Bonneville Power Administration
Submitted 06/11/2021, 03:09 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
Support.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
The Bonneville Power Administration (Bonneville) continues to support the dedication of effort of the Governance Review Committee (GRC) in proposing its Phase 2 Straw Proposal – Delegation of Authority Issues dated May 12, 2021 (Phase 2 Straw Proposal), and supports the overall direction of the GRC’s recommendations. Bonneville agrees with the GRC and finds this Phase 2 Straw Proposal expands the scope of issues that the CAISO Board of Governors (Board) and the EIM Governing Body (EIM GB) will share approval authority for. As such, the Board and EIM GB will be well-positioned to jointly consider, debate, and decide matters of importance to the EIM. That said, Bonneville has been consistent with its comments since the inception of the GRC effort that an independent EIM governance structure is the end goal—and is of high importance to its stakeholders. Bonneville understands the limitations to governance independence that CAISO faces absent new legislation in California, and therefore supports the GRC’s proposal as an incremental improvement.
3.
Provide detailed comments on the scope of joint authority proposal:
Bonneville is supportive of the GRC’s delineation of scope of issues for joint authority of the Board and the EIM GB. Bonneville finds this definition simple and straightforward to facilitate quick identification of authority for an issue. The GRC defines the joint authority scope as:
Joint Authority extends to all proposals to change or establish any CAISO tariff rule(s) applicable to the EIM Entity balancing authority areas, EIM Entities, or other market participants within the EIM Entity balancing authority areas in their capacity as participants in EIM. This scope excludes from joint authority, without limitation, any proposals to change or establish tariff rule(s) applicable only to the CAISO balancing authority area or to CAISO-controlled grid.
Bonneville appreciates the effort by the CAISO staff, at the GRC’s direction, to identify which topics might be within joint authority as described in the Phase 2 Straw Proposal attachment. The effort is helpful to envision potential joint authority designations; however, Bonneville understands the attachment to be illustrative only and not reflecting any GRC or stakeholder consensus. Bonneville expects this document to play no role in future classification decisions. Rather, Bonneville expects that each potential topic designation would be made on its own merits, based on the GRC’s proposed test, through a transparent stakeholder debate and comment process. The substance of any new proposal held up to the standard described above should determine whether it is subject to joint authority and not the randomly chosen location in the CAISO tariff.
Given that this is a unique balancing of authorities, Bonneville suggests that it may be beneficial for the governing bodies to set an agenda item on a time certain, in perhaps one year, to review how the delineation of issues has worked in practice.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The Phase 2 Straw Proposal puts forth an alternative to potential dual Section 205 filings at FERC. Specifically, the proposal states:
If the two bodies do not on the first try both agree to approve a proposal that is subject to their joint authority, the matter would be remanded to CAISO Staff to identify through the stakeholder process a revised proposal that both bodies could approve.
If, however, after following this process, the two bodies still remain deadlocked and cannot agree jointly on a next step, then the Board of Governors could, as a last resort, authorize a FERC filing if, and only if, all of the following conditions are met:
The Board, by unanimous vote, makes both a finding that the two bodies are at an impasse and that exigent circumstances exist such that a revision to the tariff is critical to preserve reliability or to protect market integrity.
The CAISO would be required to include in its FERC filing whatever written opinion or other statement the EIM Governing Body may want to offer regarding the proposal.
The EIM Governing Body would have a right, at its discretion, to retain outside counsel to assist in preparing any such written opinion/statement on the proposal.
Bonneville is supportive of the EIM GB having the option of retaining outside counsel, if necessary, to present comments it deems essential to a FERC filing arising from a deadlock scenario. Bonneville emphasizes the importance of the BOG’s vote being unanimous. Further, Bonneville believes (a) exigent circumstances means a change is necessary for reliability or market integrity; and (b) the proposal should include an additional requirement for the Board to provide a written explanation of what the exigent circumstances are.
Bonneville also proposes that costs associated with such outside counsel used by the EIM GB be paid by all EIM participants—as the duty of the EIM GB is to the market, which benefits all.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
Bonneville has no additional comments.
California Public Utilities Commission - Energy Division
Submitted 06/11/2021, 04:00 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
The Energy Division staff of the California Public Utilities Commission (ED staff) appreciates this opportunity to provide comments on the Energy Imbalance Market (EIM) Governance Review Committee (GRC) straw proposal and workshop discussion.
