DOE grant for Pathways funding on hold due to federal government uncertainty

The West-Wide Governance Pathways Initiative is working on a draft budget as it plans the creation of a regional organization, although recent cuts at the federal government has put a significant portion of its expected funding on hold.

Pathways fiscal sponsor, Global Impact, was awarded about $900,000 from the US Department of Energy last year.

"Given some of the cuts and uncertainty with the federal government, that funding is currently on hold," Kathleen Staks, launch committee co-chair and executive director of Western Freedom, said during a Feb. 27 stakeholder meeting. "We're awaiting additional communication from DOE. With or without that DOE funding, the RO is going to need additional funding."

The committee plans to have a draft budget available later this spring, she added.

"We also recognize some of this forward momentum is also contingent in many ways on what happens in the legislature, so we're trying to balance that timing and balance those needs," Staks said.

Bill filed in California legislature

Senate Bill 540 was filed Feb. 21 to implement Step 2 of the West-Wide Governance Pathways Initiative that lays out plans to transfer governance authority over existing regional energy markets from the California Independent System Operator to a new regional organization.

"As a California stakeholder, we're really excited that a bill was introduced in California last week to enable Step 2 of the Pathways Initiative and we are doubly delighted that it was introduced by two authors of the Energy and Utilities Committee," said Evelyn Kahl, launch committee member and general Counsel for California Community Choice Association.

Essentially, SB 540 adds a section to the Public Utilities Code to authorize California investor-owned utilities and CAISO to participate in regional energy markets governed by an independent organization.

"The CAISO will be able to offer services to the RO that go beyond energy market operation to transmission, balancing authority services, transmission planning and other service areas which might allow some co-optimization of the California function with the RO functions," Kahl said.

A bill has to be enacted on or before Sept. 12, when the legislature adjourns. The governor then has a month to sign or veto the bill.

Formation committee

Step 2 included the creation of a formation committee that would be a subcommittee of the launch committee tasked with working on the implementation of the Step 2 proposal. There are also formation committee liaisons who are non-voting member who will provide feedback.

"Being able to share their expertise and experience with the formation committee as we're developing some of our implementation recommendations is going to be really critical," said Staks, who will also serve as the formation committee chair.

The launch committee is still the decision-making body.

CAISO staff will serve a technical and advisory role. They will not make decisions or influence directions, but will help identify limits and opportunities on what is possible and help the formation committee understand the stakeholder process, Staks said.

"Even though there is a bill moving through the California legislature, the launch committee and formation committee are not formally engaging on that," Staks said. "Individual members of the launch committee are engaging and they are engaging their organization."

Next steps

Step 2 includes three phases of work:

• Phase 1: Pre-implementation activities
• Phase 2: Implementation activities prior to RO board seating
• Phase 3: Implementation after RO board is seated

"The launch committee feels pretty confident that the 2027 date that is in the legislation will not be too early," Staks said. "We are committed not to get in the way of the operations of the EIM or EDAM. We're committee to taking the time to do an adequate amount of stakeholder process to make sure that we are getting the input that we need and really continuing to refine the recommendations as we look forwards and put these things into reality."

Nothing will be filed at FERC until the tariff change has been reviewed by stakeholders and the agreement between the RO and CAISO is finalized, Staks added.

"We're thinking that by the time we get FERC approval, we'll have all of the pieces in place so that the RO will be ready to go live," Staks said. "CAISO will have to certify all those pieces to make that governance transition."

None of the work that the committees are doing will interfere with the ongoing operations of the Energy Imbalance Market of the implementation of the Extended Day-Ahead Market, Staks added.

"Those things are critical, and we want to make sure that we are cognizant as we're talking about transitioning the governance over those markets to a new independent body that the actual operations of those market services can remain unhindered," Staks said.