Compatibility with CAISO Markets

Some parties argue that, because a retail provider-based system would depend on default emission rates for unspecified power purchases, it may have deleterious effects on CAISO's pooled markets with the averaging of emissions in the pool reducing the incentive for generators in the pool to reduce emissions. They assert that clean generators with emission rates lower than the default rate would negotiate bilateral contracts that enable them to capture some of the value of their lower emissions and that this increased reliance on specified contracts and self-scheduling would dampen the efficiencies in dispatch and transmission that the Market Redesign and Technology Upgrade (MRTU) is designed to provide.

The CAISO Market Surveillance Committee states its additional view that, "Another reason why more self-scheduling is likely to occur is because each [retail provider] will be trying to self-manage its supply portfolio to stay within [its] emissions limitation." The CAISO Market Surveillance Committee expresses concern that, "The [CAISO] markets for energy and ancillary services will become significantly thinner... Furthermore, thinner markets would likely also be less competitive markets. Ultimately, all of these increased costs would be passed on to consumers." PG&E, SCE, and SDG&E/SoCalGas express similar positions.