By Robert Mullin
The newly established Western Energy Imbalance Market (EIM) governing body kicked off its first meeting last week by electing its leadership.
CAISO’s Board of Governors appointed the five-member body in June, selecting one each from five industry sectors: EIM entities, ISO-participating transmission owners, power suppliers and marketers, publicly owned utilities and state regulators. (See CAISO Board Appoints Western Energy Imbalance Market Governing Body.)
Kristine Schmidt, president of Dallas-based Swan Consulting, was selected to serve as the body’s chair. A former vice president at ITC Holdings and director at Xcel Energy, Schmidt has more than 30 years’ experience in the energy sector. She also worked as an adviser to former FERC Commissioner Nora Brownell.
Doug Howe, an independent consultant and Ph.D. in mathematics, was chosen as vice chair. Howe has authored or co-authored more than 30 papers and presentations covering industry topics such as energy efficiency in the European Union and utility regulation in the U.K. He previously held an executive position with GPU Inc., which was acquired by FirstEnergy in 2001.
Carl Linvill, a member of the governing body, praised Schmidt for her “equanimity” and also expressed support for the wider Western regional representation that Howe — a New Mexico resident and former state regulator — will provide.
“We still have a lot to figure out and learn,” Linvill said. “Figuring out how to establish a regional presence really is emboldened and enabled by these two positions.”
“On behalf of the ISO, we want to give you our immense thanks for being willing to serve on this body,” CAISO CEO Steve Berberich said. “We consider the EIM as a critical attribute and will continue to support it for as long as necessary.”
A decade ago, Schmidt noted, nobody in the industry would’ve believed the region would have an EIM.
“We’re now seeing a regional market take shape in the West,” Schmidt said. “We’re hitting the ground running.”
Stakeholder Coordination
The governing body’s inaugural meeting included a set of briefings by EIM stakeholders and ISO staff to acquaint members with key structures affecting the market.
“There’s a lot of interest in what you’ll be doing,” said Tony Braun, an industry consultant who chairs the Regional Issues Forum, a loosely structured stakeholder group created by CAISO to foster broad regional discussion about EIM-related issues.
While the forum’s role “has not been concretely laid out,” the group’s first two meetings have been well attended, indicating a high level of interest in the EIM’s activities, Braun said.
The two most significant issues for forum participants: the bidding of external resources at the EIM’s interties and the impact of California’s greenhouse gas regulations on the market. (See related story, CAISO Kicks off Effort to Track GHGs Under Regionalization.)
Braun proposed that future meetings of the forum be coordinated with those of the EIM’s governing body and its state regulators’ group to improve collaboration and reduce participants’ travel for meetings.
“We’d love to hear how we can shape our processes to help you do your jobs,” Braun said.
Governing body members expressed appreciation for the work of the forum.
“The stakeholder-driven nature of the [forum] is probably something that is both difficult and necessary,” said governing body member Valerie Fong. “I found that the way [the meetings are] being run is very open.”
Schmidt called the meetings “extremely helpful.”
“We’re trying to do everything we can do to mitigate some of the travel issues,” she added.
Regulatory Collaboration
Ann Rendahl, chair of the EIM’s body of state regulators, sketched out the role of her group for the new governing body.
“Our purpose is to ensure that state regulators that aren’t involved in this market understand what is going on in EIM,” said Rendahl, a member of the Washington Utilities and Transportation Commission.
The group provides a forum for regulators to learn about EIM and CAISO developments that might be relevant to their jurisdictional responsibilities. While it can take a common position in CAISO and EIM stakeholder processes, individual regulatory commissions are not restricted from taking any position before FERC or the ISO board on EIM-related matters.
The regulators’ group is also charged with monitoring EIM governing body action items and selecting a voting member for the body’s nominating committee.
Rendahl emphasized the need for her group to closely coordinate its activities with that of the governing body. “We want to not just monitor, but work with the governing body,” she said.
ISO Process Basics
Governing body members received a briefing about CAISO’s stakeholder process from Brad Cooper, ISO manager of market design and regulatory policy.
Cooper explained the stakeholder process the ISO uses each fall to develop a “roadmap” of planned policy developments, including EIM initiatives. The ISO last year drew from a catalog of 49 potential initiatives, selecting only 10 because of staff constraints.
“We can’t develop everything in the catalog,” Cooper said.
A final roadmap is presented to the CAISO board — and, in the future, the EIM governing body — at the beginning of each year. The ISO informs stakeholders of any changes to the roadmap through its Market Performance and Planning Forum.
“The roadmap isn’t set in stone,” Cooper said. “For instance, we had the Aliso Canyon issue come up” earlier this year, forcing a modification of the roadmap. (See CAISO Seeks Rapid Response to SoCal Gas Restrictions.)
When developing the roadmap, ISO staff divide initiatives into four categories, including initiatives already in progress, policy changes mandated by FERC, non-discretionary efforts related to reliability or market efficiency, and discretionary initiatives.
For the last category, ISO staff and stakeholders together prioritize potential initiatives according to benefits and feasibility.
“If something could provide great benefits and is relatively trivial to do, that would get priority,” Cooper said.
Cooper acknowledged that CAISO’s policy process is driven more by staff than by stakeholders — and said the ISO prefers it that way.
“We realize that we made a commitment to look at other [stakeholder] processes [to implement under] regionalization, but we think our stakeholder process really allows us to quickly evolve policies,” Cooper said, adding that he didn’t think a project such as the EIM could’ve been developed under a stakeholder-led model.
“The ISO really tries to take a balanced view of our proposed policy,” Cooper said, contending that the ISO’s process does not factor in specific stakeholder interests, avoids “contentious voting structures,” and prevents bias or brokered policy decisions — allowing the ISO to focus on grid reliability.
Still, Cooper emphasized that “stakeholders are involved every step of the way,” including through “working group” meetings that focus on specific initiatives.
“We have a lot of open interaction that may not be possible with more formal stakeholder processes,” Cooper said. “This allows us to really interact with our stakeholders and get their input.”
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