Cooperation, Compromise Needed for Western Regionalization to Succeed
The controversy over wheel-throughs in CAISO was not so much a rejection of the ISO’s proposal as an example of the types of comprises and efforts needed to make Western regionalization succeed, CAISO CEO Elliot Mainzer told RTO Insider Friday.
“I see this as a test of our collective capacity to work together for regional solutions,” Mainzer said. “This is the type of issue that we need to prove to ourselves that we can solve through regional collaboration, and it’s going to require some amount of compromise by everyone.”
Western states are facing resource challenges as they seek to transition from fossil fuels to renewable resources. CAISO experienced energy emergencies in August and September that highlighted the challenges of that transition, including limited resources and strained transmission in the West.
“The region has not had to cope with scarcity like this for a long time,” Mainzer said. “When you’re suddenly recognizing that there’s a scarce resource, whether it’s scarce power or scarce transmission, and you suddenly have to allocate it … [and] you have to come up with a short-term compromise on it, it’s difficult.”
The compromise was the ISO’s wheeling plan, hotly contested and now headed to FERC for consideration. It would re-prioritize wheel-throughs so that transfers between the Northwest and Southwest would no longer take precedence over capacity needed to serve CAISO native load. Non-CAISO entities would have to apply at least 45 days in advance to designate high-priority wheel-throughs needed for reliability, giving the wheels equal standing with native CAISO load. (See CAISO Approves Controversial Wheeling Limits.)
During meetings of the Western Energy Imbalance Market Governing Body and the CAISO Board of Governors last week, a coalition of large Southwest utilities, the Bonneville Power Administration (BPA) and smaller Pacific Northwest generators voiced their displeasure with the plan.
Even those who opposed the wheeling provision, however, began their remarks by thanking CAISO staff and management for their hard work on a difficult matter, Mainzer noted.
“Everyone acknowledged how hard the ISO had worked to try to find compromise,” he said. “I think they really honored the work of our team to listen and adjust and [saw] that it was a very, very tough issue.”
The EIM Governing Body declined to “opine” on the measure, but members expressed concern that EIM entities outside of California would be treated differently from in-state EIM members, undermining FERC open-access principles. (See EIM Governing Body Rejects Part of CAISO Summer Plan.)
Vice Chair Anita Decker, for instance, said she was worried about the effect the plan could have on the expanding EIM and regional collaboration.
“It feels like a little bit of a failure that as a Western region we couldn’t get closer together on this issue,” said Decker, formerly executive director of the Northwest Public Power Association and COO at BPA.
Greater regionalization, whether a “souped-up” version of the EIM or an RTO — or multiple RTOs — is key to sharing renewable resources and building transmission, FERC Chair Richard Glick said in a recent webinar. (See Glick, Robb Call for Tx Build in West.)
Mainzer, former head of BPA, said the wheeling provision was one of the most complicated and controversial issues in the West in recent years, but he played down the controversy and stressed the collaborative aspects of the process.
“I think the prevailing sentiment on that call, particularly amongst our EIM Governing Body and others, was a recognition that we really need to work on this together, and we need to find a solution,” Mainzer said.
The wheeling limits adopted by the CAISO Board of Governors are scheduled to sunset in May 2022 and be replaced by the product of a new CAISO stakeholder initiative.
CAISO load-serving entities were also critical of the temporary provision, saying it does not go far enough to ensure the state has sufficient capacity this summer.
The general displeasure was a sign that neither side had gotten all it wanted, Mainzer said.
“That was by design,” he said. “We certainly were trying to find a balanced solution.”
“If we had walked away with one constituency saying, ‘Hey, this is wonderful. … Thank you so much,’ [it would have meant we hadn’t] done a lot of work to compromise for the others,” he said.
Wheeling Not a Root Cause
Transmission constraints were a key factor in the Aug. 14-15 blackouts, but wheel-throughs did not a play a significant role, according to a root-cause analysis prepared by CAISO, the California Public Utilities Commission and the state Energy Commission. (See CAISO Issues Final Report on August Blackouts.)
CAISO spokesperson Anne Gonzales said there were “no wheel-throughs of consequence” on Aug. 14 or 15.
The situation caused some critics to question why CAISO had prioritized wheeling restrictions in its package of summer readiness proposals. The measures were fast-tracked and approved this spring after only a few months of consideration. (See CAISO Speeds Rule Changes to Avoid Shortfalls.)
Mainzer said CAISO is concerned about transmission congestion this summer. Because of resource scarcity in the West, entities in the Southwest are contracting for larger amounts of energy from the Northwest, much of which travels on transmission paths through California, he said.
“A lot of entities looked at what happened last summer and said, ‘the West is short,’ and they started going out and they started buying more on a forward basis from the Northwest and wanting to wheel more power through this summer,” Mainzer said.
While Mainzer acknowledged that wheel-throughs were “a relatively modest issue, if maybe almost a non-issue, last summer,” they had a “super-priority above California load service” and are likely to increase this summer.
Gonzales said CAISO does not know for sure that wheel-throughs will be a problem this summer; the ISO cannot predict with certainty how much to expect, she said.
“We don’t have visibility into the actual megawatts, but we have been informed that buyers are planning to contract for them this summer,” she said in an email. “If the summer heat doesn’t reach the level of last August, this won’t be a problem, but if we get into tight conditions, even a few hundred megawatts could be critical.”
The proposal will likely be challenged at FERC. CAISO and the EIM are both hoping for guidance from the commission. Mainzer noted that FERC Order 888, which requires public utilities to provide open access transmission service, also lets utilities reserve transmission capacity for native load. FERC needs at least 60 days to issue an opinion.
“My gut feeling is we got what we needed [last] week, which was to get it filed and to try to get some clarity for this summer,” he said. “We’re already huddling up to figure out how to design a long-term solution.”