The committee tasked with laying the groundwork for an independent Western RTO confronts a complex set of challenges on an ambitious timeline as it seeks to help CAISO outpace SPP in the contest to organize the region’s electricity market.

Chief among the challenges: raising the money needed to finance the effort, which a group of Western state utility commissioners kicked off in July to boost the prospects of establishing a single RTO that pointedly includes California. The commissioners proposed the plan just as SPP’s Market+ day-ahead market offering began making headway against CAISO’s Extended Day-Ahead Market. (See Regulators Propose New Independent Western RTO.)

Members of the West-Wide Governance Pathway Initiative’s (WWGPI) Launch Committee described the work ahead during a virtual stakeholder update Nov. 17, just days after the group released its mission statement and charter.

“The real mission is that we’re looking to create an independent entity with independent governance that is capable of overseeing an expansive suite of West-wide wholesale electricity market activities and related functions,” said Launch Committee Co-chair Pam Sporborg, director of transmission and market services at Portland General Electric.

Sporborg described the “core principles” — set out in the mission statement — guiding the committee’s work:

• • Establish an entity with the largest possible footprint in the West — including California — while maximizing consumer benefits.
  • Ensure independent governance for all market operations.
  • Preserve and build on existing CAISO market structures, including the Western Energy Imbalance Market (WEIM) and EDAM.
  • Minimize duplication of costs for both the market operator and its participants.
  • Create a structure flexible enough to support a full complement of RTO services while not requiring participating organizations to join a full RTO if they choose not to.

Funding Needed

In the month since it began meeting, the Launch Committee has created work groups to address specific “focus areas” to tackle issues in establishing the independent entity.

Organizational structure and funding will be the key focus of the Administrative Work Group, according to Jim Shetler, the group’s co-chair. Shetler is general manager of the Balancing Authority of Northern California (BANC), which in August became the second organization to commit to joining CAISO’s EDAM. (See BANC Moving to Join CAISO’s EDAM.)

During the Nov. 17 meeting, Shetler said his group is evaluating whether the WWGPI should form a 501(c)(3) or “more of an informal association kind of structure.” It also will determine whether the effort requires an initial “fiscal sponsor.”

“We are stood up to do a lot of work and look at the governance structure alternatives for an independent oversight, but we don’t have any dollars to do that right this minute, so we are looking at where we would get funding, both in the near term and long term,” he said.

Near-term funding could come from “seed donations” by electric sector participants who’ve already expressed willingness to put up the money, Shetler said. The work group could also seek grants from foundations.

For the longer term, the group is working with Western state officials to file a grant request with the Department of Energy for federal funding, which likely would not materialize until the middle of 2024.

The group is examining the full scope of the WWGPI and the costs associated with administrative setup, outreach and communications, and legal analysis.

“I would anticipate we would have a better handle on what we think the dollars and cents would require … in the early to mid-December timeframe,” Shetler said.

Laura Trolese, director of Western markets and strategy at The Energy Authority, asked where the funding would be found for the entity’s foundational board of directors, which is slated to be seated in January.

“And maybe just a note that it could be problematic to have funding for that board that is either not or perceived not to be independent,” Trolese added.

Shetler said his group recognizes the need for any funding to be “unbiased and not influential.”

“Some of the federal dollars that might be coming our way [are] an option for that, but we have not had any detailed discussions yet on what that funding source may me, though we acknowledge and recognize we have to make sure that it’s viewed as being independent,” he said.

“We want the funding to really come from a broad and diverse set of entities,” said the Launch Committee’s other co-chair, Kathleen Staks, executive director of Western Freedom, an industry coalition that advocates for a single Western RTO.

Legal Questions

Examination of legal issues will fall to the Launch Committee’s Priority Functions and Scope Work Group.

The group is charged with identifying “concrete options” for a market structure that integrates California, said the group’s co-chair, Spencer Gray.

“Our goal is to define a range of solutions — or pathway options — that are related to tariff management for the markets and other services [and] what the governance structure looks like for a potential new regional entity,” said Gray, executive director of the Northwest & Intermountain Power Producers Coalition (NIPPC).

The group will address legal questions associated with creating a regional entity, including what is possible under existing law and what are any associated litigation risks. It also will investigate the minimum changes needed in California law to alter CAISO’s governance and operations to enable some of the options.

“And we want to be thorough in asking those questions without presenting a preferred solution yet; this can be viewed more like a solution set,” Gray said.

While the single tariff covering CAISO and the WEIM gives both the ISO Board of Governors and the WEIM Governing Body voting rights, only the ISO board has the right to file rule changes with FERC, noted work group member Jeff Nelson, manager of market design and analysis at Southern California Edison.

“So we’re starting with that place and sort of asking questions — what sort of things could move around? And what would require new tariffs?” Nelson said. The group also will explore what it would require for an independent entity to have “absolute rights” over market rules “without the ISO’s current board having any say in those.”

Gray said many stakeholders, including NIPPC, filed comments with the WWGPI asking for that kind of legal analysis “because there’s been so much thinking about what are the options for greater autonomy for a regional entity in the context of the Western EIM and EDAM.”

Communications, Outreach and Transparency

“Talking about markets to a general audience is quite challenging, as many of you know, so anyone who knows how to talk about this in an easily understandable way, we’re always looking to improve,” said the Northwest Energy Coalition’s Ben Otto, co-chair of the Launch Committee’s Communications and Outreach Work Group.

The group’s focus will be threefold, Otto said, including supporting the committee’s ability to communicate with WWGPI stakeholders; acting as a liaison between stakeholders and the work groups to “collect and share feedback”; and leading outreach with stakeholders, the media and others.

“Our goal here is just to be able to clearly communicate out to the public about what we’re doing — our goals, our processes and our timelines,” Otto said of the last point.

Launch Committee meetings currently are held in private. Allison Mace, manager of market policy and analysis at the Bonneville Power Administration, asked whether the committee plans to open future meetings to the public.

“We’re continuing to have these types of public forums where we are able to get the input and share the updates on the Launch Committee, but … there will be other times where the Launch Committee will need to be able to discuss and deliberate about the feedback received in these meetings amongst ourselves,” Sporborg said.

Staks said the committee is considering whether to hold additional topical public meetings, such as one to cover the legal analyses and scenarios outlined by Gray.

Shetler pointed out that the new charter states any decisions by the Launch Committee will be made in public session.

“We really are trying to make sure that this is a very transparent process,” Staks said.

The Launch Committee will hold its next public update Dec. 15.