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CAISO updates proposed principles for regional grid governance

TheCalifornia ISO hasmade some changes to a series of proposed principles for governance of aregional grid operator in the western U.S.

CAISOand utilities in the West are considering the creation of a regional market,something that would necessitate a change in the grid operator's existingCalifornia-focused governance structure. The , released July 15,removes a principle about tracking greenhouse gas emissions, but adds newprinciples about when the final governance plan would become effective.

CAISOremoved the greenhouse gas tracking principle as "it is not directlyrelevant to corporate governance." The grid operator, however, said it hascommitted to developing a transparent mechanism for tracking and accounting forgreenhouse gas emissions across the new multistate balancing authority area.

"TheISO believes that a regional grid operator can enhance the transparency of thetypes of resources used to serve load, and, at the same time, support thedistinct policies of each state, including allocating any associatedadministrative costs to those with compliance obligations," the proposalsaid.

Accordingto the proposal, a successful regional governance plan would need to beapproved by the CAISO board and participating states. The proposal requiresthat any regional governance plan must be approved by each state'srepresentative to a transitional committee. There is also a role forCalifornia's governor, now Jerry Brown, and state lawmakers.

Theinitial proposal was the subject of two workshops in June. Revisions to the principles are meantto address comments from dozens of stakeholders. The revised proposal containseight categories of principles that address such issues as preservation ofstate authority, a transitional committee, a transitional period andcomposition and selection of a regional ISO board.

Oneprinciple that saw a number of changes is the idea of a body of stateregulators. For one, the name has been changed to the Western States Committee.This was done after the proposal was revised to allow states to appoint a nonregulatorrepresentative.

Basedon stakeholder comments, CAISO also added a nonvoting position for arepresentative of a federal power marketing administration.

CAISOfurther added a provision, to be developed further by a transitional committee,which allows CAISO to file tariff changes with FERC regarding the matterswithin the primary authority of the Western States Committee after a sustainedperiod of inaction by the committee. This is to ensure the grid operator isable to remedy a market flaw that could materially affect ratepayers.

Thisproposal, along with the finalstudy results on the effects of forming a regional market, will bediscussed at a July 26 workshop in Sacramento, Calif.

Afterstakeholders provide more input, the proposal will be refined for transmittalto the governor, who would then decide whether to present it to state lawmakersas a proposed modification of CAISO's governance. The principles then could beincorporated into state legislation that, if enacted, would also sunset theprovisions of CAISO's existing governance structure, the grid operator said.

Shouldthese principles be approved through California legislation, a transitionalcommittee of stakeholders and state representatives would be formed, similar tothe committee used to develop the EIM governance structure. The transitionalcommittee would integrate these core principles into a regional governance planand then oversee the preparation of corporate governance documents that implementthe plan.