language to that proposed by PG&E.