{"id":366,"date":"2016-10-31T20:04:49","date_gmt":"2016-10-31T20:04:49","guid":{"rendered":"http:\/\/westerngrid.net\/wcea\/?page_id=366"},"modified":"2023-04-17T17:20:28","modified_gmt":"2023-04-17T17:20:28","slug":"critique-of-rso-assumptions-and-assertions","status":"publish","type":"page","link":"https:\/\/westerngrid.net\/wcea\/critique-of-rso-assumptions-and-assertions\/","title":{"rendered":"Critique of RSO Assumptions and Assertions"},"content":{"rendered":"

[vc_row][vc_column][lab_heading title=”RSO: Critique of Western Regional System Operator Assumptions and Assertions”][\/lab_heading][\/vc_column][\/vc_row][vc_row][vc_column width=”1\/2″][vc_column_text]\"v2-western-states-trimmed-only-rso-states\"Evaluating the costs, benefits and impacts of a Regional System Operator (RSO) on states, utilities and customers is a complex process. The CA Independent System Operator (CAISO), as directed by the CA legislature, has performed significant analysis of these issues.\u00a0 The body of work, known\u00a0as the SB 350 studies<\/strong>, examined: creation and retention of jobs and other benefits to the CA economy, environmental impacts in CA and elsewhere, impacts in disadvantaged communities, emissions of greenhouse gases and other air pollutants, and reliability and integration of renewable energy resources.<\/p>\n

The SB 350 studies were developed using independent consultants and an open, stakeholder process.\u00a0 The studies provide credible, quantitative analysis on economic benefits of regionalization of the electric grid.\u00a0\u00a0<\/strong>However,\u00a0while robust, the studies do not quantify all possible benefits of an RSO<\/strong>, nor do they provide the individual state-by-state analysis that will be needed for state decision making outside of California. Study of net benefits for each involved state should begin immediately.[\/vc_column_text][\/vc_column][vc_column width=”1\/2″][vc_column_text]In addition to SB 350 study work, the CAISO is facilitating numerous initiatives to examine and design different facets of an RSO such as the planning process for adequate resources, how a new entity might be governed and how the system will pay for existing and new transmission. Through these processes, stakeholders have adopted many assumptions and have stated many assertions about future operation of an RSO.<\/p>\n

As a supporter of regionalization Western Grid Group (WGG) has developed this paper to evaluate and respond to assertions about SB 350 studies and regionalization.\u00a0 This paper is intended to be a living document that will be expanded and modified as regionalization proceeds.\u00a0This paper covers eight topic areas:<\/strong>\u00a0 cost of doing nothing; SB 350 study assumptions and findings, power plant emissions, consumer and system benefits, transmission, market manipulation, complexity of market operations, changes in jurisdictional authority as well as issues still being evaluated.<\/p>\n

This paper is organized into two sections, organization of assertions by topic, followed by an in-depth response to each assertion.<\/strong>\u00a0A bibliography of sources is also provided. Th\u00adis document is intended to deepen the understanding of the effects of regionalization on the electric system in the Western Interconnection.<\/p>\n

We welcome your input: rso at westerngrid.net.<\/p>\n

[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column reveal_effect=”” css=”.vc_custom_1468356430742{padding-right: 20px !important;}”][vc_tta_tour color=”blue” active_section=”1″][vc_tta_section title=”Directory of Assumptions” tab_id=”1477944491753-2cbb926a-0e41″][vc_column_text]<\/p>\n

    \n
  1. Cost of doing nothing or delaying<\/strong><\/li>\n<\/ol>\n

    1.1 \u00a0 Doing nothing does not cost consumers money or cause higher emissions \u2013 Incorrect<\/strong><\/p>\n

    1.2 \u00a0 There is no urgency to act, we can wait until 2024 before making a decision on an RSO. \u2013 Incorrect<\/strong><\/p>\n

    \n
      \n
    1. SB 350 study assumptions and findings<\/strong><\/li>\n<\/ol>\n

      2.1 \u00a0\u00a0\u00a0 Studies do not quantify all benefits \u2013 Correct<\/strong><\/p>\n

      2.2\u00a0\u00a0\u00a0\u00a0 RSO benefits are overstated because \u201ccurrent practice\u201d should reflect more efficient bilateral markets in the future \u2013 Incorrect<\/strong><\/p>\n

      2.3 \u00a0\u00a0\u00a0RSO benefits are understated because SB 350 study assumptions understate the challenges of the Duck Curve — Correct<\/strong><\/p>\n

      2.4 \u00a0\u00a0\u00a0RSO benefits only occur when mistakenly assuming more renewables than required by state Renewable Portfolio or Energy Standards \u2013 Incorrect<\/strong><\/p>\n

      2.5 \u00a0\u00a0\u00a0Assumed solar costs are too high and lower solar costs diminish RSO benefits \u2013 Incorrect<\/strong><\/p>\n

      2.6 \u00a0\u00a0\u00a0SB 350 studies assume \u201cfree transmission\u201d for out-of-state renewables \u2013 Incorrect<\/strong><\/p>\n

      2.7 \u00a0\u00a0\u00a0Mandated (doubling) energy efficiency wipes out RSO benefits \u2013 Incorrect<\/strong><\/p>\n

      2.8 \u00a0\u00a0\u00a0Most benefits to CA from regionalization are due to shifting CAISO costs to (PAC) and PAC wants a reduced Grid Management Charge (GMC) \u2013 Partially correct<\/strong><\/p>\n

