By Robert Mullin

CAISO’s latest draft of governing principles for a Western RTO is an improvement, but more changes are needed to win approval from regulators in the states in which PacifiCorp operates, speakers at a California Energy Commission (CEC) governance workshop said Monday.

“Our states are very sensitive to the perception that California can swing a veto,” PacifiCorp Transmission general counsel Sara Edmonds said.

Edmonds was referring to a provision that would institute load-weighted voting on the proposed Western States Committee (WSC) — the body comprising representatives from states considering participating in a future RTO. (See Latest Proposal Fills Out Western RTO Governance Plan.)

Veto Rights

As currently conceived, the voting rule — which requires any initiative be approved by 75% of voting members representing 75% of load — would not only prevent California from ramming through favored policies, but also permit that state to singlehandedly block any measures with which it disagrees.

“Ultimately, why we came to this [voting model] is that it gives some power to the weight of load, but gives all parties the ability to block a vote,” said Stacey Crowley, vice president of regional and federal affairs at CAISO. “It really does drive consensus.”

“I also understand that [weighted voting] is very important to California,” Edmonds said, noting that her company will seek to obtain feedback from state utility commissions on the issue.

“I can tell you that a weighted voting model that gives California veto power will be problematic,” said Jennifer Gardner, an attorney for Western Resource Advocates (WRA), a Colorado-based environmental group that supports the ISO’s bid to regionalize the Western grid. (See Q&A: Western Resource Advocates Sees Benefits from Western RTO.)

In an alternative voting proposal submitted to the CEC last month, WRA pointed out that California would represent 76% of the load in an expanded ISO in which PacifiCorp was the only service area outside the current footprint. Including Arizona Public Service and NV Energy would still leave California with a 61% share, which would fall to a slim majority of 52% with the addition of Portland General Electric, Puget Sound Energy and Idaho Power.

Tiered Voting

WRA’s proposal: a tiered voting process in which every state would hold one vote under most circumstances and the WSC would attempt to work toward consensus. For issues where consensus voting might be difficult, other rules would apply, such as majority voting for day-to-day decisions and two-thirds majority voting for amending bylaws.

Load-weighted voting could apply for decisions related to the WSC’s areas of “primary authority” — tariff revisions that currently fall under the remit of state regulators. The weighting would be simplified so that any state with more than a 50% of the RTO’s load would wield two votes, while all others would get one. Gardner noted that the New England States Committee on Electricity follows a similar practice.

“What’s really important with that group is that they achieve all of their decisions based on consensus,” Gardner said. “If not, they revert to voting based on load.”

The California Public Utilities Commission’s Mike Florio said he was “taken aback” by the WSC’s limited role in the initial development of the resource adequacy and transmission access charge rules for an RTO.

“I think the counting rules [for resource adequacy] should be uniform for all the states,” Florio said. “That’s why it’s something that should fall to the Western States Committee.”

The ISO has played its strongest role with local resource adequacy, but the process is still in play for flexible capacity, Florio said.

“There is a significant role for the states there that hasn’t been outlined to date,” he added. “I’d think the states would want to have some kind of backstop role.”

Clarity on Roles

“I think we need to get much more clear on the very specific roles between the ISO board and the WSC — and versus the WSC,” said Dede Hapner, vice president of FERC and ISO relations with Pacific Gas and Electric.

Hapner said the most recent governance proposal provided a larger role for the WSC than the previous version and that industry participants must think about areas where the committee could trump the board.

“How much will be acceptable to the FERC?” she asked.

Hapner also advocated for the creation of a “transitional” WSC to begin quickly addressing issues of concern to participating states.

Concurring with that view was Rachel Gold of the Large-Scale Solar Association.

“Seating the WSC earlier — even in informal fashion — will be important to getting to ‘yes’ here,” she said.

Other Western states would likely want to weigh in on rules around resource adequacy and greenhouse gas accounting, Gold noted.

Mark Gendron, vice president of power services at the Bonneville Power Administration, had a similar take. While his agency was pleased with the proposal’s attention to complex technical issues such as resource adequacy, it thinks it will take time to work through those matters.

“We’re concerned that some of the decisions on some of these technical issues could be made prior to the [seating of the] new board and Western States Committee,” Gendron said.

Potential Shortcoming

Robert Cromwell, director of power contracts and resource acquisition at Seattle City Light, pointed out a potential shortcoming in the ISO’s decision to make the WSC a body of general state representatives rather than regulators: Utility commissions might still have to weigh in on whether they could fulfill a WSC decision based on their own state laws.

The panelists found some positives in the latest proposal as well.

“We have repeatedly requested that consumer and environmental advocates be separated [in the Transitional Committee guiding development of the RTO],” Gardner said. “We appreciate CAISO taking our concerns.”

PacifiCorp’s Edmonds supported the proposal’s creation of a Nominating Committee and Approval Committee to select members of the final RTO board — the latter of which would comprise WSC members.

“The current revised proposal appears to shift more responsibilities to states, and I know our states are looking at this,” Edmonds said.

Edmonds also noted that the fleshed-out proposal deferred fewer governance design details to the Transitional Committee, calling that a “good thing.”

Florio and Gendron both complimented the proposal for emphasizing that the WSC should be a collaborative body.

“I think the emphasis on a collaborative, consensus-based process is appropriate,” Florio said.

Hapner supported the proposal’s shorter transition to seating a final board and agreed with the redistribution of sector representation on the Transitional Committee, which folded generators and marketers into the independent power producers sector and created an exclusive grouping for end-use consumer advocates.

“The consensus seems to be that we’re making progress, but there’s still a lot of work to be done,” concluded CEC Chair Robert Weisenmiller.