Dive Brief:
A broad stakeholder group on Friday unanimously approved the first step in a two-part process for creating an independent organization to oversee the Western energy imbalance market and the pending extended day-ahead market.
The proposal from the West-Wide Governance Pathways Initiative’s launch committee gives the EIM’s governing board primary authority over the markets; in the current structure, it holds joint authority with the California Independent System Operator’s board. The initiative’s second phase calls for developing a plan by the end of this year for a fully independent market organization, which would require action by the California Legislature next year.
The proposal is “a step in the right direction that gets us away from the joint authority and starts moving us really closer towards independent governance,” Kevin Thompson, a member of the Arizona Corporation Commission, said in support of the approved measure at the Pathways Initiative meeting on Friday.
Dive Insight:
The Pathways Initiative started last year at the urging of utility regulators from five states, including California. It aims to build on the Western EIM but establish an independent market governance structure, separate from CAISO’s board, which is selected by California’s governor and confirmed by the state Senate.
The initiative is developing its two-step plan in a way that would allow for the eventual creation of a regional transmission organization.
Through the initiative, key sectors — including independent power producers, state consumer advocates, investor-owned utilities and public power utilities — are trying to solve the question of how to bring to fruition a regional market operator in the West that is not beholden to one particular state’s constitution, said Vijay Satyal, deputy director of markets and transmission for Western Resource Advocates, which supported the measure on Friday.
Under the plan, market proposals would start at the WEIM governing body for approval and then go to CAISO’s board for review. If there is a disagreement over a proposal, a dispute resolution process would begin. If that does not succeed, CAISO would file both market proposals on equal footing with the Federal Energy Regulatory Commission for review.
CAISO intends to launch a stakeholder process to review the Pathways Initiative’s proposal, with a vote on it expected by early August, Stacey Crowley, the grid operator’s vice president of external affairs, said at the meeting. The review will include a three-week public comment period, she said.
Under the plan, the transition to the new governance structure would be triggered when a set of geographically diverse non-CAISO entities accounting for at least 70% of the grid operator’s balancing authority area load have executed EDAM implementation agreements.
With NV Energy’s decision Friday to join CAISO’s planned day-ahead market, the trigger would be met if all the other utilities that have indicated they plan to join or they are leaning toward participating in the market sign agreements.
Those utilities and entities are Portland General Electric, Idaho Power, PacifiCorp, Los Angeles Department of Water and Power and the Balancing Area of Northern California, which includes the Sacramento Municipal Utility District.
Meanwhile, in a second step, the Pathways Initiative plans to develop a proposal for a fully independent organization to oversee the EIM and EDAM markets. It aims to release a proposal in the early fall for public comment, with final approval coming by the end of the year, said Spencer Gray, Northwest and Intermountain Power Producers Coalition executive director.
“This step aims to implement the regulators’ vision of a regional energy market with a large and inclusive footprint, maximizing independence while leveraging the existing market infrastructure to minimize costs,” the Pathways Initiative said in its Step 1 final proposal.
