On October 1, 2015, FERC issued an order approving the
California Independent System Operator's ("CAISO")
revisions to its capacity procurement mechanism ("CPM")
to, among other things, implement a competitive solicitation
process to procure backstop capacity. In the order, FERC found that
(1) compensating CPM capacity based on a competitive solicitation
process will result in compensation driven by competitive factors
and (2) the use of a soft cap and 20 percent adder to compensate
resources will provide them with enough revenue for system upgrades
and improvements.
On March 17, 2011, FERC conditionally accepted and suspended
CAISO's proposed CPM compensation methodology ("March 2011
CPM Order"). The CPM is a voluntary backstop mechanism that
permits CAISO to procure capacity to address a deficiency or
supplement resource adequacy to maintain grid reliability. To
compensate resources providing this backstop capacity, CAISO
initially proposed an administratively-set
