“Wax on, wax off”

First, let me suggest you watch this short video from YouTube below:

 

Learning how to run WPTF in anticipation of Gary Ackerman’s departure on June 30 has been challenging. First, directing a trade association is a unique skill set. Even if you’ve been a member of one, there are few jobs that prepare you for it. It’s rather a combination of cruise director, mixed with college administrator with treasury responsibilities. WPTF, to its credit, is even more unique with perhaps the broadest-based membership in our industry and robust committee structure. Hence it is no wonder that I sometimes joke that Gary is Mr. Miyagi – though he has yet to ask me to “paint the fence”…

As I sit in the airport departure lounge, I reflect on a wild, busy week. Some of you may recall in my last blog that I had heard a “rumor” of a bill coming up in the California

Legislature – presumably backed by Unions – that would solve the dilemma of what natural gas plants to keep for reliability by simply “choosing” them and let the others die off. No market signals, just a designation by “someone” and that some form of compensation would be forthcoming. In the last Burrito, Gary highlighted that the rumor had become draft legislation.

When I was in Sacramento at the beginning of the week, I was surprised to hear some openness to this kind of approach from parties you wouldn’t expect to like such a “Soviet” sounding plan. After talking with enough people about this, I began to get the sense that many in California are so worn down by the lack of a cohesive Resource Adequacy (RA) program, but the need is so great, that grudging acceptance of this draconian option might be a way forward. Pretty shocking to me, I must say. It reminded me of a bumper sticker I once saw in DC during the 1980s when nuclear tensions between the US and the Soviet Union were high. It read: “Nuclear War… Let’s get it over with.” That, my friends, is policy fatigue. Fortunately, that sentiment did not become pervasive and we won the Cold War… I think.

I had a great meeting with some senior CAISO managers and compared notes on a variety of issues, to include RA and CRRs. We talked about RA, the CPUC proceeding on RA and what was the “art of the possible” there. We agreed some changes to the CRR status quo were warranted but I disagreed on the CAISO’s proposed approach that would, in our view, limit the functionality of the CRR market and make it more opaque. However, we agreed that we would try to constructively engage the CAISO, even when we disagreed.

I came away from the meeting with some empathy of the CAISO situation. All ISOs and RTOs have difficult jobs to be the independent grid operator and market administrator. There will always be someone upset with you. For California, this may be worse in that it has a FERC tariff, but since 2002, the FERC has seemed to leave the CAISO to fight things out with the CPUC and legislature. The perception of this passive approach to tariff administration may be a recognition of how unpopular FERC was thought to be in California. FERC thus seems to have chosen not to antagonize state politicians by giving the CAISO tariff the same close scrutiny it had other markets. But I suspect this has made it even harder for the CAISO to resist state policies that are questionable and less likely to seek FERC help in this regard. When the Governor of California gets to appoint your Board, you aren’t very likely to ask the Feds to help you resist.

From there, I went to San Diego for our WPTF General Meeting at the very wonderful Grand Del Mar. Nice surroundings to have discussions, meet with our Board and hear from our Members and distinguished guests. I got to wrestle with my Board on how to update our Policy Statement on RA and a strategy for actually having the CPUC listen to us. This is one of the things I am learning about being the Executive Director… I may have my own views on RA but what you really have to do is listen to your members, share your views, but then try to reach some kind of outcome that is workable.

However, the real fun of the meeting – other than my ritual humiliation of golfing – were the speeches by our two distinguished guests. Andy Ott, the CEO of PJM, gave an interesting presentation on the PEAK/PJM effort to provide a market platform combined with Reliability services for the West outside of CAISO. Andy’s technical expertise was just what many members wanted in order to understand how such a platform might differ from the CAISO Energy Imbalance Market (EIM). The speech by FERC Commissioner, Robert Powelson, the next day offered some insight into just how the folks on 888 First Street viewed development of markets in the West, while ensuring reliability in California. Good stuff that our members found interesting and timely. Overall, the General Meeting demonstrated to me how WPTF is such a unique organization of perspectives and underlined its function as the “information clearinghouse” of the Western Interconnect. There is more to discuss from this past week but I hear in the background that I must now “paint the fence.” Must not end up like “grape.”

