This initiative will explore several topics related to price formation in the California ISO markets focused on real-time market pricing. Scarcity prices are important to attract supply and incent resources to be available and perform. They are also important to provide appropriate price signals to reduce demand. Recent energy shortages and associated prices in the ISO real-time market have emphasized the need for the ISO to review and enhance its scarcity pricing provisions. Consequently, the ISO plans to consider the following topics in this initiative: (1) enhance real-time market scarcity pricing to better reflect tight supply conditions, (2) consider fast-start pricing, and (3) enhance how the real-time market uses advisory prices to dispatch resources.
| Proposal Development | Decision | Implementation | Completed/Closed | |
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| Phase 2 |
Mar 03, 2026 Spotlight presentation at WEM Governing Body
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| Phase 1 |
Jul 31, 2024 Order accepting tariff amendment (ER24-2168)
Jul 08, 2024 Answer to comments (ER24-2168) May 31, 2024 Tariff amendment filing (ER24-2168) |
Nov 14, 2024 PRR 1591 updates to the hourly energy shaping factor
Implementation milestones
Jul 11, 2024 Training Aug 01, 2024 Production |
Completed |
These sessions will focus on developing detailed proposals for
Topic 1: Scarcity Pricing
Topic 2: BAA-level Market Power Mitigation (MPM)
Topic 3: Fast Start Pricing
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Price-Formation-Enhancements-Working-Group-Phase-2-Meeting-Inventory.pdf
Price Formation Enhancements Working Group Phase 2 Meeting Inventory 09/22/2025
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Web meeting |
https://www.caiso.com/documents/presentation-scarcity-pricing-market-surveillance-committee-jan-16-2026.pdf
Presentation - Scarcity Pricing - Market Surveillance Committee - Jan 16, 2026 02/04/2026
Presentation - Market Power Mitigation Issue - Market Surveillance Committee - Jan 16, 2026 02/04/2026
Presentation - Price Formation Enhancements - Market Surveillance Committee - Jan 16, 2026 02/04/2026
Presentation - Price Formation Issues - Market Surveillance Committee - Jan 16, 2026 02/04/2026
Video - Market Surveillance Committee - Jan 16, 2026 02/04/2026
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Web meetings |
Working Group Session 14 for Nov 10 and Nov 20 - Scarcity Pricing https://youtu.be/v6YOger8SoI
Video - Price Formation Enhancements - Nov 10, 2025 11/12/2025
Video - Price Formation Enhancements - Nov 20, 2025 12/01/2025
Presentation - Price Formation Enhancements - Nov 20, 2025 11/19/2025
Presentation - Price Formation Enhancements - Nov 10, 2025 11/08/2025
Gridwell Consulting WPTF Presentation - Price Formation Enhancements - Nov 10, 2025 11/10/2025
SCE Presentation - Price Formation Enhancements - Nov 10, 2025 11/10/2025
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Web meeting |
Session 13 - Straw Proposal - BAA-level Market Power Mitigation and Scarcity Pricing https://youtu.be/0WYzdv7VXUQ
Video - Price Formation Enhancements - Straw Proposal - Day 1 - Sep 03, 2025 09/04/2025
Video - Price Formation Enhancements - Straw Proposal - Day 2 - Sep 04, 2025 09/05/2025
Presentation - Price Formation Enhancements - Straw Proposal - Scarcity Pricing - Sep 04, 2025 09/02/2025
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Web meeting |
Working Group Session 12 - BAA-level Market Power Mitigation https://youtu.be/JY3nMM8MSnk
Video - Price Formation Enhancements Policy Development Working Group - Mar 13, 2025 03/18/2025
Presentation - Price Formation Enhancements - Mar 13, 2025 03/13/2025
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Web meeting |
Working Group Session 11 - BAA-level Market Power Mitigation https://www.youtube.com/watch?v=DB5m3SG8z58
Video - Price Formation Enhancements - Mar 05, 2025 03/11/2025
Presentation - Price Formation Enhancements - Mar 05, 2025 03/05/2025
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Web meeting |
Working Group Session 10 - Fast Start Pricing https://youtu.be/AN8iz-h5-wU
Video - Price Formation Enhancements - Feb 13, 2025 02/18/2025
Presentation - Price Formation Enhancements - Feb 13, 2025 02/13/2025
Presentation - Price Formation Enhancements - Fast Start Pricing - Feb 13, 2025 02/12/2025
