According to the report, congested power lines are sending a signal to build more transmission in California. Since 1998, the ISO has approved 300 transmission improvement projects worth nearly $3.5 billion and that will help reduce congestion and lower costs. The ISO new market design, to be implemented in early 2007, will also reduce real time congestion costs because it will identify and mitigate congestion from the day-ahead schedules submitted to the ISO, rather than allow over-booked transmission lines to continue into real-time.
In 2004, several major transmission system enhancements were completed to help mitigate congestion going forward. The Path 15 Upgrade Project is a good example of how transmission expansion can add to grid reliability and reduce congestion. The added capacity will significantly reduce electricity costs in California, saving approximately $100 million per year in normal conditions, and more than $300 million during dry years when Path 15 helps mitigate the lack of hydroelectric resources in Northern California, according to the economic studies completed by the California ISO.
The Path 15 Upgrade began commercial operation on December 22, 2004 allowing greater energy flows between southern and northern California.
The Market Report indicates that the demand for energy in California is growing at roughly four percent — about double the typical rate. Most of the electricity used in California is now bought and sold via contracts directly between parties, well in advance of the ISO daily markets. While the ISO schedules the delivery of that energy, only 3-4 percent of the energy needed on a given day goes through the ISO markets.
The 2004 "state-of-the-market report" is available on the ISO home page at www.caiso.com.