ED staff supports the overall effort to improve coordination in the West and recognizes that some form of shared governance authority is foundational in order to move forward with an Extended Day-Ahead Market (EDAM) and other forms of regional market coordination. The straw proposal incorporates a number of constructive elements that move us in this direction and can lead to greater engagement between California entities and other market participants.
ED staff appreciates the GRC’s efforts to outline which general areas of the tariff would be subject to joint authority, supports elimination of the dual filings, and generally agrees with the clarifications regarding the CAISO Board’s ability to move forward with Federal Energy Regulatory Commission (FERC) filings if exigent circumstances exist. At the same time, ED staff recommends that the proposal be modified, as described further below, to:
- Further clarify what issues will fall under joint authority and which issues remain under CAISO Board authority;
- Change the approval required for determination that the two bodies are at an impasse and that exigent circumstances exist to a super majority vote, rather than a unanimous approval requirement;
- Expand the CAISO Board’s ability to move forward with a FERC filing under exigent circumstances with a unanimous vote of the CAISO Board, without two rounds of stakeholder consideration and CAISO Board votes; and
- Allow the EIM Governing Body to obtain outside counsel for opinions on Section 205 FERC filings, but clarify that this should be funded solely by EIM participants, not by California ratepayers.
In addition, ED staff discusses its position regarding 1) dispute resolution regarding decisional classification, and, 2) issues surrounding the durability of the delegation of authority.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
ED staff appreciates the straw proposal and the draft tariff table of contents illustrative designation mark-up, as this effort does help stakeholders better understand the GRC’s intended policy directions.
3.
Provide detailed comments on the scope of joint authority proposal:
With regard to the scope of joint authority, in the latest straw proposal, the GRC:
- Includes in the scope of joint authority proposals to change or establish any CAISO tariff rule(s) applicable to the EIM entity balancing authority areas (BAAs), EIM entities, or other market participants within the EIM entity BAAs in their capacity as participants in EIM.
- Excludes from joint authority proposals to change or establish tariff rule(s) applicable only to the CAISO BAA or to the CAISO-controlled grid.
Further, the GRC states that, “This definition would establish a clear and straightforward rule that is easy to understand and use. If a rule applies to an EIM Entity or to market participants within an EIM Entity BA, then it is subject to Joint Authority. If a rule does not apply to such entities, then the approval authority is held solely by the Board.”
However, based upon discussions at the workshop, the definition is already leading to disagreements about its scope and could use more clarification, as evidenced in conflicting comments about the wheeling issue currently under consideration in a Section 205 filing at FERC. Thus, it will be important for the GRC and CAISO to provide more real-world examples of what would be included based upon the clear and straightforward rules. This could be done in workshops and/or in further discussions and documentation.
Based on ED staff’s reading of this rule, nearly everything pertaining to the real-time market would be under joint authority because EIM entities participate in the real-time market, and thus any change to the real-time market rules would affect them. ED staff assumes that this is not the intent of the “applies to” language; staff assumes that the intent of the language is to limit the rules to those that are applicable to an EIM entity’s participation in the EIM market- but this broader applicability is a reasonable interpretation of the language, as evidenced by the positions of parties in the workshop and comments on the proposal. In addition, as currently constructed, system market power mitigation would affect only CAISO entities; however, if CAISO proposes that system market power would affect all entities, this would fall under joint authority.
It is important to keep in mind that participation in the CAISO market is not voluntary for California load-serving entities (LSEs), as it is for EIM participants, and the market rules disproportionately affect California customers since most if not all of their energy runs through the market (i.e., all resource adequacy resources have a must-offer obligation, and all of the CAISO load clears through the market as well). Thus, California is disproportionately affected by any rule changes, and the delineation of authority for these critical issues is of paramount importance to California consumers.
Therefore, to reiterate, ED staff requests more clarity regarding what falls both within and outside of joint authority. It would be helpful if the next iteration of the GRC proposal addresses these types of issues specifically so that all parties understand the delegation of authority and exactly what will change under the new governance construct proposed with the joint authority model.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
With regard to the process for resolving potential deadlocks, in the latest straw proposal, the GRC:
- Provides strong incentives for both bodies to resolve any differences of opinion before filing at FERC; at least two attempts to find agreement must be made.
- Removes dual filings from its proposed dispute resolution process, but permits the CAISO Board to move forward with a FERC filing in the case of an intractable impasse as determined by unanimous vote of the CAISO Board, where exigent circumstances exist.
- Empowers the EIM Governing Body to address at FERC any tariff filing made under this narrow exigent circumstances provision, including the retention of outside counsel.