Mike Cadwalader Comments Price Formation Enhancements Working Group Session 6 and 7 - Feb 06, 2025 02/07/2025
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Web meeting |
Working Group Session 9 - Scarcity Pricing https://youtu.be/Kq9jEhKj1JA
Video - Price Formation Enhancements - Feb 06, 2025 02/11/2025
Presentation - Price Formation Enhancements - Feb 06, 2025 02/06/2025
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Web meeting |
Working Group Session 8 - Scarcity Pricing https://youtu.be/Cpe7fy1XB5k
Video - Price Formation Enhancements - Jan 22, 2025 01/27/2025
Presentation - Price Formation Enhancements - Session 1 - Jan 22, 2025 01/21/2025
Presentation - Price Formation Enhancements - Session 2 - Jan 22, 2025 01/21/2025
Presentation - Department of Market Monitoring - Flexibility Ramping Product - Jan 22, 2025 01/21/2025
Presentation - Vitol - Competitive Electric Markets - Jan 22, 2025 01/21/2025
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Web meeting |
Working Group Session 7 - Fast Start Pricing, PJM Interconnection https://www.youtube.com/watch?v=5yGpS54gsLA
Video - Price Formation Enhancements - Jan 16, 2025 01/22/2025
Presentation - PJM Fast Start Pricing - Jan 16, 2025 01/15/2025
Presentation - PJM Fast Start Education - Jan 16, 2025 01/15/2025
Presentation - Price Formation Enhancements - Jan 16, 2025 01/16/2025
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Web meeting |
Working Group Session 6 - Fast Start Pricing Workshop Video is unavailable for this meeting. https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-MISO-Independent-Market-Monitor-Review-of-ELMP-Dec-19-2024.pdf
Presentation - MISO Independent Market Monitor Review of ELMP - Dec 19, 2024 12/17/2024
Presentation - Fast-Start Pricing ELMP at MISO - Dec 19, 2024 12/17/2024
Presentation - Price Formation Enhancements - Dec 19, 2024 12/18/2024
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Web meeting |
Working Group Session 5 - Scarcity Reserve Demand Curve (SRDC) to reflect tight supply conditions https://youtu.be/7RpgNtEQEnk
Video - Price Formation Enhancements - Dec 16, 2024 12/19/2024
Presentation - Price Formation Enhancements - Dec 16, 2024 12/16/2024
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Web meeting |
Working Group Session 4 - Fast Start Pricing https://www.youtube.com/watch?v=WvW7poHncGs
Video - Price Formation Enhancements - Dec 05, 2024 12/09/2024
Presentation - Price Formation Enhancements - Dec 05, 2024 12/05/2024
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Web meeting |
Working Group Session 3 - BAA-level Market Power Mitigation, Pivotal Suppliers and Impact Thresholds https://www.youtube.com/watch?v=kgp_J8phcbA
Video - Price Formation Enhancements - Nov 20, 2024 11/26/2024
Presentation - Price Formation Enhancements - Nov 20, 2024 11/20/2024
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Web meeting |
Working Group Session 2 - Fast Start Pricing https://youtu.be/0piPbCUYl0o
Video - Price Formation Enhancements Policy Development Working Group - Nov 14, 2024 11/20/2024
Presentation - Price Formation Enhancements - Nov 14, 2024 11/13/2024
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Web meeting |
Working Group Session 1 - BAA-level Market Power Mitigation https://youtu.be/XfItVTJ_XJw
Video - Price Formation Enhancements Policy Development Working Group - Nov 06, 2024 11/20/2024
Presentation - Price Formation Enhancements - Nov 06, 2024 11/06/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Price-Formation-Enhancements-Working-Group-Phase-2-Schedule-2024-2025.pdf
Price Formation Enhancements - Working Group Phase 2 - Schedule 2024-2025 11/13/2024
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Outcome statement: The effective trade date August 01, 2024, the ISO implemented the Price Formation Enhancements modifications to rules for bidding above the soft offer cap for resources, especially to allow resources with intra-day opportunity costs to reflect those costs in their energy bids. This implementation scope includes:
1) Revision of the cap on all Default Energy Bids (DEBs) from $1,000/MWh to $2,000/MWh (“Uncap the DEB”) for both Day-Ahead (DA) and Real-Time (RT). Generating resource energy bids are capped by max ($1000, DEB, adjusted DEB) for both DA and RT.
