{"id":243,"date":"2016-07-21T20:59:53","date_gmt":"2016-07-21T20:59:53","guid":{"rendered":"http:\/\/westerngrid.net\/wcea\/?p=243"},"modified":"2016-07-25T21:09:25","modified_gmt":"2016-07-25T21:09:25","slug":"revised-western-rto-governance-plan-highlights-state-authority","status":"publish","type":"post","link":"https:\/\/westerngrid.net\/wcea\/revised-western-rto-governance-plan-highlights-state-authority\/","title":{"rendered":"Revised Western RTO Governance Plan Highlights State Authority"},"content":{"rendered":"

Revised Western RTO Governance Plan Highlights State Authority<\/strong>
\nJuly 21, 2016
\nBy Robert Mullin<\/p>\n

CAISO has released a revised set of principles for governing a Western
\nRTO in a bid to convince skeptics that an expanded ISO will be amenable
\nto the entire region. The new document won initial praise, although
\ndoubts remain.<\/p>\n

The ISO\u2019s governance changes seek to address the concerns of industry
\nparticipants in the broader West who contend that the original proposal
\nfavored California interests and didn\u2019t sufficiently protect individual
\nstates\u2019 authority over electricity-related matters. (See CAISO Governance
\nPlan Fails to Dispel Western Concerns.)<\/p>\n

\u201cI will say that the revised proposal appears to be a step towards us
\nrather than a step away,\u201d said Bryce Freeman, administrator of the
\nWyoming Office of Consumer Advocate, noting that he hadn\u2019t yet studied
\nthe proposal in depth.<\/p>\n

\u201cThe question is, is it enough to keep the [PacifiCorp] states engaged?\u201d
\nsaid Freeman, who criticized the original proposal as being \u201cCalifornia-
\ncentric.\u201d<\/p>\n

State Approvals Needed<\/strong><\/p>\n

That engagement will be essential for CAISO\u2019s expansion into areas of the
\nWest now served by PacifiCorp. A widely accepted governance structure is
\nkey to the Portland-based utility gaining regulators\u2019 approval to join
\nthe ISO in 2019. Regulators from five states outside California \u2014 Idaho,
\nOregon, Utah, Washington and Wyoming \u2014 must sign off on membership.<\/p>\n

\u201cWe think the revised proposal marks a positive step in the right
\ndirection and that the changes appropriately reflect input from
\nstakeholders, including on the key issue of striking the right balance
\nbetween the existing authority of the ISO\u2019s board and California and the
\nother affected states,\u201d PacifiCorp spokesman Bob Gravely said.<\/p>\n

The updated proposal attempts to strike that balance in part by scrapping
\na controversial plan to appoint an \u201cinitial\u201d RTO board of governors on
\nwhich California-appointed members would have held a 5-4 majority. That
\nboard was slated to remain throughout a transition period and would have
\nselected the \u201cfinal\u201d board based on a process developed by a transitional
\ncommittee. Freeman previously referred to the initial board as the
\n\u201cmother of all California-centric concerns.\u201d<\/p>\n

Transitional Committee<\/strong><\/p>\n

CAISO is now proposing that the transitional committee develop a
\nnominating and approval process to select a new nine-member board. The
\nnew board would be selected within 18 months of the effective date for
\nthe governance plan, which the transitional committee would develop and
\nsubmit to the current board for approval.<\/p>\n

New board members would fill seats created under the governance plan, as
\nwell as the open seats of sitting board members as their terms expire.
\nTransitional committee members could extend the terms of sitting board
\nmembers after determining that doing so would be beneficial to the new
\nboard based on the \u201cexpertise and institutional knowledge.\u201d<\/p>\n

The revised proposal also fleshes out the composition of the transitional
\ncommittee.<\/p>\n

\u201cThe details are drawn from the Energy Imbalance Market transitional
\ncommittee, which was successful in developing a governance structure that
\ngave the entire region a voice in the market rules for the EIM,\u201d CAISO
\nsaid.<\/p>\n

Each state in the expanded RTO footprint will be entitled to appoint a
\ncommittee representative through its own process. In addition,
\nstakeholders throughout the region would select representatives to the
\ncommittee from nine sectors: investor-owned utilities; publicly owned
\nutilities; independent power producers; large-scale renewable energy
\nproviders; distributed energy resource providers; generators and
\nmarketers; federal power marketing administrations (PMAs); public
\ninterest groups; and state- sanctioned ratepayer advocates.<\/p>\n

