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BPA to examine reliability service offer from CAISO

The Bonneville Power Administration on Feb. 26 said it is exploring whether to take reliability coordinator services from the California ISO or stay with its current provider, Peak Reliability.

Peak is joining forces with a PJM Interconnection subsidiary to potentially form an organized market in the western U.S. CAISO plans to leave Peak and become its own reliability coordinator, and it has encouraged other balancing authorities to join its effort.

In a news release, Bonneville said it needs to consider what is best for reliability as well as the potential cost implications to its customers. To do that, Bonneville signed two nonbinding documents the agency said would help preserve its flexibility while evaluating reliability coordinator service providers.

One of those documents is a letter of intent that enables Bonneville to participate in CAISO's stakeholder process as the grid operator forms its reliability coordinator service. The other is a revocable notice of withdrawal from Peak, effective Dec. 31, 2019. Peak requires 18 months notice of withdrawal, and Bonneville said this notice allows the agency to mitigate cost risks as it maintains the flexibility to evaluate the reliability coordinator options.

Reliability coordinators assess transmission reliability and coordinate emergency operations within a region and across the regional boundaries. Peak in 2014 spun off from the regional entity Western Electricity Coordinating Council and is responsible for coordinating reliability across 14 western states, two Canadian provinces and part of northern Mexico.

Peak and PJM Interconnection expect to have a final proposal ready for release in late March or early April but have indicated that the offering will have three prongs: the continuation of Peak's existing reliability coordinator services, market services and balancing authority services. A webinar to provide an update on the plan is scheduled for 10 a.m. Pacific Time on Feb. 27.

Peak spokeswoman Rachel Sherrard said Peak is allowing entities to retract their withdrawal at any time and continue taking reliability coordinator services, given the changes and new options being considered in the West. Sherrard said Peak has started to get revocable notices like the one from Bonneville, as expected.

"Peak considers the receipt of revocable notices as a positive sign that funding parties are not going to be rushed into making important reliability decisions and want to do their due diligence on each offering," Sherrard said in an email.

Sherrard said Peak is in confidential discussions with a number of parties about the Peak/PJM Interconnection reliability and market services options.

For its part, CAISO expects to launch its reliability coordinator service in 2019. A representative with the grid operator did not immediately respond to questions about other entities that have expressed an interest in its proposal.

Michelle Cathcart, vice president of transmission operations for Bonneville, said the reliability of the federal transmission system in the northwest and Western Interconnection are the agency's principal concerns.

"Our two actions today with CAISO and Peak ... will ensure we can maintain that reliability across our footprint as the region's utility providers, including some of our customers, decide which path to pursue for reliability coordinator services," Cathcart said.

Bonneville said the moves should not be seen as a determination of which entity it will pick to provide reliability coordinator services in the future. The agency said it will evaluate CAISO, changes at Peak, and any other potential reliability coordinator providers to figure out the best path forward for ensuring reliability and delivering value to the Northwest.

Bonneville added that a decision on reliability coordinator services is not tied to participation in a market like CAISO's energy imbalance market. The agency said it is exploring the possibility of joining such a market as another way of preserving the value of Northwest hydropower and transmission.