2) For energy storage resource registered as an LESR using a proxy value, ISO will cap their bids at max ($1000, DEB from internal system if available, 4th highest Maximum Import Bid Price (MIBP), highest cost-verified bid)
3) Modification of MIBP shaping factor formula based on the high-priced day SMEC only
Effective Trade Date August 16, 2024, the ISO implemented a modification of the MIBP shaping factor formula based on the high-priced day system marginal energy cost (SMEC) only.
Web meeting |
https://youtu.be/Ye6NaSCcKWg
Video - Price Formation Enhancements Discussion Paper - Sep 30, 2024 10/03/2024
Discussion Paper and Stakeholder Recommendations - Price Formation Enhancements 09/05/2024
Presentation - Price Formation Enhancements - Sep 30, 2024 09/30/2024
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https://www.caiso.com/documents/may-31-2024-tariff-amendment-price-formation-enhancements-er24-2168.pdf
May 31, 2024 Tariff Amendment - Price Formation Enhancements (ER24-2168) 08/01/2024
Jul 08, 2024 - CAISO Answer to Comments - Price Formation Enhancements (ER24-2168) 08/01/2024
Jul 31, 2024 - Order Accepting Tariff Amendment - Price Formation Enhancements (ER24-2168) 08/01/2024
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Price Formation Enhancements - Soft Offer Bid Cap Pre-Market Simulation Training |
https://youtu.be/2vqsQjzoE2w https://stakeholdercenter.caiso.com/InitiativeDocuments/presentation-price-formation-enhancement-bidding-above-the-soft-offer-cap-training-and-scenario-walkthrough.pdf | |
Web meeting |
https://caiso.webex.com/caiso/ldr.php?RCID=44ebb7109900399f1d2a890a0c0fb194
Video - Price Formation Enhancements - Market Simulation Call - Jul 22, 2024 07/30/2024
Presentation - Market Simulation - Jun 20, 2024 06/25/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Revised-Draft-Tariff-Language-Price-Formation-Enhancements-May-20-2024.docx
Revised Draft Tariff Language - Price Formation Enhancements 05/20/2024
Draft Tariff Language - Price Formation Enhancements 05/13/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Final-Proposal-Price-Formation-Enhancements-May17-2024.pdf
Final Proposal - Price Formation Enhancements 05/17/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/NoticeofDecisionalClassification-FERC831SoftOfferCap-May2024.pdf
Notice of Decisional Classification - FERC 831 Soft Offer Cap - May 2024 05/10/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Draft-Final-Proposal-Price-Formation-Enhancements-Redline-May-7-2024.pdf
Draft Final Proposal - Price Formation Enhancements Redline 05/07/2024
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Web meeting |
https://youtu.be/GhPzzvL1M7o
Video - Price Formation Enhancements - May 02, 2024 05/03/2024
Draft Final Proposal - Price Formation Enhancements - May 02, 2024 05/01/2024
Presentation - Price Formation Enhancements - May 02, 2024 05/02/2024
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Web meeting |
Market Surveillance Committee meeting https://www.caiso.com/Documents/PFE-rules-for-bidding-above-the-soft-offer-cap-straw-proposal-presentation-apr24_2024.pdf
MSC Presentation - Price Formation Enhancements - Apr 24, 2024 04/24/2024
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Web meeting |
https://www.youtube.com/watch?v=kFOX3HCfLFg&feature=youtu.be&themeRefresh=1
Video - Price Formation Enhancements - Apr 23, 2024 04/23/2024
Feasibility Assessment and Straw Proposal - Price Formation Enhancements - Apr 22, 2024 04/24/2024
Presentation - Price Formation Enhancements - Apr 23, 2024 04/23/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/IssuePaper-StakeholderRecommendations-PriceFormationEnhancements-Rules-BiddingAboveSoftOfferCap.pdf
https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Price-Formation-Enhancements-Apr-23-2024.pdf
Presentation - Price Formation Enhancements - Apr 23, 2024 04/22/2024
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Web meeting |
