Regional grid operators will need to coordinate along transmission system seams as wholesale power markets become increasingly integrated in the US West, a panel of experts said Oct. 11.
The California ISO and Southwest Power Pool are looking to expand their day-ahead energy market products in the Western Interconnection to dispatch renewable energy resources more efficiently and to lower costs while cutting greenhouse gas emissions. The day-ahead time frame is where most energy transactions occur in wholesale power markets.
CAISO filed proposed tariff changes (ER23-2686) with the Federal Energy Regulatory Commission in August to establish its Extended Day-Ahead Market (EDAM). The SPP is working with stakeholders to develop Markets+, its own planned day-ahead market offering in the Western Interconnection.
CAISO's filing drew more than 70 intervenors with only two protests. But commenters raised significant questions about how CAISO's extended day-ahead market might interact with SPP's Markets+, former FERC Commissioner Suedeen Kelly noted during the American Council on Renewable Energy's annual Grid Forum in Arlington, Va.
The issue could be further complicated by the Western Resource Adequacy Program (WRAP), a voluntary grid reliability initiative approved by FERC in February. Under the program, participants must identify the generation resources they plan to use to meet peak demand. Participants must also demonstrate that they hold firm transmission rights to deliver that capacity. If a participant is forecast to be deficient, the program operator will call on other participants with a surplus to hold back capacity and deliver it to the deficient participant.
Experts see synchronization issues
"In the EDAM filing, there were some issues that were not addressed," said Kelly, now a partner at law firm Jenner & Block LLP. "What's the impact, if EDAM is approved, for those utilities who are participating in WRAP and potentially in SPP's Markets+?"
Pat Reiten, senior vice president at Berkshire Hathaway Energy, agreed that "eventually there must be a discussion about WRAP and EDAM requirements."
"It's a resource acquisition question. Do you, as a utility, have to plan to acquire capacity all the way up to the last hour, or how much can you rely on the market to do that, including when it gets tough?" Reiten said. "Those things will ultimately have to be synchronized."
Reiten added that CAISO's extended day-ahead market will not solve all of the region's resource adequacy problems.
Another remaining issue is pancaked transmission rates, which require transmission customers to pay multiple charges to move power across the bulk power system, Reiten said.
"If you're NV Energy Inc., as an example, and you build a solar park and need to access Wyoming wind or Northwest hydro, solving those problems in addition to economic dispatch is important," Reiten said.
Nevada utility NV Energy is owned by Berkshire Hathaway Energy.
CAISO governance
To that end, governance reforms will be crucial to furthering market expansion in the West, panelists said during the Oct. 11 event.
CAISO's Western Energy Imbalance Market is governed on a "bifurcated" basis with shared authority from CAISO's board of governors, Reiten noted. CAISO's five-member board is appointed by the California governor under state law.
"We're starting to build up all of the functions of a [regional transmission organization] layer by layer," Reiten said. "But at the end of the day, you can't do it with non-independent, politically derived governance."
A study funded by the US Energy Department released in September 2021 estimated that the creation of a single-footprint regional transmission organization in the West could produce up to $2 billion in gross savings annually by 2030 compared to the status quo.
In September, however, the Idaho Public Utilities Commission unanimously rejected an invitation to join an initiative launched by regulators in Arizona, California, New Mexico, Oregon and Washington to explore forming a single regional transmission organization for the Western Interconnection.
"There is no evidence that the initiative's goal of independent governance is feasible without changes in California's legislation," the Idaho regulators said.
Kelly said CAISO's current governance structure is "probably the biggest impediment to a broader market."
"Very simply, the rest of western states want to be sure they're part of the governance of their future markets," Kelly said. "If California is exclusively governing or even dominating the governance, that's not going to happen."
Still, iterative steps "are important," said Blair Anderson, director of public policy for Amazon Web Services Inc., who stressed that western US market participants should move forward "with speed."
"Don't belabor each step too long," Anderson said.
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