Participants in the West-Wide Governance Pathways Initiative face a busy meeting schedule this summer as the group’s leaders look to advance on parallel fronts to develop a “regional organization” (RO) to assume governance of CAISO’s Western Energy Imbalance Market (WEIM) and Extended Day-Ahead Market (EDAM). 

The Pathways Initiative hit a key milestone last month when CAISO began a stakeholder process to adopt the effort’s “Step 1” proposal for the ISO to elevate the “joint” authority the WEIM’s Governing Body shares with the ISO’s Board of Governors over WEIM matters to “primary” authority. (See CAISO Kicks off Stakeholder Process for Pathways Initiative.) 

“The CAISO board will be taking up the final recommendation with the EIM Governing Body sometime later this summer, or early fall, and then we’ll be working on the tariff language that will be required to actually make these changes,” Western Freedom Executive Director Kathleen Staks said during a June 28 meeting of the Pathways Initiative’s Launch Committee, of which she is a co-chair. 

Step 2 of the group’s efforts will be more complicated, said Launch Committee member Evie Kahl, general counsel at California Community Choice Association (CalCCA). That step, part of “Phase 2” of the committee’s work, deals with both the legislation needed to transfer WEIM/EDAM authority to the RO and the issues around forming the RO. 

Step 2 will consist of eight separate workstreams dealing with: the stakeholder process for an RO; CAISO-related issues such as the financial liability associated with governing an electricity market; analysis of the existing CAISO tariff; public interest issues; RO formation issues, such as form of incorporation; RO governance issues, such as board nominations and funding sources; California legislative issues; and other legal issues. 

Kahl emphasized that the CAISO tariff analysis is a “really important” workstream that will “cross over” into other streams. 

“The objective really is to define the portions of the tariff that will fall within the RO’s new scope of authority,” Kahl said. “And what it’s requiring is this foundational analysis that the team has started, looking at the existing CAISO tariff and looking at what sections are uniquely market functions, [and] which are uniquely [balancing authority] or transmission operator functions.” 

The “most challenging question” is how to handle sections of the tariff that touch on both the market and BA functions, she said. 

Kahl also said the public interest workstream will incorporate input from the state regulators who initiated Pathways a year ago, as well as work from consumer advocates and other “important voices.” 

“It’s going to be examining things like, ‘What are the public interest obligations that are going to be a part of the RO’s responsibility?’ For example, a responsibility to minimize consumer costs and, in undertaking market design, to respect state and local authority,” she said. “It’s also going to be looking at the role for state regulators and consumer advocates in the process of designing the market and tariff approval process.” 

Kahl set out the public workshop schedule for many of the workstreams, including: 

• • July 25 — RO formation and governance, which will discuss issues such as the RO’s state of incorporation, principal place of business and entity formation status. The workshop also will cover the nominating and selection process for the RO board and number of board seats; RO and CAISO board joint sessions for areas of shared authority; the potential for reserving board seats for particular sectors; and the transition from the WEIM Governing Body process to that of the RO.

• • July 31 — Public interest, to discuss the roles for a states committee and consumer advocates. 

• • Aug. 2 — Tariff analysis and CAISO issues, which will deal with what authority might be retained by CAISO; RO compliance, financial obligations and liability; and RO/CAISO staffing structure. The workstream also will cover RO authority matters. 

Special Process for Stakeholder Process

Staks said the Pathways Initiative is undertaking a different approach for the largest workstream, the stakeholder process, for which the Launch Committee has retained nonprofit group Gridworks to facilitate four meetings. This workgroup also will include some non-committee members, she said. 

Matthew Tisdale, executive director at Gridworks, said his company received funding from the Arthur M. Blank Family Foundation to support its work with Pathways. The workstream will focus on comparing how other RTOs/ISOs in the country, as well as the Western Power Pool’s Western Resource Adequacy Program (WRAP), engage with stakeholders. It will examine seven key elements: 

• • Among competing priorities, who selects the policy topics for stakeholder attention? 
  • Who among stakeholders frames and presents a policy problem and proposes a range of solutions? 
  • In stakeholder workshops, who is responsible for facilitating discussion and advancing an agenda? 
  • Will the stakeholder process include voting, and if so, how frequently should sector-based voting occur? 
  • How should sectors be defined and weighted for voting purposes? 
  • What kind of forums and committees use to organize themselves? 
  • How often and through what nomination process should topics be subject to a stakeholder process? 

Gridworks’ role in the workstream is to “organize” and “summarize,” not to “editorialize,” Tisdale said. It aims to provide stakeholders with a summary in early September. 

The stakeholder process work group will hold virtual workshops July 11, July 24, Aug. 2 and Aug. 28, all starting at 9 a.m. PT. 

Budget Update

The Pathways Initiative raised about $500,000 to complete its Phase 1 work (mostly committed to developing Step 1) but under-ran its budget by $150,000. That money will be carried over and applied to Phase 2, according to Jim Shetler, general manager of the Balancing Authority of Northern California and co-chair of the Launch Committee’s Administrative Work Group. 

The budget for Phase 2, which the committee expects will run from this month to the fourth quarter of this year and produce a Step 2 proposal, remains about $450,000, for which the committee is seeking funders, Shetler said. 

Phase 3, which is intended to implement Step 2 and likely will run from this fall to the first quarter of 2026, has a budget of $636,000.

Shetler said they will seek additional funding from the U.S. Department of Energy for Phase 3. 

DOE in April rejected the Pathways Initiative’s first attempt to secure $800,000 in agency grants. But later that month, Launch Committee Co-Chair Pam Sporborg, of Portland General Electric, said that, based on DOE feedback, the group likely would reapply with a “more detailed and specific proposal” on how it would spend the money.