The California electricity market: an assessment of the first year of operations (panel on evolution of electricity market structures)

April 1, 1999 marked the completion of one full year of operation of the California Independent System Operator (ISO) and Power Exchange (PX). The market design in California incorporated many new features. A year's experience with the market affords an opportunity to assess how well some of these features worked and to review some of the changes being made in the market. Some of the key aspects in the Cal ISO and PX design were the principle of self-commitment by generators, the use of competitive auctions for ancillary services, a congestion management approach that applied the power balance constraint on each participant's portfolio, the use of reliablity must run (RMR) contracts, a stakeholder governing board, a multisettlements design with financially binding day-ahead, hour-ahead and real-time markets. We examine some of these areas.