A recent workshop on the West-Wide Governance Pathways Initiative has sparked praise for the proposal as well as concerns, including uneasiness over plans to share staffing between CAISO and a new regional organization that would govern Western electricity markets. 

“Shared staffing could lead to undue influence over governance decisions and compromise the impartiality needed for effective oversight and market rule promulgation and implementation,” Rob Creager, executive director of the Wyoming Energy Authority, said in a letter to the California Energy Commission.  

Even if the arrangement is temporary as part of Pathways Step 2, it could have long-term impacts and “create a precedent for the market operation moving forward,” Creager wrote.  

The letter was one of several submitted as a follow-up to a CEC workshop Jan. 24 on regional electricity markets and coordination, including the Pathways Initiative. (See CEC Workshop to Focus on Impact of Pathways Initiative; Ariz. Commissioner Questions Utility Decisions to Join SPP’s Markets+.) 

Pathways proposes to create a new independent “regional organization” (RO) to govern rules for CAISO’s Western Energy Imbalance Market (WEIM) and Extended Day-Ahead Market (EDAM).  

The move could alleviate concerns of potential participants who are uncomfortable with markets led by CAISO, whose Board of Governors members are appointed by the California governor. 

Pathways backers are now waiting for a bill to be introduced in the California legislature that would allow a change to CAISO’s governance with the introduction of the RO. 

The International Brotherhood of Electrical Workers, which opposed previous efforts to “regionalize” CAISO, plans to sponsor the bill, an IBEW representative said in October. The deadline for introducing bills this session is Feb. 21. (See California Labor, (Possibly) Public Power to Sponsor Pathways Legislation.) 

While the potential legislation has garnered support, including from some past opponents, Creager pointed out it’s typical for bills to be revised as they move through the legislature. He recommended that stakeholders clearly state what they want in the bill — as well as what they don’t want — “to ensure true political independence of the RO is established and to ensure any market designs and market rules are fair and transparent.” 

WEA was formed in 2020 when the Wyoming State Energy Office merged with the Wyoming Infrastructure Authority and the Wyoming Pipeline Authority. Creager noted that Wyoming was the largest electricity exporter in the Western Interconnection as of 2023. 

EDAM vs. Markets+

While acknowledging the competition between CAISO’s Extended Day Ahead Market and SPP’s Markets+, Creager said WEA realizes that “with PacifiCorp’s long-term participation in the WEIM and first-mover to commit to the EDAM, combined with Black Hills Energy’s (dba Cheyenne Light, Fuel & Power) decision to join the WEIM, Wyoming’s attention will be more focused on the evolution of CAISO’s market offerings with the potential to expand to a RO.” 

In August, two Black Hills Energy subsidiaries serving parts of Montana, Wyoming and South Dakota announced their move from SPP’s Western Energy Imbalance Service (WEIS) to CAISO’s WEIM. (See CAISO’s WEIM Plucks Black Hills Utilities from SPP’s WEIS.) 

Other stakeholders who submitted comment letters to the CEC commended the Pathways Initiative. 

Leanne Bober, director of regulatory affairs for the California Community Choice Association, said CalCCA supports Pathways because of its potential to “capture reliability, affordability and environmental benefits of regional coordination.”  

Pathways continues the incremental approach to regional coordination that has been working well for the region so far, Bober wrote, pointing to CAISO’s WEIM and soon-to-be-implemented EDAM as examples. 

Shifting energy market governance to an RO with board members from across the West “will promote trust across Western entities, attract a diverse range of potential regional market participants and maximize the potential benefits of a regional market,” Bober said. 

Adam Smith, director of regulatory relations at Southern California Edison, also wrote in support of Pathways. 

“Independent governance is crucial for greater regional market integration,” Smith wrote. The Pathways Initiative “has now provided a clear proposal for implementing such governance.”