Working Group Session 16, Analysis on Fast Start Pricing https://youtu.be/4ULeI0pAo20?si=EiVdA1Ptp1SIEj4I
Video - Price Formation Enhancements - Apr 8, 2024 04/15/2024
Presentation - Price Formation Enhancements - Apr 08, 2024 04/08/2024
Mike Cadwalader Comments Price Formation Enhancements Working Group Session 16 - Apr 8, 2024 05/13/2024
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Price-Formation-Enhancements-Working-Group-Schedule-2024.pdf
Updated Price Formation Enhancements Working Group Schedule 2024 01/30/2024
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Web meeting |
Working Group Session 15, Battery Storage Bidding and FERC
Video - Price Formation Enhancements Working Group - Mar 8, 2024 03/13/2024
Presentation - Price Formation Enhancements Working Group - Mar 12, 2024 03/12/2024
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Web meeting |
Working Group Session 14, BAA-Level Market Power Mitigation https://youtu.be/rwqANnPvyKc
Video - Price Formation Enhancements Working Group - Feb 21, 2024 02/23/2024
Presentation - Price Formation Enhancement - Feb 21, 2024 02/20/2024
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Web meeting |
Working Group Session 13, Workshop https://youtu.be/kpsvG7B4RhM
Video - Price Formation Enhancements Workshop - Feb 12, 2024 02/13/2024
Presentation - Price Formation Enhancement Workshop - Feb 12, 2024 02/09/2024
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Web meeting |
Working Group Session 12, Scarcity Pricing Sprint 3 https://youtu.be/3xet4FA3YSg
Video - Price Formation Enhancements Working Group - Jan 24, 2024 01/29/2024
Presentation - Price Formation Enhancements - Jan 24, 2024 01/22/2024
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Web meeting |
Working Group Session 11, Scarcity Pricing Sprint 2 https://youtu.be/HxvIdew-d5k
Video - Price Formation Enhancements Working Group - Jan 17, 2024 01/23/2024
Presentation - Price Formation Enhancements - Jan 17, 2024 01/16/2024
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Web meeting |
Working Group Session 10, Scarcity Pricing Sprint 1 https://youtu.be/CBMymPsXsUE
Video - Price Formation Enhancements Working Group - Jan 10, 2024 01/12/2024
Presentation - Price Formation Enhancements Working Group - Jan 10, 2024 01/08/2024
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Web meeting |
Working Group Session 9 https://www.youtube.com/watch?v=cQYDlDrfWp8
Video - Price Formation Enhancements Working Group - Dec 12, 2023 12/13/2023
Presentation - Price Formation Enhancement - Dec 12, 2023 12/11/2023
Mike Cadwalader Comments Price Formation Enhancements Working Group Session 9 - Jan 11, 2024 01/11/2024
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Web meeting |
Working Group Session 8 https://youtu.be/j7QsqPCl7sY
Video - Price Formation Enhancements Working Group - Nov 16, 2023 11/17/2023
Presentation - Price Formation Enhancements - Nov 16, 2023 11/15/2023
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Web meeting |
Working Group Session 7 - Draft Final Proposal https://stakeholdercenter.caiso.com/InitiativeDocuments/Draft-Final-Proposal-Scarcity-Pricing-Oct-05-2009.pdf
Draft Final Proposal - Scarcity Pricing - Oct 05, 2009 11/02/2023
Presentation - Price Formation Enhancements - Oct 25, 2023 10/25/2023
2020-2022 - Ancillary Service Scarcity Event Report 10/26/2023
Draft Market Surveillance Committee Opinion on Scarcity Pricing 11/01/2023
Nov 01, 2010 - Order on Compliance - Scarcity Pricing (ER10-500-000) 11/02/2023
Video - Price Formation Enhancements Working Group - Oct 25, 2023 10/26/2023
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Web meeting |
Working Group Session 6 https://youtu.be/q_2htf88duA
Video - Price Formation Enhancements Working Group - Oct 12, 2023 10/17/2023
Presentation - Price Formation Enhancement - Oct 12, 2023 10/11/2023
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Web meeting |
Working Group Session 5 - Discussion Paper https://stakeholdercenter.caiso.com/InitiativeDocuments/DicussionPaper-Price-Formation-Enhancements-Sept21-2023.pdf
