CAISO’s Role in California Wholesale Markets

The California Independent System Operator (known as CAISO) operates California’s energy wholesale market. The wholesale market, as any other commodity exchanges do, is composed of many interrelated processes.

The energy markets (day-ahead, hour-ahead and real-time) use a full network model that models transmission losses and reactive power load to produce prices at every point in the California electrical system. The CAISO market allows California to meet reliability needs and serve load by providing energy and sufficient capacity.

The CAISO also offers services including mechanisms for entities to obtain and trade congestion revenue rights and engage in convergence bidding activities. All products and services provided by the CAISO are developed and implemented in full collaboration with stakeholders.

The CAISO is regulated by the Federal Energy Regulatory Commission (or FERC), an independent federal agency that regulates the interstate transmission of electricity, natural gas, and oil. The California Public Utilities Commission regulates investor-owned utilities operating in the CAISO balancing authority area. Publicly owned utilities in California are regulated by their respective city councils or other governance bodies.

As a Participating Transmission Owner to the CAISO, SCE has placed all of its transmission system facilities under the administration and operation of the CAISO. Any issues related to interconnecting generation projects to SCE’s transmission system should be addressed to the CAISO.

Selling to SCE, A 3RD Party or Into the CAISO Market

The CAISO market allows any Independent Power Producer (or IPP) to sale to any “market participant” to the CAISO’s market. The current list of market participants include the Investor Owned Utilities (such as SCE, PG&E and SDGE), IPPs, municipalities, energy commodity brokers, etc. Market participants can also be non-California entities participating in inter-state transactions that can be scheduled, delivered and settled via the CAISO’s market.

Participating in the CAISO market requires you to become a Market Participant, or to establish a relationship with a current market participant under an appropriate operating agreement. Some of the operations performed by the CAISO market require additional functional agreements to be in place. These include roles performed by Scheduling Coordinators, Metering Service providers, settlement functions, etc.

For information about becoming a market participant and for any other information about the CAISO, please visit the CAISO website at

Interconnecting Your Project For Sales Into Wholesale Market

Generation projects connecting to SCE’s electrical system seeking to participate in CAISO’s market require to become a Participating Generator. All interconnections requested for the purpose of selling power to a wholesale market are under the jurisdiction of the FERC, and as such, requires to follow the FERC jurisdictional tariffs.

Depending on whether the generation project connects to SCE’s transmission or distribution system, the applicable interconnection process is handled under the CAISO tariff or SCE’s WDAT, respectively.

DISCLAIMER: The guidelines in this section are provided with the intent to help SCE’s customers understand SCE’s Interconnection Procedures. However, in the case of discrepancies with SCE’s rules, such tariffs and regulations will prevail.