By Robert Mullin

CAISO’s Board of Governors last week approved a measure investing the board with complete oversight authority over the grid operator’s internal Market Monitor.

The change comes in response to FERC’s recommendations in a 2016 audit report that found that SPP executives had “inappropriate” involvement in the oversight of that RTO’s internal Market Monitoring Unit. (See FERC Calls for Changes to Protect SPP Market Monitoring Unit Independence.)

“This is our response to FERC guidance on oversight of the Department of Market Monitoring,” Roger Collanton, CAISO general counsel, said during a March 15 meeting of the board. “In particular, [we’re] giving the board more direct oversight over the administrative functions of market monitoring in order to enhance the appearance and, in fact, the independence for market monitoring.”

CAISO’s Tariff currently outlines a “dual” reporting structure in which the department is subject to direct board oversight for its “core” monitoring responsibilities, while at the same time reporting to the ISO’s CEO for administrative purposes, which include budgeting and staffing matters.

The new arrangement calls for the establishment of an Oversight Committee to be staffed by governors Ashutosh Bhagwat and Angelina Galiteva. It will be charged with overseeing the department’s administration and operations, including determining staffing levels and compensation, setting departmental goals, approving budgets and ensuring that the ISO is providing adequate corporate support. The committee will operate under a newly created charter.

“The arrangement will still allow for the Department of Market Monitoring staff, as well as the director, to communicate directly with the [full] board as they need,” said Greg Fisher, senior counsel with the ISO. “However, the Oversight Committee will be something that they can reach out to for various issues.”

Fisher said the proposed changes arose out of a review of the recommendations from FERC’s audit of SPP, discussions with FERC staff currently auditing the ISO and consultation with DMM Director Eric Hildebrandt.

“I just want to emphasize that we’re very supportive of this,” Hildebrandt said. “We’re looking forward to working with the Oversight Committee, but as [Fisher] mentioned, this is really just to bring our organization in line with what FERC identified as best practices based on some other ISOs.”

Hildebrandt went on to laud CAISO CEO Steve Berberich for supporting the Monitor’s independence and for “always” having provided the necessary resources and staffing for the department. Hildebrandt called the prospect of direct engagement with the CEO and the Oversight Committee “the best of both worlds.”

“I support these [changes] under one condition, and that’s that I can continue to have that kind of relationship with [Berberich] and interface with him,” Hildebrandt said. “I think that’s very helpful in just our working as an internal Market Monitor.”

“The charter is designed with that type of flexibility in mind, so that the Oversight Committee has full ability to delegate responsibility as it sees fit to management, as well as anticipating that same type of collaboration and interaction with management,” Collanton said.