      \n
        \n
      1. Power plant emissions<\/strong><\/li>\n<\/ol>\n

        3.1\u00a0 \u00a0 The SB 350 study findings show the regional energy market will increase greenhouse gas emissions \u2013 Incorrect<\/strong><\/p>\n

        3.2 \u00a0 Regionalization will result in more natural gas burning in California and therefore more emissions of criteria air pollutants in disadvantaged communities \u2013 Generally Incorrect<\/strong><\/p>\n

        3.3 \u00a0 Power plant startups (and associated emissions) increase with regionalization \u2013 Incorrect<\/strong><\/p>\n

        3.4 \u00a0 An RSO will extend the life of existing coal plants outside CA \u2013 Incorrect<\/strong><\/p>\n

        3.5 \u00a0 An RSO will not reduce Green House Gas (GHG) emissions because generators will re-dispatch dirty generation to non-CA consumers and sell their clean generation to CA consumers (\u201csecondary dispatch\u201d) \u2013 Incorrect<\/strong><\/p>\n

        3.6 \u00a0 PAC will continue to run its coal plants because self-scheduling of generation and existing coal and power supply contracts will make the utility unresponsive to market prices \u2013 Probably Incorrect<\/strong><\/p>\n

        3.7 \u00a0 Given PAC\u2019s large coal fleet, the regional energy market will facilitate the transmission of more coal into California \u2013 Incorrect<\/strong><\/p>\n

        3.8 \u00a0 PAC is the wrong utility for CAISO to partner with in an RSO because it will bring coal power into CA \u2013 Not necessarily right<\/strong><\/p>\n

        \n
          \n
        1. Consumer and system benefits<\/strong><\/li>\n<\/ol>\n

          4.1 \u00a0\u00a0Consumers will never see the assumed benefits of an RSO \u2013 Probably Incorrect<\/strong><\/p>\n

          4.2 \u00a0\u00a0The regionalization proposal is merely a resurrection of a plan from 20 years ago to expand CA\u2019s power grid \u2013 Incorrect<\/strong><\/p>\n

          \n
            \n
          1. Transmission<\/strong><\/li>\n<\/ol>\n

            5.1 \u00a0\u00a0PAC consumers will be forced to pay for transmission they don\u2019t need such as Gateway West \u2013 Incorrect<\/strong><\/p>\n

            5.2 \u00a0\u00a0CA is at risk of paying a significant share of new transmission facilities built in the PAC sub-region \u2013 Unlikely<\/strong><\/p>\n

            \n
              \n
            1. Market Manipulation<\/strong><\/li>\n<\/ol>\n

              6.1 \u00a0 This regionalization proposal increases CA\u2019s risk of having another electricity crisis \u2013 Incorrect<\/strong><\/p>\n

              \n
                \n
              1. Additional complexity and cost to grid operation and utility regulation from joining an RSO<\/strong><\/li>\n<\/ol>\n

                7.1 \u00a0 If PAC joins an RSO the company will have to adapt practices to the complexities of regional market operation and that will add cost to consumers \u2013 Partially correct<\/strong><\/p>\n

                \n
                  \n
                1. Change in Jurisdictional Authority<\/strong><\/li>\n<\/ol>\n

                  8.1 \u00a0 An RSO will impose CA policies on other states \u2013 Incorrect<\/strong><\/p>\n

                  8.2 \u00a0 An RSO will undermine CA\u2019s ability to execute its clean energy policies \u2013 Incorrect<\/strong><\/p>\n

                  8.3 \u00a0 By approving a change in CAISO governance, CA gives up its power to set its own course before knowing whether an RSO will operate in its interest \u2013 Incorrect<\/strong><\/p>\n

                  8.4 \u00a0 An RSO enables FERC to expand its authority at the expense of state authority \u2013 Incorrect<\/strong><\/p>\n

                  8.5 \u00a0 Joining an RSO will remove significant costs from regulatory oversight \u2013 Incorrect<\/strong><\/p>\n

                  8.6 \u00a0 Public power and PMAs do not have an adequate role in an RSO \u2013 Incorrect<\/strong><\/p>\n

                  \n
                    \n
                  1. Assertions still being evaluated:<\/strong><\/li>\n<\/ol>\n

                    9.1 \u00a0\u00a0\u00a0Consumer and System Benefits<\/strong> – An RSO will raise rates in PAC states to levels in CA<\/p>\n

                    9.2 \u00a0\u00a0\u00a0Transmission<\/strong> – Because of limited transmission connectivity between PAC and the Independent System Operator (ISO), PAC will experience high congestion charges that offset the benefits of participating in an RSO<\/p>\n

                    9.3 \u00a0\u00a0\u00a0Transmission<\/strong> –\u00a0 PAC joining an RSO will create problems such as impact on current power contracts and impacts on static transmission rights for non-RSO participants embedded in PAC\u2019s system<\/p>\n

                    9.4 \u00a0\u00a0\u00a0Change in Jurisdictional Authority<\/strong> – CAISO\u2019s stakeholder process is not appropriate for an RSO and needs improvement<\/p>\n

                    [\/vc_column_text][\/vc_tta_section][vc_tta_section title=”Cost of delay (Section 1)” tab_id=”1477944491973-a5f4a4fa-d358″][vc_column_text]<\/p>\n

                    1. Cost of Doing Nothing or Delaying<\/strong><\/h3>\n

                    1.1 \u00a0\u00a0\u00a0<\/strong>Doing nothing does not cost consumers money or cause higher emissions \u2013 <\/strong>Incorrect<\/strong>.<\/strong><\/p>\n

                    Doing nothing will result in:<\/p>\n