Regional grid resistance doesn’t spell end of debate — Wellinghoff

Source: Debra Kahn, E&E News reporter • Posted: Thursday, September 6, 2018

California lawmakers are resisting opening up their electric grid to other Western states, but advocates of closer ties aren’t giving up hope.

A.B. 813, by state Assemblymember Chris Holden (D), failed to advance at the end of California’s legislative session last week. It would have begun the process of transforming California’s grid operator into a regional transmission organization, capable of managing electricity flows across the West more efficiently and potentially providing wider markets for California solar and Rocky Mountain wind power (Climatewire, Sept. 4).

Lawmakers’ hesitance need not spell the end of the debate, advocates of closer ties said yesterday.

It’s the third year that California lawmakers have considered the creation of a regional electricity market. The prospect of a Western RTO has long tantalized utilities and regulators for its potential to encourage wind and solar development in California’s neighboring coal-heavy states. Many mainstream environmental groups, including the Natural Resources Defense Council and Union of Concerned Scientists, were also on board.

The Sierra Club, Food & Water Watch and others raised the concern that regionalization would instead open up California’s grid to dirtier energy from neighboring states, as well as possible interference from the Federal Energy Regulatory Commission. In hearings on the bill this summer, lawmakers were spooked by both possibilities (Energywire, June 27).

But with or without full regionalization, California can still pursue closer ties with its neighbors — and will still come under FERC jurisdiction, former FERC Chairman Jon Wellinghoff, who had been advocating for the bill at his distributed energy consulting firm, GridPolicy Inc., said in an interview yesterday.

“FERC has total control over CAISO,” he said. “People in the Legislature in California don’t understand that. I’ve talked to them. They think because they have the governor nominate these people and they talk to them, they have some control. Maybe there is informally, but there isn’t formally.”

CAISO, the California Independent System Operator, has been running a voluntary energy imbalance market (EIM) since 2014 that essentially allows California to export surplus midday solar generation to neighboring states. PacifiCorp, a Portland, Ore.-based utility that serves Utah and Wyoming, is an original member of the EIM. Its membership has swelled in recent years: The market now encompasses about 55 percent of the electricity load in the Western Interconnection.

Wellinghoff said the EIM — which is already governed by a board made up of representatives from across the West — could easily be expanded.

“You could put real-time and day-ahead [trading] into the energy imbalance market and flip it all around, and then all of a sudden you have a board that’s governing that part of the operation that’s a multistate board,” he said. “It would have been nicer to have been able to do it through A.B. 813, but I think it can be done anyway, either through FERC or putting everything through the energy imbalance market.”

Outside California, the idea of a gradually expanding the EIM is also gathering steam. “I think it’s kind of the happy medium that a lot of parties are coalescing around, especially given that A.B. 813 failed to materialize this year,” said Jennifer Gardner, an attorney at Western Resource Advocates, an environmental group.

But a true regional transmission organization will still require California to give up its sole power to appoint CAISO members. “If we really wanted to have an RTO, if we want to move that far along, then it really will require a legislative fix in California at some point,” Gardner said.

Labor unions had also lobbied against A.B. 813 for its potential to send power plant construction jobs out of state. Allowing electricity from outside the CAISO’s current boundaries to satisfy California’s 50 percent renewables target would send 110,000 jobs out of the state from 2020 to 2030, according to state estimates.

A labor representative said that industry concerns could have been resolved by reforming the “bucket” system that requires utilities to purchase a certain proportion of renewable energy from within CAISO’s territory. Legislative leaders have said they will continue the conversation next year, when Gov. Jerry Brown (D) will be termed out. His likely successor is Lt. Gov. Gavin Newsom (D).

“I think in the early days, weeks, months of the Newsom governorship, they can probably get something done pretty quickly,” said Tom Dalzell, business manager for the International Brotherhood of Electrical Workers’ Local 1245, which represents Pacific Gas and Electric Co. employees.