Discussion Paper - Price Formation Enhancements - Sep 21, 2023 09/21/2023
Presentation - Price Formation Enhancements - Sep 27, 2023 09/27/2023
Video - Price Formation Enhancements Working Group - Sep 27, 2023 09/29/2023
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Web meeting |
Working Group Session 4 https://youtu.be/kXYgj8WStqc
Video - Price Formation Enhancements - Sep 14, 2023 09/19/2023
Presentation - Price Formation Enhancements - Sep 14, 2023 09/14/2023
Poll Results - Price Formation Enhancements - Sep 14, 2023 09/18/2023
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Revised-Price-Formation-Enhancements-Overview.pdf | |
Hybrid meeting |
Working Group Session 3 https://youtu.be/GqoxeEQVOzI
Video - Price Formation Enhancements - Aug 17, 2023 08/22/2023
Presentation - Price Formation Enhancement - Aug 17, 2023 08/17/2023
Poll Results - Price Formation Enhancements - Aug 17, 2023 08/18/2023
Chat - Price Formation Enhancements - Aug 17, 2023 08/18/2023
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Hybrid meeting |
Working Group Session 2 https://www.youtube.com/watch?v=H0GsW-mIMoY
Video - Price Formation Enhancements - Aug 10, 2023 08/14/2023
Presentation - Price Formation Enhancements - Aug 10, 2023 08/10/2023
Poll Results - Price Formation Enhancements - Aug 10, 2023 08/11/2023
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Hybrid meeting |
Working Group Session 1 https://youtu.be/W0hYuG8SDqU
Video - Price Formation Enhancements Working Group - Aug 3, 2023 08/08/2023
Presentation - Price Formation Enhancements - Aug 3, 2023 08/02/2023
Poll Results - Price Formation Enhancements - Aug 3, 2023 08/03/2023
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https://stakeholdercenter.caiso.com/InitiativeDocuments/Price-formation-enhancements-overview.pdf
Price Formation Enhancements Overview 07/17/2023
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Web meeting |
https://www.youtube.com/watch?v=W57tQkudCvQ
Video - Price Formation Enhancements - Jun 26, 2023 07/12/2023
Presentation - Price Formation Enhancements - Jun 26, 2023 06/23/2023
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Hybrid meeting |
https://youtu.be/zFxgtuWrskQ
Video - Price Formation Enhancements - Mar 20, 2023 03/24/2023
Presentation - Price Formation Enhancements - Mar 20, 2023 03/17/2023
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Web meeting |
https://youtu.be/WhB8yVE_pq8
Video - Price Formation Enhancements - Dec. 16, 2022 12/19/2022
Presentation - Price Formation Enhancements - Dec 16, 2022 12/15/2022
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Web meeting |
https://youtu.be/uxfn08PCIw0
Video - Price Formation Enhancements - Nov 16, 2022 11/17/2022
Presentation - Price Formation Enhancements - Nov 16, 2022 11/14/2022
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Web meeting |
https://stakeholdercenter.caiso.com/InitiativeDocuments/Issue-Paper-Price-Formation-Enhancements.pdf
Issue Paper - Price Formation Enhancements 07/05/2022
Presentation - Price Formation Enhancements - Jul 12, 2022 07/11/2022
Video - Price Formation Enhancements - Jul 12, 2022 07/13/2022
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Web meeting |
Workshop and Stakeholder Presentation https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-PriceFormationEnhancementsWorkshop-June9-2022.pdf
Presentation - Price Formation Enhancements Workshop - Jun 09, 2022 06/07/2022
Powerex Presentation - Price Formation Enhancements - Jun 09, 2022 06/07/2022
Calpine Presentation - Price Formation Enhancements - Jun 09, 2022 06/07/2022
Rev Renewables Presentation - Price Formation Enhancements - Jun 09, 2022 06/07/2022
WPTF Presentation - Price Formation Enhancements - Jun 09, 2022 06/13/2022
Powerex and Public Power Council Report - Importance of Fast Start Pricing in Market Design 06/27/2022
Video - Price Formation Enhancements - Jun 09, 2022 06/14/2022
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