These generally are positive steps forward, and ED staff in particular appreciates this proposal’s avoidance of the “dual FERC filings” concept that many stakeholders argued would be unworkable in practice. At the same time, we are concerned about the approach required for a determination of “exigent circumstances.” Namely, if a single CAISO Board member is not in agreement that the two bodies are at an impasse and that exigent circumstances exist (such that a revision to the tariff is critical to preserve reliability or to protect market integrity), this appears to stifle CAISO’s ability to act to preserve reliability or protect market integrity, as deemed vital by the other four members. Therefore, ED staff recommends that the requirement be modified to require only a super majority of the CAISO Board members, especially given that CAISO staff will have made two attempts to resolve this with stakeholder input and Board votes.
In addition, ED staff is concerned that this process does not allow for swift enough approval of tariff changes that might be required in an emergency. Thus, ED staff recommends that under exigent circumstances, with a unanimous vote of the CAISO Board the CAISO be empowered to move forward with tariff changes without two stakeholder efforts and two Board votes. By way of example, would CAISO have been able to file its summer reliability tariff changes had it been required to conduct two stakeholder processes and two CAISO Board votes before submitting them to FERC, if the EIM Governing Body had opposed them?
Finally, although not as significant an issue, ED staff is concerned about the cost sharing proposal discussed at the workshop regarding funding for the outside counsel that the EIM Governing Body can retain to defend any objection to a Section 205 FERC filing. The proposal provides that the CAISO Board can make a filing over the objection of the EIM Governing Body, but that CAISO is required to include whatever written opinion or statement the EIM Governing Body may offer and the EIM Governing Body would be able to retain outside counsel in preparing the opinion/statement. At the workshop, GRC members suggested that this could/would be funded through uplift charges through the real-time market, which are funded in large part (roughly 80 percent) by California CAISO customers.
ED staff does not object to the EIM Governing Body retaining counsel, but opposes funding outside counsel in this manner, especially to oppose a proposal that the CAISO Board has approved. Therefore, ED recommends that these costs be borne by EIM entities themselves, and requests that the next iteration of the GRC proposal specifically addresses funding for outside counsel with an eye toward adherence to cost-causation principles.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
ED staff appreciates the opportunity to comment on the EIM GRC straw proposal and workshop discussion and looks forward to reviewing the revised GRC proposal and to continuing participation in the stakeholder process.
Additional Comments Regarding Decisional Classification
ED staff submits the following comments on two issues not directly discussed in the straw proposal and workshop.
Decisional Classification Dispute Resolution. The straw proposal issued by the GRC on May 12, 2021 does not discuss decisional classification dispute resolution (i.e., resolving disputes regarding whether a stakeholder initiative and the associated tariff changes are solely within the scope of the CAISO Board or under shared authority with the EIM Governing Body). However, ED staff is concerned that the existing and proposed process could result in the CAISO Board being outvoted on decisional classification if the EIM Governing Body is expanded or if the CAISO Board is not fully seated.
The previous GRC proposal, issued on December 14, 2020, explained the decisional classification process, as follows:
At the conclusion of each stakeholder process, before any proposed tariff amendment is submitted for approval, CAISO staff reports the proposed final classification to the chairs of the Governing Body and the Board, along with any stakeholder objections to the classification that were made in comments on the draft final proposal. This notification is made in a public notice that is posted on the CAISO’s website and includes the date by which any comments on the classification are due back from the two chairs. If neither chair objects to the proposed classification, then it becomes the final classification used to obtain approval for the initiative.
If either chair objects to the proposed final classification, the two chairs will confer together and if necessary with CAISO staff to attempt to resolve the matter. If the chairs are unable to reach agreement, then a dispute resolution process is triggered that involves the two bodies meeting together as a “committee of the whole” to decide the proper classification, after providing all stakeholders an opportunity to submit further comments on the proposed classification. The decision is then made by a vote of the combined members of both bodies, with the majority prevailing. In the event of a tie vote, the chair of the Board breaks the tie. (Emphasis added.)[1]
Because the decisional classification is made by a vote of the combined members of both bodies, the CAISO Board would not retain its ability to break ties regarding decisional classification if the EIM Governing Body was expanded or if the CAISO Board was not fully seated (this likely is at odds with what the GRC intended). Therefore, to address this issue, ED staff recommends that this process be amended to specify that the EIM Governing Body and the CAISO Board each be provided 50 percent of the votes and that the CAISO Board chair retain the ability to break any ties regarding decisional classification.
