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A revised document describing the guiding principals for the governance of California's proposed 11-state electrical grid calls for broader participation from other states and sets deadlines for the implementation of a new Independent System Operator.
According to the document, posted to the California Independent System Operator website on Friday afternoon, the CAISO decided to modify its original proposal based on public and stakeholder input to give states more direct representation earlier in the transition process.
California regulators believe assigning the dispatch of electricity across 11 western states to a central authority would improve efficiency, save electrical customers millions of dollars and, in the long run, reduce pollution that comes from electrical generation.
The original proposal suggested that the CAISO undergo a transition phase, during which time the board would add three new members to represent outside states, but leave the five current members, as appointed by the California Legislature, in their positions. It was not clear what would take place when their terms expired.
The new proposal calls for moving to an entirely new nine-member board immediately via a nomination and approval process developed by the Transitional Committee. That body will be comprised of one representative from each state participating in the regionalized grid, as well as a cross-section of industry stake holders.
According to the revised proposal, the Transitional Committee will have nine to 12 months to develop and submit a regional governance plan detailing the appointment of the new ISO board and other details. That plan will be submitted to the sitting ISO board, the governor of California and the Federal Energy Regulatory Commission for approval.
Once the plan takes effect, the ISO will begin seating new board members within 18 months.
Like the original proposal, the document calls for the creation of a Western States Committee, previously called the Body of State Regulators, that will be incorporated as a nonprofit entity separate from the board of the ISO, but still funded by the ISO. Language preserving the authority of states over issues already regulated by the states, such as energy policy and local power rates, also remains. The previous greenhouse gas monitoring mandate has been removed.
In a statement, company spokesman Paul Murphy said that at first review, Rocky Mountain Power was pleased with the changes made to the proposal, but that it would take more time to conduct a full analysis.
A new proponent of the regional grid proposal also heralded the revisions as improvements.
"I think they're listening to what people are saying, and my expectation is that they are now going to try to draft some legislative language and begin the transition," said Don Furman, manager of Fix the Grid West. The broad coalition represents everything from industry players like General Electric, Sunpower and the American Wind Energy Association to advocacy groups such as the Environmental Defense Fund and the Natural Resources Defense Council.
Furman said independence is the gold standard the ISO must reach for if it is to convince states like Utah and Wyoming to sign the deal. The board that will oversee the regional grid must be not only separate from California state government, he said, but also independent of the economic interests of any one party, and should include diverse voices.
"Unless there is a complete shift to independence, and I mean true independence, I can't imagine that Utah or Wyoming or even Oregon or Washington would sign onto this," he said.
But this will be a challenge for California, Furman said. Though there are other regional grid systems in the U.S., he said, those were created when a group of utility companies came together and decided to create a cooperative. He said the California proposal is unique because the entity proposing to manage the system not only already exists, but is the creation of California statute.
Nonetheless, Furman said, Fix the Grid West believes the expansion of the CAISO would be the most cost effective way to unify the western grid and drive economic efficiency and reduce power costs, prove more reliable power, and take better advantage of renewable energy resources.
But Michele Beck, director of the Utah Office of Consumer Services, said that although the revisions appear to contain some improvements, she felt there are still too many unknowns for her to determine whether joining an expanded CAISO would be beneficial to Utah ratepayers.
Utah lawmakers also moved on Wednesday to begin creating a bill that would give them the ability to block or approve the participation of Utah utility companies in CAISO's regional grid.
Still, Furman said he's still optimistic about the potential for collaboration.
Utah had "a good early stage meeting to start talking about the issues," he said. "I felt people were expressing opens, albeit with concerns, and they should have concerns. This is a serious issue, and concerns need to be aired and discussed, so I was not at all discouraged by this."