CAISO on June 18 kicked off the West-Wide Governance Pathways Initiative stakeholder process required to shift the ISO’s governance structure to an independent entity within the Extended Day-Ahead Market (EDAM).  

During a conference call, members of the initiative’s Launch Committee presented Step 1 of the “stepwise” approach, which would elevate the “joint” authority over both the EDAM and the Western Energy Imbalance Market that the latter’s Governing Body shares with CAISO’s Board of Governors to “primary” authority. This means the body would be the first to vote on tariff change proposals for both markets. 

The moves are meant to quell fears about the ISO’s state-run governance structure. (See Pathways Initiative to Act Fast on ‘Stepwise’ Governance Plan.) California’s governor appoints members of the ISO’s board, on which the State Senate votes to confirm. 

The stepwise approach was outlined in a straw proposal released June 5. 

“We’re looking to create a structure that can enable the largest footprint possible and include California,” said Kathleen Staks, WWGPI co-chair and director of Western Freedom. “We ultimately want this entity to be able to evolve and add market services up to and including a full regional transmission organization.”  

The first round of stakeholder feedback led Launch Committee members to highlight a focus on respecting state and local authority in the initiative, “ensuring we are creating a structure that respects each individual state’s ability to set and enforce its own energy policies,” Staks said. “We are not looking to create something that is going to enable one state to force its policies on another state and vice versa.” 

Over the summer, committee members and stakeholders will be working on a proposal for Step 2, which would establish a “regional organization” as a legal entity and, after passage of required California legislation, transfer the Governing Body’s primary authority to “sole” authority. 

Stakeholder Comments

Some stakeholders expressed concern that the initiative still doesn’t achieve the level of independence needed to quell concerns surrounding CAISO’s governance structure. 

“We appreciate steps forward with the Step 1 proposal to extend [Federal Power Act Section] 205 filing rights and primary authority to the WEIM Governing Body,” said Doug Marker, intergovernmental affairs specialist at Bonneville Power Administration. “But at the same time, as we’ve said, we don’t believe that it by itself achieved the level of independence from any one state’s authority that’s necessary for a regional market. 

“What we’re concerned about is that transition to primary authority could lead to the CAISO Board of Governors being disconnected from WEIM and EDAM issues and possibly increased conflict between the Board of Governors and the WEIM Governing Body.” 

Marker requested that the committee consider elements that could be added to the proposal that could support continued collaboration between both entities.  

“We have a number of [Governance Review Committee] members … who are aware of the perceived and, I think, real value of the increased collaboration that happened moving to the joint authority model,” responded Spencer Gray, committee members and executive director of the Northwest & Intermountain Power Producers Coalition. “While we didn’t touch on the mechanics of whether the two bodies would continue to be jointly going forward, we certainly didn’t want to preclude that approach.” 

A second stakeholder call is tentatively set for July 23.