The West-Wide Governance Pathways Initiative still grapples with political uncertainties and governance concerns despite efforts to fix those issues as it seeks to create an independent “regional organization” (RO) to oversee CAISO’s Western electricity markets, proponents of SPP’s Markets+ contend.

The claim came in a Dec. 6 addendum to the first “issue alert” on governance the Markets+ backers published Aug. 7. The proponents have issued several alerts to highlight the purported advantages of Markets+ over CAISO’s Extended Day-Ahead Market (EDAM).

The contributors include Arizona Public Service, Chelan County PUD, Grant County PUD, Powerex, Public Service Company of Colorado, Salt River Project, Snohomish PUD, Tacoma Power, Tri-State Generation and Transmission Association and Tucson Electric Power — all of whom helped fund the Phase 1 development stage of Markets+.

The addendum is a response to the West-Wide Governance Pathways Initiative’s Launch Committee voting to approve its “Step 2” proposal, which divides functions between CAISO and the new independent RO backers seek to create to oversee the ISO’s Western real-time and day-ahead markets.

While recognizing the work that went into developing Step 2 and the “incremental benefits” it would provide, the Markets+ proponents argued the plan failed to resolve key issues, such as independent governance and broader political support.

The addendum noted that under Step 2, the Pathways Initiative must secure a legislative change in California to establish the RO and grant it power to set market policy for EDAM, while CAISO would “retain its current balancing authority and market operator roles.”

“The success of the Step 2 Proposal depends on uncertain future events including legislation in California that has not yet been developed or approved and subsequent implementation of that legislation by the California ISO Board of Governors and other entities,” the addendum stated.

Additionally, while Step 2 will “provide incremental benefits to all energy markets in the West,” the question of whether the proposed RO will be independent of CAISO has not been resolved, according to the Markets+ backers.

“This includes a single shared tariff and an intertwined relationship across numerous areas, such as shared staffing, and financial and regulatory responsibilities associated with the organization being borne by CAISO,” the addendum said. “In addition, CAISO would be responsible for day-to-day market operations with limited supervision by the RO.”

The Markets+ backers contend it’s “not clear whether any future California legislation will enable the CAISO BAA to be part of any RTO governed by the RO.”

The addendum also raised concerns over transparency in the selection of the Step 2 Formation Committee, uncertainty about how the RO would address costs and cost allocation, and the risk to Western ratepayers outside the CAISO BAA “until a fully independent governance structure is eventually achieved (if ever).”

Pathways supporters have addressed some of the concerns raised in the addendum. In October, key backers of Pathways told state energy officials they’re confident California lawmakers will pass legislation next year to relax state oversight on CAISO’s markets and establish the RO. Pathways supporters in California have begun discussions with legislative staff who likely would contribute to crafting the bill.

The Pathways initiative also has won over previous skeptics, with the International Brotherhood of Electrical Workers indicating they will sponsor the legislation needed to implement Step 2.

Kathleen Staks, executive director of Western Freedom and Pathways Launch Committee co-chair, cited the Step 2 proposal in an email to RTO Insider on Dec. 9, stating the plan lays the foundation to “enable the West to create a suite of voluntary wholesale electricity market services as stakeholders and participants desire and require, with each state retaining its unique decision-making autonomies and participating on a level playing field.”

Staks noted that the Launch Committee “is not engaging in any legislative efforts” and “[a]ny future legislative needs will be determined by the RO and western stakeholders and the CA legislature.”

“The proposed legislative scope for 2025 does not include a change to the CAISO BAA,” Staks added. “The Launch Committee did include a section in the proposal about a potential scenario for co-optimization of the transmission system … that could be possible without further legislative change.”