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California governor puts grid proposal on shelf, giving Utah time for review

Published August 15, 2016 11:31 am

The six-month delay gives Utah, other stakeholders more time to review and refine the proposed governance of grid.
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An important initial step on California's path to creating a regional electric grid for 11 Western states, including Utah, has been delayed by that state's governor until January.

California's Independent System Operator (CAISO), the nonprofit organization that operates much of the state's electrical grid, had intended to present a proposal this month for converting itself into a regional entity. The state believes it could cut its retail power rates by as much as 3 percent if it can persuade all 11 states to turn over the management of electrical distribution within their borders to the CAISO.

But in a letter issued earlier this week, California Gov. Jerry Brown said he thought it best to postpone a vote until January in light of "some important unresolved questions that would be difficult to answer in the remainder of California's current legislative session."



Brown said he had instructed his staff and state agencies to continue working with CAISO and the other involved states to develop a strong governance proposal in the interim.

Evan Westrup, a spokesman in the California Governor's Press Office, said he could not elaborate on what questions Brown believes remain unanswered.

But Anne Gonzales, a public information officer for CAISO, said she thought the governor's actions may have been prompted by requests from stakeholders for more time to review and refine the governance proposal — the document that, if approved by the California Legislature, would define how the CAISO is to become a regional grid operator.

That's a key issue that could make or break Utah's participation in the grid. State leaders have voiced concerns that Utah may not benefit as greatly as California from the arrangement, and might lose some of its sovereignty if it gives the CAISO, which is currently led by a board of directors appointed by the California Governor and Legislature, authority over the distribution of electricity.

Utah lawmakers moved in an interim session last month to open a bill file for a law that would give the state Legislature the power to prevent Utah's participation on the grid, but the subsequent vote did not comply with interim rule voting requirements and the motion was not completed.

Utah does not have immediate authority to review California's proposal. The CAISO's regional operator agreement would be with PacifiCorp, which operates as Rocky Mountain Power in Utah. The utility company would have to obtain the approval of the Utah Public Service Commission — and from the equivalent bodies in each of the six states PacifiCorp serves — before entering into the agreement.

Rocky Mountain Power CEO Cindy Crane has said that the utility will not continue to pursue a regional arrangement with the CAISO unless all six of the states it serves approve the relationship.

In a statement, Rocky Mountain Power spokesman Paul Murphy said the company was unsurprised by the California governor's decision, and that the company appreciated having more time to work through key issues.

"This is a case where getting it right is more important than getting it fast," he said. "We continue to believe grid integration has significant potential benefits for customers. ... Going forward, regional governance remains the key issue that will need to be resolved in order to advance this important initiative."

Gonzales said the CAISO was pleased to have more time to fine-tune its vision for regional governance.

"[The] only way it's going to work is if everyone feels like they have a voice and a seat at the table," she said. "What we are hearing, over and over, is, 'We don't have time to digest this. We need more time to understand this.' "

But part of the reason why the CAISO was pushing for an August hearing before the California Legislature, she said, was that the nonprofit wanted to give PacifiCorp adequate time to pitch the finalized proposal to its service-area states.

"We are trying to get things moving," Gonzales said. "And they still are moving, so we are pleased that the governor wants to continue working on this early next year."

The CAISO also has in mind the deadlines placed upon it by California's SB350, which requires the system operator to complete its governance proposal by the end of 2017 in order to have the regional agreement in place by 2020, Gonzales said.

And, she said, the CAISO was concerned about other Western entities that are organizing themselves and pursuing regional systems of their own.

"We didn't want to allow for market competition to move in," she said. "California would then lose opportunities to move to a regional grid. We could envision California becoming almost an island."

PacifiCorp hasn't seriously explored partnering with any other regional system, Murphy said. The Colorado-based Mountain West Transmission Group has been floated by some Utah leaders as a possible alternative to CAISO, Murphy said. But there is limited connectivity between the Mountain West system and PacifiCorp's holdings, he said, and PacifiCorp has already established a relationship with CAISO.

And the Mountain West Transmission Group isn't looking to expand. Formed in 2013, the group already consists of seven power entities across Colorado, Wyoming, South Dakota, and small segments of Utah and Arizona.

"I think that's our profile we're looking at right now for our particular efforts," said Mark Stutz, a spokesman for Xcel Energy, which operates as the Public Service Company of Colorado, a member of the Mountain West Transmission Group.

epenrod@sltrib.com

 

 

 

 

 

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