Learning how to run WPTF in anticipation of Gary Ackerman’s departure on June 30 has been challenging. First, directing a trade association is a unique skill set. Even if you’ve been a member of one, there are few jobs that prepare you for it. It’s rather a combination of cruise director, mixed with college administrator with treasury responsibilities. WPTF, to its credit, is even more unique with perhaps the broadest-based membership in our industry and robust committee structure. Hence it is no wonder that I sometimes joke that Gary is Mr. Miyagi – though he has yet to ask me to “paint the fence”…

As I sit in the airport departure lounge, I reflect on a wild, busy week. Some of you may recall in my last blog that I had heard a “rumor” of a bill coming up in the California

Legislature – presumably backed by Unions – that would solve the dilemma of what natural gas plants to keep for reliability by simply “choosing” them and let the others die off. No market signals, just a designation by “someone” and that some form of compensation would be forthcoming. In the last Burrito, Gary highlighted that the rumor had become draft legislation.

When I was in Sacramento at the beginning of the week, I was surprised to hear some openness to this kind of approach from parties you wouldn’t expect to like such a “Soviet” sounding plan. After talking with enough people about this, I began to get the sense that many in California are so worn down by the lack of a cohesive Resource Adequacy (RA) program, but the need is so great, that grudging acceptance of this draconian option might be a way forward. Pretty shocking to me, I must say. It reminded me of a bumper sticker I once saw in DC during the 1980s when nuclear tensions between the US and the Soviet Union were high. It read: “Nuclear War… Let’s get it over with.” That, my friends, is policy fatigue. Fortunately, that sentiment did not become pervasive and we won the Cold War… I think.

I had a great meeting with some senior CAISO managers and compared notes on a variety of issues, to include RA and CRRs. We talked about RA, the CPUC proceeding on RA and what was the “art of the possible” there. We agreed some changes to the CRR status quo were warranted but I disagreed on the CAISO’s proposed approach that would, in our view, limit the functionality of the CRR market and make it more opaque. However, we agreed that we would try to constructively engage the CAISO, even when we disagreed.

I came away from the meeting with some empathy of the CAISO situation. All ISOs and RTOs have difficult jobs to be the independent grid operator and market administrator. There will always be someone upset with you. For California, this may be worse in that it has a FERC tariff, but since 2002, the FERC has seemed to leave the CAISO to fight things out with the CPUC and legislature. The perception of this passive approach to tariff administration may be a recognition of how unpopular FERC was thought to be in California. FERC thus seems to have chosen not to antagonize state politicians by giving the CAISO tariff the same close scrutiny it had other markets. But I suspect this has made it even harder for the CAISO to resist state policies that are questionable and less likely to seek FERC help in this regard. When the Governor of California gets to appoint your Board, you aren’t very likely to ask the Feds to help you resist.

From there, I went to San Diego for our WPTF General Meeting at the very wonderful Grand Del Mar. Nice surroundings to have discussions, meet with our Board and hear from our Members and distinguished guests. I got to wrestle with my Board on how to update our Policy Statement on RA and a strategy for actually having the CPUC listen to us. This is one of the things I am learning about being the Executive Director… I may have my own views on RA but what you really have to do is listen to your members, share your views, but then try to reach some kind of outcome that is workable.

However, the real fun of the meeting – other than my ritual humiliation of golfing – were the speeches by our two distinguished guests. Andy Ott, the CEO of PJM, gave an interesting presentation on the PEAK/PJM effort to provide a market platform combined with Reliability services for the West outside of CAISO. Andy’s technical expertise was just what many members wanted in order to understand how such a platform might differ from the CAISO Energy Imbalance Market (EIM). The speech by FERC Commissioner, Robert Powelson, the next day offered some insight into just how the folks on 888 First Street viewed development of markets in the West, while ensuring reliability in California. Good stuff that our members found interesting and timely. Overall, the General Meeting demonstrated to me how WPTF is such a unique organization of perspectives and underlined its function as the “information clearinghouse” of the Western Interconnect. There is more to discuss from this past week but I hear in the background that I must now “paint the fence.” Must not end up like “grape.”

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