Implementation and evolution of the Congestion Revenue Right market in California

The California Independent System Operator (CAISO) successfully launched its new Market Redesign and Technology Upgrade (MRTU) on April 1st, 2009. The new design is based on Locational Marginal Prices (LMPs) with Day Ahead and Real Time submarkets. The energy market is supplemented with a Congestion Revenue Right (CRR) market. With the major redesign of the CAISO markets, the implementation has proved to be challenging since most of the processes have to be built in their entirety. This paper describes the CRR market implemented in California, presents the evolution of the CRR revenue adequacy and CRR auctions in the first month of life, analyze price convergence of the CRR market towards the day-ahead market. It also describes some implementation challenges that CAISO has faced to go live with its CRR market.