The California Department of Water Resources and other parties have asked CAISO to restart a transmission access charge initiative that was put on hold in 2018 due to the development of the ISO’s Extended Day-Ahead Market.

CDWR, along with the Bay Area Municipal Transmission Group and the State Water Contractors, want CAISO to bring back a drafted final proposal regarding the ISO’s Transmission Access Charge (TAC) rules in order to possibly reduce the amount of new transmission needed in the state.

CAISO’s current TAC rules measure transmission use with a “volumetric-only” approach, which “fails to reflect cost causation and utilization of the transmission system, resulting in inequitable allocation of costs,” the CDWR group said in Nov. 13 comments on CAISO’s draft 2026-2028 policy initiatives road map.

“Costs should reflect that transmission networks are built to handle peak demand when the grid is strained the most,” the group said.

CAISO instead should recover a larger portion of fixed electric transmission costs through a demand-based rate structure, and less from volumetric rates, the group said. Doing so would incentivize better load management practices and reduce the need for new transmission that is driven by peak demand requirements, they said.

Current TAC rules send inefficient price signals to behind-the-meter battery storage resources operators, the group said. If price signals were accounted for more specifically, CAISO might find it needs to plan for less new transmission infrastructure, the group said.

In February, CDWR proposed to restart the TAC initiative and bring back the 2018 proposal. However, CAISO dismissed CDWR’s request because the “levels of behind-the-meter solar have stabilized, rendering these changes unnecessary and overly complex in today’s market,” CAISO said, according to the CDWR group’s Nov. 13 comments.

CDWR is concerned about CAISO’s “misunderstanding of the substance and need” for the TAC proposal and are “frustrated by the process used to date,” they said.

“CAISO infrastructure staff have dismissed the need for this initiative, without any stakeholder meetings to discuss the issues that motivated the initiative in 2016-2018, or to consider input from stakeholders on the current need for the TAC structure changes that were fully vetted and proposed to be adopted in 2018,” the group said.

The 2018 TAC initiative was supported by CAISO’s Department of Market Monitoring, California’s three largest investor-owned utilities, municipal utilities, independent transmission developers, retail marketers and the California Public Utilities Commission, the group said. The proposal supports CAISO’s resource adequacy capacity program for required contributions to coincident peak demand and DMM’s support for allocation of natural gas transmission infrastructure costs, they said.

The current TAC rules started in 2001, and the structure has remained “relatively stable” through the intervening years, CAISO staff said in the 2018 draft final proposal.

CDWR’s comments were filed in CAISO’s annual policy initiatives road map process, which determines the policy initiatives for the following three years. CAISO plans to release a final policy road map in December for the 2026-2028 cycle.

NV Energy Requests Policy Review Changes

NV Energy filed comments about CAISO’s policy road map, asking CAISO to evaluate the frequency, length and content that is reviewed in stakeholder policy meeting sessions.

The ISO’s policy meeting sessions have become longer but have been held less frequently. This approach to policy development with stakeholders has caused certain meeting materials to be condensed or skipped altogether, NV Energy representative Lindsey Schlekeway said in comments to CAISO. The long gaps between meeting sessions have made it difficult to track and follow issues raised by stakeholders, Schlekeway said.

“It would be helpful for CAISO to be mindful of the resource constraints considering the activities that are underway in the West,” Schlekeway said. “The stakeholder process may have large impacts to the market design, and NV Energy would like to dedicate sufficient time to each initiative in order to provide the most informed and helpful comments to CAISO.”

NV Energy recommended CAISO hold three-day meeting sessions, rather than one meeting per month, to review complex issues with stakeholders.