In addition to developing the governance plan, the transitional committee
\nwill be responsible for dealing with other issues, such as whether to
\ncreate a funding mechanism to facilitate participation in the RTO by
\nconsumer advocates.<\/p>\n

CAISO\u2019s modified proposal clarifies the role and powers of the Western
\nStates Committee (WSC), previously referred to as the body of state
\nregulators. A representative from each RTO state will be appointed to the
\nWSC, which also reserves one non-voting slot each for PMAs and publicly
\nowned utilities. State committee members are not required to be
\nregulators.<\/p>\n

The WSC will \u201cprovide input on matters of collective state interest\u201d and
\nhold \u201cprimary authority\u201d over certain RTO policy initiatives related to
\ntransmission cost allocation and resource adequacy.<\/p>\n

\u201cPrimary authority means the committee will play the lead role for its
\ndefined areas of authority, and policy approval by the committee would be
\na prerequisite to any Section 205 filing with FERC in those areas,\u201d CAISO
\nsaid.<\/p>\n

Still, the ISO would reserve the right to file with FERC without WSC
\napproval \u201cwhen reliability is imminently threatened.\u201d<\/p>\n

\u2018Genuine\u2019 Effort<\/strong><\/p>\n

The proposed principles make an explicit concession to state sovereignty,
\npromising that governing documents will include \u201cbinding provisions\u201d to
\n\u201cprotect and preserve state authority over matters regulated by the
\nstates themselves,\u201d including procurement, resource planning, retail
\nrates, and resource and transmission siting.<\/p>\n

\u201cThe proposal appears to genuinely making an effort to preserve state
\nsovereignty,\u201d said Michele Beck, director of the Utah Office of Consumer
\nServices. \u201cBut there\u2019s a limit to what you can do in any proposal.\u201d<\/p>\n

Beck cited the U.S. Supreme Court\u2019s April decision in Hughes v. Talen
\nEnergy \u2014 which struck down a Maryland program to incentivize in-state
\ngeneration \u2014 as an example of how participation in an RTO can compromise
\na state\u2019s authority. (See Supreme Court Rejects MD Subsidy for CPV
\nPlant.)<\/p>\n

\u201cUltimately, policymakers will have to weigh whether a certain amount of
\nloss of sovereignty is worth the benefit,\u201d Beck said.<\/p>\n

While Beck was encouraged that CAISO set aside a position for consumer
\nadvocates on the transitional committee, she was also wary of a process
\nmodeled on the EIM, which she said left out the perspective of consumer
\ngroups.<\/p>\n

Show Me the Benefits<\/strong><\/p>\n

She also thinks Western industry participants need to be looking beyond
\nthe governance issue.<\/p>\n

\u201cI want to remind people that governance is a big concern, but we still
\nhave to see benefits,\u201d Beck said, pointing out that no studies have been
\nperformed to assess how consumers in individual states will be affected
\nby PacifiCorp joining an RTO.<\/p>\n

The utility says such a study is in the works.<\/p>\n

\u201cHaving a final governance structure approved by the legislature that can
\nbe supported by other states, as well as completing a full cost analysis
\nto determine net customer benefits, remain the two most important steps
\nthat will determine if we continue to move forward,\u201d said PacifiCorp\u2019s
\nGravely.<\/p>\n

CAISO will take up discussion of the revised proposal during a public
\nforum held in Sacramento on July 26. After taking a last round of
\ncomments, the ISO plans to send a final governance proposal to Gov. Jerry
\nBrown, who is expected to present the plan to the state legislature in
\nAugust. Lawmakers must approve any changes to the ISO\u2019s governance
\nstructure.<\/p>\n","protected":false},"excerpt":{"rendered":"

CAISO has released a revised set of principles for governing a Western
\nRTO in a bid to convince skeptics that an expanded ISO will be amenable
\nto the entire region. The new document won initial praise, although
\ndoubts remain.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,8],"tags":[],"class_list":["post-243","post","type-post","status-publish","format-standard","hentry","category-news","category-rso"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/posts\/243","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/comments?post=243"}],"version-history":[{"count":2,"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/posts\/243\/revisions"}],"predecessor-version":[{"id":247,"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/posts\/243\/revisions\/247"}],"wp:attachment":[{"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/media?parent=243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/categories?post=243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/westerngrid.net\/wcea\/wp-json\/wp\/v2\/tags?post=243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}