A Western RTO would likely take shape for reasons much different from those that motivated the creation of organized markets in other parts of the U.S.

That view was widely shared among members of Oregon’s RTO Advisory Committee last Wednesday, when it met for a second time to hammer out the contents of a study on the benefits and risks of RTO membership, due to the legislature by the end of the year.

During the committee’s first meeting in September, Adam Schultz, the Oregon Department of Energy’s Electricity and Markets Policy Group lead, promised that the second gathering would address a key question: What problem is the state attempting to solve by joining an RTO?

The answers for other organized markets usually centered on the anticipated cost savings to utilities — and their ratepayers — from the centralized dispatch of generation and regional transmission planning.

But the views expressed Wednesday pointed to a different factor driving the need for a Western RTO: namely, its potential role in decarbonization.

‘Feeling of Desperation’

What’s changed?

“I’d say it’s the conversation around our state’s mandates on procuring more clean energy, but also around the impacts and effects of climate change is having on our system,” said Nicole Hughes, executive director of advocacy group Renewable Northwest.

“Ten years ago, we weren’t seeing the radical climate [and] weather impacts; we weren’t dealing with the wildfire situation that we are today,” Hughes said. “So I think for some people involved in this conversation, there’s a feeling of desperation that if we aren’t doing everything that we could possibly do, to continue to live the lifestyles that we are hoping to live, then we’re not doing enough.”

For Renewable Northwest members, an RTO would be “one of the solutions” to decarbonizing the electricity sector, Hughes said.

Speaking from the virtual audience, Michael Jung, vice president of government affairs at generation and transmission cooperative PNGC Power, said his group’s members are committed to achieving carbon neutrality by 2033. Jung said PNGC’s membership of publicly owned utilities has in the past relied on the vast and “cheap” hydroelectric system managed by the Bonneville Power Administration to serve their customers “and never really had to think very hard about what to do to shape the future.”

But BPA’s “preference” customers confront a future in which the Federal Columbia River Power System will no longer be able to fully meet their needs. “The easy way out is no longer going to be an option,” Jung said.

“In the context of our carbon commitment, we really do believe that a Northwest RTO is going to be an essential ingredient towards giving us options that go beyond just the BPA preference power portfolio, and giving us a market that we can turn to to meet our needs, particularly in clean power, as well as facilitating the delivery across the transmission network, which may or may not be BPA[-operated],” he said.

Sarah Edmonds, director of transmission services at Portland General Electric, said an RTO is “unique” in offering the “integrated solution” needed to facilitate “deep decarbonization and clean energy integration” through better utilization of “resource solutions that don’t look like our traditional set of generation resources” on the grid.

“And when I say ‘integrated,’ I’m emphasizing the fact that the RTO brings all of the inputs and outputs from the market optimization part of the RTO, the transmission planning and the resource adequacy piece — potentially. And because those pieces are under one roof, they’re able to leverage each other, and the data that’s produced from these different functions and mechanisms can be integrated to provide that solution where all the pieces are coming together,” Edmonds said.

Mary Wiencke, vice president of market, regulation and transmission policy at PacifiCorp, cautioned that an RTO by itself will not reduce carbon emissions.

“I think the idea is to operate the system more effectively and enable that decarbonization to happen more efficiently, more cost effectively,” she said.

But Wiencke said any RTO dispatch model would need to consider state policies, such as California’s carbon pricing, a policy soon to be adopted by Washington state as well. “Those state policies will need to be reflected in the market rules in some fashion,” she said.

“I think one thing for you all to consider is that all seven RTOs/ISOs that have been formed were formed in a carbon environment. This is an opportunity for the region to consider what an RTO would look like in a decarbonized world,” said Ravi Aggarwal, a BPA manager and ex officio member of the RTO Advisory Committee.

‘Art of the Possible’

During the committee’s first meeting in September, it was Aggarwal who posed the idea that the Pacific Northwest consider an “incremental” approach to developing an RTO. (See Oregon RTO Committee Ponders Paths to Regionalization.) On Wednesday, he clarified that he wasn’t advocating for foregoing the pursuit of an RTO with the looser arrangements that exist in the region today.

But Aggarwal pointed out that the Northwest is unique in that it contains BPA, a non-FERC jurisdictional entity that controls about 70% of the region’s transmission and faces possible statutory limitations related to how it can participate in an RTO.

“If you look at the history, it took us about four years just to form a regional planning organization — Northern Grid — and that’s just one functionality of many that an RTO serves,” Aggarwal said, recounting other incremental developments such as the expansion of the Western Energy Imbalance Market (WEIM) (which BPA will joint next year) and the creation of the Western Resource Adequacy Program by the Northwest Power Pool. (See RA Program Will Require Restructuring of NWPP.)

“All those are incremental steps that move us probably closer to an RTO construct. It doesn’t take us directly to an RTO, but it builds a pathway to maybe eventually get to an RTO,” whether within an area like the NWPP footprint or West-wide, he said.

Spencer Gray, executive director of the Northwest & Intermountain Power Producers Coalition, said his organization has supported the incremental steps the region has taken so far but thinks those efforts might be reaching the limits of their effectiveness.

“I think we’re going to get up to the edge of not being able to do much more, to evolve our grid to deal with emerging issues like the commitment of Washington and Oregon to 100% clean grids. We’re not to that edge yet; I think perhaps the [WEIM] day-ahead market possibly will be the edge of that functionality that can be bolted on to our existing grid without a more fundamental shift, which an RTO represents,” Gray said.

Wiencke said the need to decarbonize might outpace the timeline for creating an RTO.

“The conversation, I think, is really about urgency, and really about accelerating the decarbonization process, and I think there’s a lot of things that are needed to achieve that, including potentially an RTO,” Wiencke said. “However, I think there’s real tension there, because an RTO is going to take a long time to put together and to put in place, and I don’t know how to advise on sort of accelerating the development of an RTO.”

Oregon Public Utility Commissioner Letha Tawney pointed to other “constraints” beyond BPA’s jurisdictional status that have consigned the Northwest’s electricity sector to a policy of incrementalism — both rooted in California.

The first is CAISO’s state-run governance model, which Tawney believes California lawmakers would be willing to amend.

More intransigent though is the state’s resource adequacy model — overseen by the California Energy Commission rather than CAISO — which Tawney thinks the legislature is less likely to change.

“To incorporate [California] in the [RTO] dispatch, to take advantage of all the solar that they want to send out on a daily basis, and all of the investment they’re making in batteries, we will face a real challenge if we try to bring both the RA construct and a market construct together,” Tawney said. A governance change for RA program “isn’t even on the table right now.”

“There isn’t that sort of perfect RTO that we’re comparing to; we’re comparing to the art of the possible, given the existing landscape we’re operating in,” she said.