Market Monitoring Overview	Back to Previous Page  Download Adobe Reader

Roles and Responsibilities The California ISO's mission is to operate the electric grid reliably and efficiently, provide fair and open transmission access, facilitate effective markets, and promote infrastructure development. Because operating the California electric grid is a large and complex undertaking, the ISO will always be reviewing its rules and protocols with an eye towards improving the efficiency of the market. For the market to operate in an open and competitive manner, no participant should be able to take unfair advantage of the rules or procedures or concentrate market power and inhibit competition. The Department of Market Monitoring is the organization within the ISO that keeps a close watch on the efficiency and effectiveness of the ancillary service, congestion management and real-time spot markets. In carrying out this monitoring function, the Department of Market Monitoring works closely with the ISO Market Surveillance Committee – an independent advisory group of industry experts that make recommendations regarding the efficient operation of the ISO markets to the ISO Board of Governors and the Federal Energy Regulatory Commission.

Mission Provide independent high quality analysis of key market issues in a fair, competent, thorough, and professional manner.

Core Functions Monitor Market Performance – Monitor market performance to identify potential anti-competitive market behavior or market inefficiencies. Assess Market Rules and ISO Operational Practices – Identify ineffective market rules or ISO operational practices and recommend changes to improve wholesale competition and efficient market outcomes. Conduct Market Analysis (Efficiency) – Provide analysis on market performance with particular focus on the structural competitiveness and efficiency of the wholesale markets and the effectiveness of bid mitigation rules to remedy the potential exercise of market power. Conduct Market Analysis (Investment Signals) – Evaluate the effectiveness of the markets in signaling needed investment in generation, transmission, and demand response infrastructure and identify any potential barriers that may impede the market’s ability to provide needed investments. Manage Enforcement Protocols – Monitor, develop, and enforce the California ISO Enforcement Protocols – Rules of Conduct in the ISO Tariff that specify the behavior expected of Market Participants and establish in advance the sanctions and other potential consequences for violations of these rules. Manage Coordination with Regulatory/Legal Entities – Coordinate and assist with referrals, investigations, and inquiries by other regulatory and legal entities. Provide Advice to Management and Board – Provide independent advice to California ISO CEO and Board on market related matters.

Potential Corrective Actions  The unimpeded and open functioning of the market is the best way to achieve competitive electricity prices. However, situations may develop where corrective action must be taken to ensure that the market continues to function in a fair and efficient manner.  Response actions include the following: 1.       Seek to change market rules in Tariffs/Protocols to improve market efficiency and fairness 2.       Seek changes to market power mitigation rules: ·          Bid caps or floors ·          Mitigation procedures 3.       Reporting and referral to regulatory agencies for possible enforcement action   Additional details on the role and responsibility of the Department of Market Monitoring can be found in Appendix P of the ISO Tariff  (http://www.caiso.com/1856/18568d4233b0.pdf).