One thing has become abundantly clear after three intensive workshops this summer: There’s no blueprint for developing the stakeholder process for the “regional organization” (RO) envisioned by the West-Wide Governance Pathways Initiative. 

“Stakeholder engagement process” is one of six “work streams” the Pathways Initiative launched this summer to lay the foundation for the RO, which would assume the governance of CAISO’s Western Energy Imbalance Market (WEIM) and Extended Day-Ahead Market (EDAM). (See Busy Summer Ahead for Pathways Initiative.) In some ways, its outcome could be the most vital for the RO’s long-term viability.   

That’s because supporters of SPP’s Markets+ day-ahead offering have touted the market’s stakeholder-led approach to governance nearly as much as the independence of that governance from state (that is, California) influence, challenging acceptance of CAISO’s more staff-driven model. 

Scott Miller, executive director of the Western Power Trading Forum, recognized the change in expectations last July, telling RTO Insider that Markets+ had been “charmed” by SPP’s approach to stakeholder engagement. (See In Contest for the West, Markets+ Gathers Momentum — and Skeptics.) 

“Now they’ve been exposed to a stakeholder process that the stakeholders run, and there still hasn’t been a stakeholder process [in CAISO] that is developed much differently, even in the context of the EIM,” Miller said at the time. 

‘Little Bit Outside the Mainstream’

A year later, Pathways backers seek to address those changed expectations, beginning with a series of four workshops to determine how stakeholders want to interact with the future RO. The group’s Launch Committee considered the subject weighty enough to engage an independent facilitator, Gridworks, to manage the workshop discussions. 

Workshop participants are grappling with a broad question of how to create a “hybrid” stakeholder process model that combines the best parts of CAISO’s staff-driven process with the stakeholder-driven — and committee-based — processes of the RTOs in the Eastern Interconnection, which themselves vary in their approaches. 

Several participants have pointed to benefits of CAISO’s approach: its inclusiveness, accessibility and relative informality, despite its top-down nature. They’ve noted that while CAISO’s process does not rely on stakeholder committees, the ISO recently rolled out use of stakeholder “working groups” to hash out market initiatives.  

“The CAISO process is able to organically capture large ideas [and groups of] stakeholders,” Alan Meck, principal market design analyst at Pacific Gas and Electric, said during the Pathways Initiative’s July 24 workshop.  

Meck said he sees benefit in the ISO’s less structured — that is, non-committee — approach to addressing issues because it doesn’t entail a process in which “x percent” of votes from certain stakeholder groups is needed to advance markets changes. 

Oregon Public Utility Commissioner Letha Tawney said that “as a stakeholder who is not resourced to engage in these processes very deeply,” she appreciated the open nature of the CAISO process. 

“I like how it doesn’t ask, ‘What’s your standing? Why do you have a voice here? Do you get to have a say in this? It’s an all-comers [process], and as a decision-maker myself, who tries to run procedurally equitable processes, I really like that,” said Tawney, one of the signatories of the July 2023 letter launching the Pathways Initiative. 

Tony Braun, an attorney who represents publicly owned utilities in California, offered an example of how that openness can benefit stakeholders who sit “a little bit outside the mainstream” on a market issue. 

“When the flexible capacity product was first introduced, the proposal, which was very mature, was to just peanut butter the costs of it on a load-ratio share basis,” Braun said. “We had to fight tooth-and-nail to show … CAISO that our loads and resources did not look like everybody else’s, or at least certain loads and resources.” 

Braun said the public utilities ultimately convinced the ISO to adopt a more cost-causation approach. 

“And I can’t help but think that would have not happened in a voting structure — that we would have just been an extraordinarily small minority and we would just get rolled over,” he said. 

Ryan Millard, West region senior director of regulatory and political affairs at NextEra Energy Resources, said CAISO included elements of “the good, the bad and the ugly.” Among the bad, Millard noted, is that CAISO’s lack of stakeholder process formality can translate into unclear timelines. 

Citing the example of the ISO’s interconnection process enhancements initiative, he said, “I don’t think there were enough attempts in the beginning to kind of structure how the stakeholder process was going to move forward, and there [weren’t] timelines built into the front. In fact, that was my commentary through that process multiple times: ‘Pick a date, you have a lot of conflicting or complicated compliance filings at FERC that are going to make this more complicated.’ And sure enough, it did.” 

Other workshop participants pointed to what they see as advantages in SPP’s more structured stakeholder process, which they experienced in developing the Markets+ tariff. 

Doug Marker, an intergovernmental affairs specialist at the Bonneville Power Administration, said BPA recognizes and supports the fact that Pathways is seeking “to do something different than the older CAISO staff model.”  

“We would like to see a more stakeholder-led issue development process,” he said during the July 24 workshop. In April, BPA staff issued a recommendation that the agency choose Markets+ over EDAM, citing governance and stakeholder processes as two key reasons for its leaning. (See BPA Staff Recommends Markets+ over EDAM.)  

For BPA, it’s important the stakeholder process “get issues defined and developed so that there’s a clear majority and minority perspective, if necessary,” Marker said. 

“The Markets+ process has helped to facilitate developing consensus on some difficult issues. We were really skeptical going into the process about the voting aspect of it, but it served in some instances to really facilitate consensus,” he said. 

