Tuesday, January 22, 2019

Western RTO Proponents Vow to Keep Trying

By Hudson Sangree

Three times in three years, proponents of an organized market in the Western Interconnection have tried and failed to turn CAISO into an RTO.

Opponents say it’s time to give up, but supporters of CAISO regionalization say they’ll likely keep at it until they succeed.

Zichella | NRDC

“The benefits of a regional grid integration are so great that, frankly, we’re talking about something inevitable,” said Carl Zichella, western transmission director at the Natural Resources Defense Council. The environmental group was a main backer of this year’s CAISO regionalization effort along with Gov. Jerry Brown and ISO leadership.

The movement’s supporters argue that the future of renewable energy lies in Western states trading wind, solar and hydropower resources across state lines as easily as energy is now distributed within California.

Zichella said proponents believed they had a combination of Democratic and Republican votes needed for their measure — AB 813 — to pass the State Senate this year but that Democratic leaders wouldn’t let the bill out of the Senate Rules Committee on the last night of the State Legislature’s 2017/18 session on Aug. 31.

The bill would have started the process of turning CAISO into an RTO by initiating changes in its governance structure.

It languished in the Rules Committee, where Senate leaders had sent it, and never reached a floor vote because of a lack of Democratic unity on the bill, advocates on both sides of the issue said.

“In California, we feel like there’s a future for this legislation,” Zichella said. “We’ll probably take another run at it.”

Freedman | UC Berkeley

Matthew Freedman, a staff attorney for The Utility Reform Network (TURN), said he hopes that won’t happen. The ratepayer advocacy organization strongly opposes an effort to make CAISO a multistate organization.

“The Legislature has emphatically rejected regional proposals put forth by the governor over the last several years, which suggests it’s time to consider alternative approaches to regional coordination,” Freedman said.

Those alternatives could take multiple forms, including expanding the Western Energy Imbalance Market to include more participants and moving it from a real-time exchange to a day-ahead market, he said.

“We’d prefer incremental steps toward regional coordination” that are easier to undo if necessary, the lawyer said.

Proponents of a Western RTO say they’ll likely try again after a measure to expand CAISO failed for the third time in three years. | © RTO Insider

TURN and other opponents are against the idea of changing CAISO’s governance structure from one overseen by officials in Sacramento to a multistate conglomerate with an independent board of directors that they contend would be more susceptible to meddling from Washington and to influence from the coal-burning states of the Interior West.

AB 813 was the latest effort to turn the ISO into an RTO. A similar bill last year stalled out in a legislative committee. (See CAISO Regionalization, 100% Clean Energy Bills Fizzle.) Brown supported, but then decided to postpone, regionalization efforts in 2016. (See Gov. Brown Reaffirms Commitment to Expanded CAISO.)

The governor is termed out of office this year, and his replacement will be elected in November.

Brown has been the main proponent of regionalization as a means to further his green energy goals across the West, Freedman noted, but “he won’t be the governor in January,” when the Legislature reconvenes for the start of a new two-year session.

Whether a new governor will support CAISO regionalization remains to be seen.

It’s also unclear if a majority of Democratic lawmakers can be persuaded to vote for a measure that would remove CAISO’s leaders from their oversight and is opposed by labor unions, publicly owned utilities and other powerful interests, Freedman said.

Many Democrats, who control the Legislature, had reservations about AB 813 and didn’t want to be forced to vote against it on the Senate floor for fear of angering the governor, he said.

Senate President Pro Tempore Toni Atkins may have kept the bill in the Rules Committee, but she wouldn’t have done so without her caucus’s backing, Freedman said. “Had there been an overwhelming amount of support, she would not have held it,” he said.