By Jason Fordney

Last week saw a handful of CAISO-related developments at FERC, including the commission’s suspension of a Pacific Gas and Electric transmission rate request and approval of Portland General Electric (PGE)’s authority to charge market-based rates in the Western Energy Imbalance Market (EIM) ahead of the utility’s Oct. 1 entry into the market.

The commission on Thursday set settlement hearings over PG&E’s request for a transmission rate increase after receiving protests from state regulators and others. FERC accepted and suspended until March 1, 2018, PG&E’s request for a 6% increase, saying there are issues that “are more appropriately addressed through hearing and settlement judge procedures” (ER17-2154).

In its July 27 tariff filing, the utility said the rate increase will allow it to recover costs incurred so far in 2017 for transmission expansion, as well as in 2018. It expects to invest $1.2 billion this year and another $1.4 billion next year. The approved rates would produce about $1.8 billion in revenue in 2018.

PG&E said the requested increase is largely driven by the need to replace aging infrastructure. Other factors include compliance with reliability rules and the magnitude and location of changes in California’s forecasted electricity load. A substantial amount of its system was built more than 50 years ago, PG&E said.

Numerous protests were filed by parties, including the California Public Utilities Commission, a handful of California cities, the Energy Producers and Users Coalition, municipal electric agencies and the Transmission Agency of Northern California.

Some protesters argued that PG&E’s proposed 10.25% return on equity should be no higher than 8.84%, and there were disputes over the proxy group screening tool, which is used to determine a reasonable return. Others disputed the utility’s request for a 50-basis-point adder for participation in CAISO, which FERC granted.

The PUC’s challenge of two recent FERC approvals of the adder in previous tariff filings are on appeal with the 9th U.S. Circuit Court of Appeals. FERC rejected the PUC’s request to abstain from a ruling on the current adder until that court proceeding is resolved.

ISO Submits Aliso Canyon Measures

CAISO also submitted Tariff amendments to address the loss of the Aliso Canyon natural gas storage facility. The measures extend previously approved changes that can limit market bidding flexibility in response to gas constraints.

“The maximum gas constraint has proven to be a useful and discrete tool that balancing authority areas can use to reflect the interactions of gas limitations in the electric market optimization. Therefore, the CAISO proposes to adopt that measure on a permanent basis and throughout its entire system,” CAISO said.

The measures allow the grid operator to constrain the operations of gas plants across the state and the EIM, part of a package of initiatives drawn up in response to the loss of the storage facility after a massive leak was discovered in October 2015. The proposal required approval by the CAISO Board of Governors and the EIM Governing Body. (See CAISO Board Approves Aliso Canyon Rules Package.)

Portland General Electric Begins EIM Participation

FERC also approved PGE’s application to charge market-based rates in the EIM, saying that the Oregon utility’s balancing authority area will not be a sub-market and does not require a separate market power analysis (ER17-1693).

PGE began transacting in the EIM on Oct. 1. The company in early September briefed the EIM Governing Body on its implementation activities. It reached an implementation agreement with CAISO in November 2015.