The Sacramento “Car Wash”

Well, I write this from a Peet’s Coffee shop in El Dorado Hills, CA on a grey day here in the foothills of the Sierras. I’m on my first trip out West and trying to see the Board members of WPTF in the Northern California area, meet with our consultants to get a handle on all the excellent work they are doing for our members and to see some folks at CAISO… But first let me share this photo (below) on my way out of Sacramento out to El Dorado Hills. I thought to myself… “Hmmm, if I just stay on 50 long enough, I’ll get to the exit for my house in Maryland… just before the Chesapeake Bay Bridge.”

The week started with a trip to NYC to visit our Board members who reside in Manhattan. This whole process reminds me of the term that is used on ESPN Radio when a celebrity comes through the studios in Bristol, CT to promote a movie, a book, etc. These celebrities go on all the radio shows, all the major ESPN TV shows and appear on Sports Center. The crew at ESPN refer to it as the “Bristol Car Wash”. Well, I’m not a celebrity but I feel thoroughly “washed” at the moment.  I get on to Houston later to see our Board members there and I’ve got other trips to see Board members in other parts of the West… not to mention stakeholders in DC and elsewhere. Quite a change from the office environment of 888 First Street, NE (FERC) but quite stimulating.

One thing I have come to appreciate as I immerse myself in the world of my WPTF members (with Gary Ackerman’s guidance) is how the expansion and developments of markets seems to be invedible for the West as a whole. I know CAISO is engaged in a “staredown” with PEAK and its efforts with PJM Connect to come up with a market structure that might compete with EIM/ISO expansion. I am neutral as to the “winner” but as a market enthusiast I can only say that the competition is beneficial to anyone who shares the desire for expansion of efficient markets in the West.

At the same time, the WPTF members have issues with regard to market rules in the CAISO as the good folks in Folsom try to run a rational/reliable market while the state of California layers on varied and often confusing resource requirements. As I look to see how WPTF can help our members, working to see how we can help rationalize resource procurement is a difficult, but worthy, endeavor. My familiarity with how resources ae procured in other FERC-regulated areas and ERCOT meant that when I looked at California and what the CPUC orders and seems to want in evolving policy statements leads me to think of the term “belts and suspenders” on steroids. Perhaps our committees on CAISO and the CPUC can help sort out what the tangle. It really reminded me of a picture of utility lines in NYC at the turn of the 20th century…

nyc2.jpg

 

Finally, a personal thought on market expansion in the West. After a call from our WECC Committee I called my former colleagues at PJM and asked to speak to the staff in charge of working with PEAK. I just wanted to hear what they were doing and to offer myself as a conduit of information from the members of WPTF. As I said, I am neutral on PEAK versus CAISO expansion (I’m all for SPP/Mountain West – seems like a good fit for those folks). But I don’t want either option to die because of something that was preventable.

To that end, I know governance is a sticking point for CAISO expansion (true expansion, not EIM). I have said to several folks, both on the East Coast and in the West, that I see a real chance of a 206 complaint at FERC against the governance of CAISO. Order 2000 states that the governance structure of an RTO – or even an ISO under Order 888 – must be “independent”. The threshold for a 206 complaint under the Federal Power Act is that the part of a tariff that is the source of the complaint is “unjust and unreasonable”. I suggest that it is fairly easy for FERC to agree that an ISO tariff that governs transactions that involve interstate commerce but which is controlled by the Governor of one state is, on its face, “unjust and unreasonable”. Just a thought. I know FERC is a “four letter word” for many in the West but perhaps not in this case.

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