Expanded Western power market not coming in near future
California has been looking at expanding its grid to allow broader participation by utility PacifiCorp, which operates as Pacific Power in Oregon, Washington and California and as Rocky Mountain Power in Utah. The Golden State’s grid manager, the Independent System Operator (ISO), views growing the grid as a way to bring in more renewable energy, as California and other Western states look to cut their carbon emissions.
The ISO said yesterday it now won’t complete its work on the rules for operations of a larger market until fall. The agency had what it called an “internal deadline” of completing work on the proposed governance structure by summer. But there were concerns from interested parties, and the grid manager decided to allow more time, said ISO spokeswoman Anne Gonzales.
“It was just more important to us to get this right,” Gonzales said. She did not detail the concerns from interested groups, saying, “We were just hearing from many sides.”
California law, S.B. 350, which passed last year, told the ISO to analyze the economic and environmental implications of the broader market. The Legislature included the caveat: “The transformation should only occur where it is in the best interests of California and its ratepayers.”
Gov. Jerry Brown (D) — who would have to approve the regional market — sent a letter to Legislature leaders and to the governors of affected states, saying all issues would be fully studied.
“While very significant progress has been made by the ISO on a transition proposal that meets the criteria in S.B. 350, there remains some important unresolved questions that would be difficult to answer in the remainder of this legislative session,” Brown said. “I have directed my staff, the Energy Commission, the Public Utilities Commission, and the California Air Resources Board to continue working with the Legislature, the ISO, interested parties and other state and energy regulators.”
Brown also did not detail the unresolved questions, and a spokeswoman did not respond to questions. Brown in the letter added that “the goal is to develop a strong proposal that the Legislature can consider in January.” In the letter to other governors, Brown included that their state regulatory authorities could also consider the proposal next year.
S.B. 350 increased to 50 percent the amount of renewable energy that investor-owned utilities in California must make by 2035. A lengthy study by four consulting firms, released last month, found modest gains in household income and emissions cuts through 2030, although greenhouse gases might increase in the short term by allowing wider use of coal-fired power. It said that although California could meet that mandate with in-state renewable power, there would be benefits to getting some from other states (ClimateWire, July 13).
There are ambitious timelines for adding renewables in S.B. 350, and “the regional grid is considered the optimal, and the best, the most cost-effective way to reach that target,” Gonzales said.
Some groups have criticized the proposed governance structure of a bigger market.
The public-interest division of Utah’s utility regulator filed comments last month that found the proposed structure to be “filled with recitations of platitudes and scant details” while at the same time substantive enough to be deemed “not in the public interest for Utah’s public utility customers and others” (EnergyWire, July 27).
Worries about coal
The ISO now is limited by state law to operating just within the state, with one small exception. Valley Electric Association Inc. in Pahrump, Nev., joined because its power lines were crossing with California’s, and it made sense, ISO spokesman Steven Greenlee has said. Utilities are members of the California ISO.
The ISO has said that if it joined up with other power authorities across state lines, California could sell its extra solar power to other states and buy wind power at night, including from Wyoming and New Mexico.
PacifiCorp, which is owned by billionaire Warren Buffett’s Berkshire Hathaway Inc., already participates in the California ISO’s same-day “real time” market. If PacifiCorp is allowed to join as a participating transmission owner, it could bid power into the day-ahead market.
Others said Brown and the ISO’s move was related to concerns over coal. A study for the ISO released in June showed that under a scenario that includes only California and PacifiCorp as ISO members, greenhouse gas emissions could increase across western North America by 600,000 tons by 2020 — a total of 0.2 percent more than would be projected without the market. Coal-fired power would increase in the region by 0.4 percent. A wider market that includes utilities in 14 states could increase the use of coal-fired power in the region by 3 percent by 2020 (EnergyWire, June 1).
PacifiCorp serves 1.8 million electricity customers in California, Idaho, Oregon, Utah, Washington and Wyoming. Environmental groups have argued that allowing the utility to bid coal-fired power into a Western day-ahead electricity market could allow it to keep coal plants open longer than it would have otherwise.
“A western regional energy market can benefit California so long as it does not undermine the crucial progress we have made to cut climate damaging pollution and boost our clean energy economy,” Kathryn Phillips, director of Sierra Club California, said in a statement. “Connecting us with PacifiCorp and its heavy coal fleet raised a lot of red flags for the state and the region.
“Fortunately, Governor Brown listened to concerns,” she added. “His letter today confirms that he understands California must take the time it needs to design a regional system that stays true to our values and grows our progress.”
The ISO pushed back against the idea that the move was a delay. S.B. 350’s deadline for the ISO is to study the potential benefits of a regional grid and develop the governance proposal for submission to Brown’s office by the end of next year, Gonzales said.
She also noted that the studies showed a wider market would decrease greenhouse gas emissions over the longer term. California’s grid adds an additional fee for using carbon-based fuels, she said. The market must dispatch lowest-cost. That creates a disincentive for carbon-based resources being used in the state.
“Carbon is going to be taken out of our grid through the regionalization,” Gonzales said.