A proposal to elevate the Western Energy Markets (WEM) Governing Body’s authority over CAISO energy markets was approved unanimously by the Governing Body and ISO Board of Governors Aug. 13.  

The proposal by the West-Wide Governance Pathways Initiative is “Step 1” in a two-step effort to establish an independent regional organization to govern CAISO’s Extended Day-Ahead Market (EDAM) and Western Energy Imbalance Market. (See CAISO Advances Pathways Initiative ‘Step 1’ Proposal to Board Vote.) 

“In a little over a year, we’ve moved from the regulator letter to a full proposal that is before us today that will enhance and reinforce the capabilities of the Western energy markets,” Scott Ranzal, director of portfolio management at Pacific Gas and Electric, said during the meeting. 

“A celebration of today’s vote and hope for the approval is certainly warranted, but it should quickly follow with additional action and effort to address the growing needs of the Western energy markets and that continued need for regional collaboration,” Ranzal said.  

The proposal received wide support, with 22 entities participating in the Step 1 stakeholder process expressing approval, six remaining neutral and one member of the public opposing.  

Before the proposal went up for a vote, Adam Schultz, manager of regional coordination at CAISO, provided an overview of stakeholder comments received in the process, placing them in two primary categories.  

The first category included stakeholders’ desire for more clarification of “exigent circumstances” that the straw proposal states are necessary if dispute resolution between the ISO board and the Governing Body is exhausted before a FERC filing.

The second concerns the trigger mechanism requiring that the FERC tariff filing needed to establish the Governing Body’s primary authority over EDAM/WEIM issues wait until the EDAM obtains implementation agreements from a “set of geographically diverse” EDAM participants representing load equal to or greater than 70% of CAISO’s balancing authority area annual load in 2022. The category also included concerns related to the scope of “primary authority” and with public interest language in the charter.  

Schultz reiterated that issues in the first category were “exhaustively considered” by the Pathways Launch Committee. Topics in the second category included ensuring continuing collaboration between the board and the Governing Body, logistical details for the dual filing mechanism and the process for implementing Step 1.  

Schultz said the second category of comments represented issues at a level of implementation detail not considered in depth by the Launch Committee and that will be considered later in a different stakeholder process.  

‘Hang in There’

Several officials spoke in support of the proposal and applauded the quick work it took to develop it.  

“I believe the best governance is created by stakeholders through a broadly representative process,” WEM Governing Body member Andrew Campbell said. “The universe of stakeholders needs to include the market participants, as well as the state government representatives and nongovernmental organizations that represent the public interest. Today’s proposal is consistent with that principle.”  

Other CAISO officials saw the success of implementing Step 1 as a boost of confidence for the challenge ahead.  

“Step 2 is going to be a heavier lift and a challenge, and I just want to encourage everyone to hang in there,” said ISO board Vice Chair Severin Borenstein. “This showed a lot of cooperation and willingness to work together. We’re going to need that for Step 2, which I think is where the real value will be unlocked.”