By Jason Fordney
Increased labor costs from the expanding Western Energy Imbalance Market (EIM) helped push up CAISO’s 2018 revenue requirement by $1.9 million to $197.2 million, but growing EIM revenues will offset some of the costs, the ISO said Tuesday.
CAISO is taking comments on its proposed 2018 budget, which calls for $217.4 million in total outlays, up 1.4% from this year. The spending package includes 14 new full-time positions, along with raises, promotions and benefit increases. Offsetting the costs are a projected $3.4 million increase in revenues, including a projected $2.6 million growth in EIM proceeds.
The ISO left its revenue requirement unchanged last year despite a 2% spending increase. (See CAISO Board OKs 2017 Budget with Steady Revenue Requirement.)
“That is almost entirely being driven by EIM,” CAISO Chief Financial Officer Ryan Seghesio said of the new employee positions during a Nov. 7 conference call. “We see some needs to add some headcount, particularly in the technology space, to help the EIM market. The good news there is that it gets offset from some EIM revenue.” The proposal would bring the ISO’s total number of budgeted employees to 614, according to his presentation.
The operations and maintenance budget, which refers to costs of ongoing operations, grew by about 3% to $178.5 million, including the 14 new positions. Debt service — principal and interest payments — remains flat at about $16.9 million. Collection of capital was lowered by $2 million to $22 million to help absorb some of the operations and maintenance increase, he said. Transmission volume is expected to increase slightly to 241 TWh.
Capital and project requirements are budgeted at $18 million. CAISO listed dozens of proposed projects for 2018, divided into market and operational excellence; technology improvements; customer service; and grid evolution readiness and regional innovation opportunities.
EIM administrative charges are projected to grow by 56%, or $2.6 million, to about $7.4 million, because of increased participation. Fees for forecasting intermittent renewables are also projected to grow by 52%, or $1.1 million, to about $3.2 million because of new resources coming online.
But the costs of conducting studies of large interconnection projects are projected to decrease by $700,000, or 37%, to $1.2 million, CAISO said. The ISO recovers its revenue through the grid management charges paid by market participants.
CAISO in the budget proposal also discussed its goals, including aggregating distributed energy and clean resources, citing 21,000 MW of renewables that are connected to the grid.
“The ISO is closely coordinating and collaborating with generators, utilities, transmission owners, energy regulators and diverse stakeholder groups, developing a grid and market structure that encourages distributed energy resources,” CAISO said. “Following a tariff filing and regulatory approval (which is expected in early 2018), entrepreneurs and utilities will be allowed to bundle, or aggregate, DERs such as energy storage, so that any extra energy can participate in the ISO wholesale market just like a utility-scale generator.”
Comments on the budget proposal are due on Nov. 14, with a vote by the Board of Governors set for Dec. 13-14.
FERC in September approved the entry of Canadian power marketing firm Powerex into the EIM. (See PacifiCorp, NV Energy Gain EIM Market-Based Rate Authority.)