ORIGINAL REPORTING: California’s Grid Operator Makes A Big Rule Change

Grid Operator Reform with Big Implications for a Western Energy Market

Herman K. Trabish, September 6, 2021 (California Current)

Editor’s note: This rule change brought a wide range of out-of-state utilities to a new initiative to build a regional market.

The California Independent System Operator leaders enabled a critical governance change that gives new powers to the Energy Imbalance Market Governing Body, which could transform the energy markets across the entire West, analysts said.

The CAISO Board, appointed by California’s governor, voted Aug. 20 to give the EIM Governing Body more authority in decisions applicable to each the CAISO and EIM markets. The revision also lays out procedures for settling disputes when the two interests diverge.

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Any proposal impacting both markets would require a majority vote from each authority to go into effect, according to EIM Governance Review Committee Chair Therese Hampton.

The governance change was a “necessary” but by no means final step towards a western-wide Regional Transmission Organization because stakeholders outside California will not accept market governance with dominating California leverage, said Western Grid Group Director Douglas Howe. He is a member of the CAISO Board-appointed Governance Review Committee that developed the new joint authority.

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The voluntary EIM was launched by PacifiCorp, a subsidiary of Warren Buffett’s Berkshire Hathaway Energy, and CAISO in November 2014 to optimize real time dispatch. Previously, the West’s 38 balancing authorities met real time supply-demand needs independently. The EIM’s second quarter 2021 filing showed quarterly benefits of $132.7 million for its 15 participants from optimized cost-effective dispatch.

With EIM cumulative benefits now at $1.42 billion, with six participants being added by 2023, regional leaders see a new opportunity. Moving from the estimated 5% of real-time power flows in the EIM to optimizing dispatch of all the resources in Western markets could save billions of dollars in meeting the high renewables and emissions reduction mandates across the West, stakeholders told Current…” click here for more

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