Lauren Tenney Denison, director of market policy and grid strategy at the Portland-based Public Power Council, spoke approvingly of the Markets+ system of standing work groups and ad hoc task forces, both of which include representatives from various stakeholder sectors and rely on forms of voting to advance issues through the stakeholder process. 

“While all decisions go to an independent board eventually, they build up through that working group level,” Tenney Denison said. “Then there’s the Markets+ Executive Committee that has representatives from all the participants and stakeholders. That group is also able to direct work back to those workgroups and task forces. So there’s just more structure involved that has stakeholders having an active voice through this voting mechanism on what to prioritize and what needs to be looked at.” 

‘Pleasantly Surprised’

An Aug. 2 Pathways workshop delved into the question of what a “sector-based committee and voting structure” could add to the RO.  

Braun said he thinks sector-based representation is essential and provides an “indicia of inclusiveness” to the stakeholder process, helping to “get the right people at the table” and build consensus. 

“I think I probably get less worked up about the definitions of the sectors than many do,” he said. “I get nervous when sectors get too granular. I think one of the lessons that we’ve learned is that making the sectors broad forces people to work together to come up with plans for populating the sectors and the relative positions in the stakeholder processes,” such as in the WEIM’s stakeholder-led Regional Issues Forum (RIF).  

“I think one of the benefits of having some similarly situated folks within the same group is that it’s helpful to sort of zoom in on areas where there is consensus out of the gate and areas where maybe we’re using different terminology to describe the same thing — or with areas also where there isn’t consensus,” said Ian White, director of regulatory affairs at Shell Trading. 

White said the RIF group representing independent power producers, marketers and independent load-serving entities sector — one in which Shell participates — has become “quite an unruly” sector with its 70 members, many of which operate under different business models and therefore don’t always share the same interests.  

“Regardless of sector size, I think you’re always going to have splinter factions form over issues that are of unique concern to an organization’s individual goals,” NextEra’s Millard said. “And that’s particularly true in diverse sectors, of which NextEra is one. The less formal structure of CAISO’s stakeholder framework sort of allows for that, and you have the ability to collaborate and/or advocate as a subgroup of your sector or even cross-collaborate with other sectors.” 

Allie Mace, manager of market policy and analysis at BPA, said sector-based representation encourages collaboration among stakeholders. 

“In the Markets+ experience, we were pretty pleasantly surprised by the enthusiasm and engagement to dig in on issues and shape compromises and consensus approaches across the sectors,” Mace said. “The sector definitions didn’t seem like they were a barrier to that collaboration. I think defined sectors can help to provide some good helpful parameters for organizing issues and input.” 

Voting with Purpose

On the topic of whether the RO’s stakeholder process should include participant voting, both Braun and Scott Ranzal, director of portfolio management at Pacific Gas and Electric, expressed support for some kind of voting, but raised the question of the purpose of votes.  

As noted throughout the workshop, voting can be characterized as “indicative” (showing a preference during the process), “advisory” (expressing an opinion to a board or other body) or “binding” (advancing a proposal).   

“I think voting is a reflection of desire that actually already happens inside the CAISO,” Ranzal said. “It’s not labeled as a vote, but it is very clear in the CAISO processes where people want to be. So I think if voting is a reflection of desire, and that can help with accountability and visualizing what is happening, adding that to the CAISO process seems like it would have a positive bent to it.” 

“I think voting has the potential to complicate engagement and sometimes discourage engagement altogether, if you’re a minority voice on a specific issue,” Millard said, advocating for “narrowing the application of when and how voting” is used in the stakeholder process. 

Mace said BPA found voting in Markets+ to be a “positive experience” after the agency overcame a “learning curve.” 

“We were pretty impressed with how voting helped to move things along,” Mace said. “Calling for that advisory vote could be a very powerful tool at times in meetings for getting out of a spinning topic and identifying where people stood, so then you can move forward on the compromise and collaboration.” 

Natalie McIntire, a senior advocate at the Natural Resources Defense Council, said she wouldn’t take a position on whether the RO should include voting and whether such voting should be advisory or binding. 

“But if there is voting, I think it’s really important that you spend a fair amount of time thinking about the balance of those votes,” McIntire said. “I think different regions across the country have different ways that they weight voting based on sectors, and you want to really make sure that that voting is reasonably balanced so that no one sector has control over the outcome of those votes.” 

Kerinia Cusick, president of the Center for Renewables Integration, said any “effective” stakeholder process she’s been involved with has included some form of voting. 

“I’m trying to sort of think of examples where there has been no voting, and those have been somewhat frustrating processes,” Cusick said. “They’ve been sort of long, very engaged, and then nothing comes out of it. So there’s a ton of value of voting to drive accountability.” 

Michele Beck, director of Utah Office of Consumer Services, said she agreed with workshop participants who want to find a “middle ground” between the more “prescriptive” voting structure of the Eastern RTOs and the CAISO process, “something that might be more limited, more indicative.” 

Ranzal said Pathways likely will draw on parts of multiple RTOs to serve the RO’s stakeholder process.   

“We’re going to create our own thing, as we often do in the West, and I think that suits and fits the needs of the West and that’s a good thing. That’s part of the reason why we’re all out here,” he said.