By Jason Fordney
SAN DIEGO — A joint effort between Peak Reliability and PJM offers Western industry players a chance to design their own market, one that will operate with more transparency than CAISO, PJM CEO Andy Ott said last week.
“The whole key here is the ability of the West to build up its own rules,” Ott said.
The CEO added that PJM’s expertise in coordinating markets and dealing with regional differences in the East will be a major asset in developing a Western market in partnership with Peak.
Having traveled west last week to attend a meeting of the Western Power Trading Forum, Ott sat down with RTO Insider to discuss the new Peak Reliability/PJM Connext market proposal. (See Peak Touts ‘Independent’ Western Market Plan.)
The partnership is galvanizing interest across the industry around a new Western market, but it comes amidst several other major recent developments shaking up the region.
Among them: competing efforts by CAISO to provide reliability coordinator (RC) services and extend its day-ahead capability into the Energy Imbalance Market (EIM). (See ‘Horse is out of the Barn’ for CAISO RC Effort and CAISO Plan Extends Day-Ahead Market to EIM.)
PJM’s executive spoke frankly about the shortcomings he sees in CAISO, including what he characterized as a relatively closed-door process for addressing market issues, compared with the more stakeholder-driven approach he envisions for the Peak market.
In California, “they have a discussion about a specific issue they are going to change, then they go in a room and make a decision, and they come out and they have a decision,” Ott said. “It’s not done that way everywhere.”
Ott touted PJM’s experience in operating a 13-state, multibillion-dollar energy market in the East. The RTO brings that experience to the effort, while Peak has the real-time reliability model of its territory already completed, he said.
Aside from the market proposals, Peak and CAISO are competing to provide NERC-certified RC services. Shortly after Peak and PJM announced their effort, CAISO dropped Peak as its RC and announced it would offer Western utilities RC services at a lower cost.
Peak CEO Marie Jordan, who also attended the WPTF event, noted that the only non-revocable notice of departure that the organization has received so far is from CAISO. Several Peak customers have announced they will leave, after CAISO issued its notice of withdrawal at the beginning of the year.
Late last month, the Bonneville Power Administration and Western Area Power Administration separately announced they have signed nonbinding notices signaling their intent to depart Peak by the end of 2019. BPA said it is exploring receiving RC services from CAISO, while WAPA is considering SPP and CAISO for some of its balancing authorities.
That move, along with a possibly rejuvenated effort to regionalize CAISO, represent other pieces of a shifting landscape. (See Calif. Lawmakers Relaunch CAISO Regionalization.)
Ott noted that the EIM was designed with the specific purpose of giving California a way to export renewable generation and get services back. The market benefits California customers, and he called outside regional participants “guests” in the market.
“I see the EIM, frankly, as a stopgap,” Ott said. “It was created to solve a problem.”
Ott said the business case for the market is being studied and is due to be issued March 30. Peak executives have publicly discussed the potential for the effort to evolve into a full RTO, something Ott says will depend on input from market participants.
“Our mindset is that if we put the PJM name on something, it’s not going to fail. We cannot afford to let it fail,” Ott said.