A measure that asks CAISO to report to California lawmakers on Western regionalization efforts and the potential benefits of greater interstate collaboration cleared the State Legislature last week, with some saying it could renew discussions of an RTO developed by the ISO.

“There is considerable potential for additional benefits for California consumers through further regional collaboration,” and the state should “collaborate, coordinate on policy, and share systems and resources with our neighboring Western states when opportunities for mutual benefit exist,” Assembly Concurrent Resolution 188 says.

“The legislature should have current and comprehensive information on the impacts to California of expanding the existing independent system operator into a regional organization that manages wholesale electricity markets, transmission planning and other services across a broader Western region.”

Introduced by Assemblymember Chris Holden and co-authored by 75 lawmakers, ACR 188 passed the Senate and Assembly without opposition on Aug. 8 and 11 respectively. It asks CAISO to produce a report by Feb. 28, 2023, that summarizes recent studies on the impacts of expanded regional cooperation and identifies features that could advance the state’s energy and environmental goals while “reflect[ing] the impact of regionalization on transmission costs and reliability for California ratepayers.”

Transmission and resources needed to fulfill the 100% clean energy goal of 2018’s Senate Bill 100 should be covered, as should mandates by Colorado and Nevada requiring transmission owners to join an RTO by 2030, it said.

CAISO said the request signaled a growing interest in regional efforts.

“We’re encouraged that compiling the many existing studies on this, as well as highlighting the other market efforts in the West, will foster a better understanding of the issues and how we might move forward collaboratively,” Stacey Crowley, CAISO’s vice president of external affairs, said in a statement.

Potential Benefits

In the resolution, lawmakers cited a study published last year that found an RTO covering the entire U.S. portion of the Western Interconnection could save the region $2 billion in annual electricity costs by 2030 and cut carbon dioxide emissions by 191 million metric tons. A group of Western states led the study, financed by the U.S. Department of Energy.

A subsequent study released in July by Advanced Energy Economy (AEE) looked at regional economic effects. It concluded an 11-state Western RTO could generate roughly $19 billion to $79 billion in additional gross regional product by 2030 and could help create 159,000 to 657,000 permanent jobs at an average total compensation, including benefits, of $73,000 a year. (See Study Tallies Economy-wide Benefits of Western RTO.)

AEE said the resolution “kickstarts discussions about California’s role in improving the Western power grid in collaboration with other states in the region.”

“ACR 188 sets the stage for California to engage substantively with its neighbors, and it’s great to see the legislature recognize the importance of regional collaboration when it comes to our energy grid and achieving state goals,” AEE Managing Director Amisha Rai said in a news release.

Prior regionalization efforts involving CAISO fizzled in 2016, 2017 and 2018, as California lawmakers balked at making changes to the ISO’s governance that could open its Board of Governors to out-of-state members. CAISO is a public benefit corporation created by the legislature and led by five gubernatorial appointees from California.

Even as California has been unwilling to share CAISO leadership, many parties in other Western states are unwilling to participate in a California-dominated RTO.

Acknowledging the standoff, the resolution said CAISO’s report should examine “collaboration between states on energy policies to maximize consumer savings while respecting state policy autonomy.”

Western Resource Advocates said the resolution “sends an important signal that regional electric grid collaboration should respect individual states’ autonomy and include governance provisions that allow significant engagement by states across the West.”

Speaking for CAISO, Crowley said, “Perhaps today there’s more general understanding of how a regional market would benefit ratepayers and the overall reliability, while at the same time respecting the policies set by each state in the West.”

Regional Cooperation Efforts

CAISO’s multistate Western Energy Imbalance Market has shown the economic benefits of regional cooperation by securing more than $2 billion in benefits for its members since it began in 2014, the resolution notes. Members from California and other Western states make up WEIM’s Governing Body.

The ISO is engaged in a stakeholder process to expand the real-time WEIM to a day-ahead market with the potential to increase resource exchanges across the West. On Tuesday it posted a revised straw proposal on the extended day-ahead market (EDAM) initiative and has scheduled stakeholder meetings for Aug. 28 and Sept. 7-8. (See CAISO Issues EDAM Straw Proposal for the West.)

“The extended day-ahead market is expected to achieve cost savings through a more efficient day-ahead commitment of generating units, including the displacement of resource commitments within one balancing authority area when more economic resources can be committed in other balancing authority areas instead,” the resolution says.

CAISO is facing competition from other entities that are moving to increase regional planning or form a Western RTO.

SPP has been promoting its Markets+ offering in the Western Interconnection, attracting interest from utilities seeking a range of market services that stop short of a full RTO. (See related story, BPA Commits to Funding Markets+ Development.) It is planning to establish a Western version of its eastern RTO, called RTO West, with Markets+ participants as likely members.

Spanning much of the Western Interconnection, the Western Resource Adequacy Program (WRAP) promises to be another significant player in regionalization efforts. Started by the Northwest Power Pool — which recently changed its name to the Western Power Pool (WPP) to reflect its wider reach — the program is meant to address reliability concerns in the Western Interconnection. It has already attracted participants in an area spanning from British Columbia to Arizona and east to South Dakota.

WPP has not signaled intentions to expand the WRAP’s offerings beyond resource adequacy, but it appears increasingly as a possible platform for incrementally developing a Western RTO that could compete with SPP and CAISO.