By Jason Fordney

FOLSOM, Calif. — The Energy Imbalance Market (EIM) Governing Body on Tuesday rejected CAISO’s move to change how members of the panel are nominated, saying the idea “appeared to come out of nowhere.”

Chairman Doug Howe made the “out of nowhere” comment as the board unanimously tabled any decision on the ISO’s proposed revisions to the nomination process.

“What problem are we trying to solve here?” Howe said after a CAISO briefing on the proposal during a Jan. 23 meeting of the panel. “For me, it’s ‘I really don’t know.’” He said the changes could create confusion in the market. “It doesn’t strike me as sending the right message out.”

The rejected proposal would have eliminated the EIM Nominating Committee’s obligation to use an executive search firm to help fill Governing Body vacancies, instead encouraging committee members to rely more on their own contacts. The plan would also have altered a current policy that allows the committee to re-nominate sitting body members without considering other candidates.

Governing Body member Kristine Schmidt said the proposal would saddle the Nominating Committee with the “heavy lifting” normally performed by a search firm. This would include tasks such as defining the scope of the work, evaluating qualifications and accreditations, narrowing the list, and conducting interviews.

“In my opinion, that is the work of the executive search firm,” Schmidt said, adding that the proposal should be vetted by the committee and the EIM Body of State Regulators.

“The changes that are being proposed trouble me greatly,” she said, contending that they appeared to be the product of a few individuals, and “there is no sunshine on that decision.” She added that “the process is working just fine to date.”

Looming Term Expirations

Created in 2016 to oversee the rapidly expanding regional market, the five-member Governing Body has decisional authority over EIM matters. The current members were all among the first to be seated on the body, and the terms of Howe and Carl Linvill are set to expire on June 30, while Vice Chair Valerie Fong and John Prescott’s terms expire June 30, 2019.

Schmidt, whose term expires in 2020, was the only member to be reappointed to the body after her inaugural, one-year term ended last year. (See EIM Governing Body OKs Charter Expansion; Retains Schmidt.) A former executive at ITC Holdings and Xcel Energy, Schmidt served as chair during her first term, which was truncated to stagger the normally three-year terms for members.

CAISO’s proposal would have altered the policy around reappointing a member that has expressed a wish to be re-nominated. Current practice dictates that the Nominating Committee “should determine whether it wants to re-nominate the departing member without interviewing other candidates.” If the committee decides against re-nomination, it is required to use the outside firm to find at least two other candidates.

The proposed change would have obligated the Nominating Committee to consider the current member but “also normally consider additional qualified candidates.” It also would have specified that the committee interview and consider at least two candidates for each position when a sitting member is not seeking re-nomination.

CAISO has cited the expense of hiring an outside consultant as a reason for the proposed changes. (See CAISO Proposes EIM Governance Changes.)

The ISO also proposed to change the process for determining whether the Governing Body — rather than its Board of Governors — has decisional authority over an ISO proposal. CAISO currently makes that determination, but a dispute resolution process is triggered if the chair of either the ISO board or EIM body challenge the decision and cannot conclude an agreement on the issue.

CAISO’s proposal would have allowed ISO management to directly consult with the objecting chair. Any change resulting from that consultation would then be subject to a vote by both chairs, a process the ISO thinks would avoid further meetings and delays.

Fong said that CAISO must take “a more holistic approach” to EIM governance changes, calling the proposal “confusing for the market and confusing for us.”

Body Briefed on ISO Roadmap

During the Jan. 23 meeting, CAISO staff told the Governing Body that the EIM could expand as a result of the ISO’s proposal to extend its day-ahead energy market into what is now a regional balancing market. (See CAISO Plan Extends Day-Ahead Market to EIM.) The ISO is focused on the day-ahead market to better manage the load curve and is working on a package of other changes. The ISO is also pursuing efforts to support reliability-must-run payments for needed gas generators and to lower market barriers for distributed energy resources.

CAISO Director of Market and Infrastructure Policy Greg Cook briefed the Governing Body on the final roadmap posted Jan. 12. Out of the 16 initiatives CAISO is undertaking this year, 12 are related to the EIM, he said.

“You have a busy year coming up in front of you,” Cook told body members.