A new draft of the California ISO's Proposal for "Principles for Governance of a Regional ISO" was released last week on October 7. The document lays out a vision for expanding CAISO to become a regional RTO encompassing other western states and was accompanied by a Discussion Paper and Draft Proposal on "Potential Topics within the Primary Authority of the Western States Committee." This follows the earlier draft of the document that was issued on July 15 and makes substantial revisions to the document in accordance with Governor Jerry Brown's request that the state take more time to work with CAISO and other parties to develop "a strong proposal that the Legislature can consider in January." This request came after CAISO's earlier proposals drew some criticism from stakeholders in other western states that would be affected by the implementation of a regional electricity market.
The new draft includes additional measures for protection of state-level authority over state-regulated matters such as "procurement policy and resource planning, as well as matters the ISO does not touch at all such as retail rate making, and Certificate of Public Convenience & Necessity (CPCN) approvals for utilities . . . , and resource or transmission siting . . . ." To ensure protection of these state-regulatory matters, the new proposal requires the ISO to establish a defined procedure for state or local authorities in participating states to raise "any such concern with ISO staff during the stakeholder policy development process and, if the matter is not resolved to their satisfaction during the policy development process, then with the ISO Board and the Western States Committee prior to approval of the proposed policy for filing at FERC." The proposal also makes changes to the structure and organization of the committee that would be tasked with transitioning CAISO into a regional RTO, including a requirement that each western state have a public official on the committee. In general, the revisions focus on increased participation by other (non-California) states and preservation of state authority: two areas that had been identified as concerns in earlier drafts.
While California is currently leading the effort toward regionalization, other western states and stakeholders will likely be faced with decisions about regionalization and RTO membership in the not-so-distant future. For example, in addition to the CAISO proposal, the Mountain West Transmission Group is also considering the development of an organized western market as well as RTO alternatives related to joint transmission tariffs.
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