Durability of the Delegation of Authority. In addition, the straw proposal issued by the GRC on May 12, 2021, does not discuss the durability of the delegation of authority. However, in its previous Revised Straw Proposal, the GRC had discussed what would occur if a large number of EIM entities indicated their intent to withdraw, and the GRC recommended the following:
[W]e recommend that if EIM Entities representing 85 percent of the highest annual net energy for load in the participating balancing authority areas outside of the CAISO Balancing Authority Area have given notice of their intent to withdraw, then the CAISO Board would have the discretion, by unanimous vote, to rescind the delegation of authority without waiting for the 180-day notice period or the 45-day negotiation period to elapse. This would ensure that the Board can promptly approve whatever tariff amendments or other changes may be necessary to restore the workability of the market. (Footnotes omitted.)[2]
In previous comments, issued on February 3, 2021, ED staff indicated that this 85 percent threshold was too high (as it is based on total load of entities, not the load participating in the EIM market) and recommended the following:
Use a more lenient threshold for the loss of load that could trigger CAISO to rescind delegated authority than the currently proposed 85% threshold (e.g., trigger rescission of joint authority if load in the EIM falls below the net energy for load in the CAISO BAA). In particular, ED staff recommends that the GRC consider setting the threshold as the EIM falling below the net energy for load in the CAISO BAA, which at today’s load levels, is roughly equivalent to 50%.
ED staff requests that the GRC consider this recommendation in its next straw proposal iteration.
[1] Western EIM Governance Review, Governance Review Committee, Revised Straw Proposal, December 14, 2020, pp. 19-20.
[2] Western EIM Governance Review, Governance Review Committee, Revised Straw Proposal, December 14, 2020, p. 23.
California Public Utilities Commission - Public Advocates Office
Submitted 06/11/2021, 12:05 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is generally supportive of exploring improvements to the Energy Imbalance Market (EIM) through the EIM Governance Review process.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
The EIM Governance Review Committee’s (GRC) May 12, 2021, Straw Proposal – Delegation of Authority Issues (May 2021 Straw Proposal) provides greater clarity on the issues that are of common concern for EIM participants and addresses some of the issues that specifically impact California ratepayers. In this respect, it is an improvement over the previous version.
The May 2021 Straw Proposal addresses two EIM Governance Delegation of Authority issues: (1) scope of the Joint Authority and (2) the process for resolving “deadlocks” between the EIM Governing Body (GB) and the CAISO Board of Governors (CAISO Board). The remaining two Delegation of Authority issues, Durability of the Delegation of Authority model and Decisional classification dispute resolution were not addressed in this proposal.
In the May 2021 Straw Proposal, the scope of the EIM GB and CAISO Board Joint Authority is limited to rules that apply to EIM entities and market participants in the EIM Entity Balancing Authority Areas (BAA), while excluding rules that apply only to the CAISO BAA.[1] Specifically, the proposed scope of Joint Authority identifies sections of the CAISO tariff that the EIM GRC recommends fall under Joint Authority (i.e., the EIM GB and CAISO Board equally oversee the proposed market rules) and identifies the sections of the CAISO tariff that should remain under the exclusive authority of the CAISO Board.
However, certain identified subsections of the CAISO tariff recommended for Joint Authority in the May 2021 Straw Proposal pertain to CAISO BAA alone and, therefore, should remain under the exclusive authority of the CAISO. For this reason, Cal Advocates recommends refinements to the May 2021 Straw Proposal to specifically identify subsections and elements that should remain under the exclusive authority of the CAISO Board, as specified in Item 3 below.
The May 2021 Straw Proposal process for resolving “deadlocks” is an improvement from the December 14, 2020 Straw Proposal[2] in that it recommends that if the EIM GB and CAISO Board are unable to agree on a market proposal after two stakeholder process iterations, the CAISO Board can proceed with a Federal Energy Regulatory Commission (FERC) filing to implement the market proposal if certain conditions are met.[3] However, Cal Advocates remains concerned that the proposed conditions may be too narrow and may hamper the CAISO’s ability to address critical market and reliability issues. While the May 2021 Straw Proposal is an improvement in that it avoids dual FERC filings from the EIM GB and the CAISO Board, Cal Advocates recommends refinements to this proposal to address emergency circumstances as described in response to Item 4 below.
[1] Straw Proposal on Key Aspects of the Delegation of Authority Issue, EIM Governance Review Committee, May 12, 2021, p.1.
[2] Western EIM Governance Review, Governance Review Committee, Revised Straw Proposal, Governance Review Committee, December 14, 2020, p. 14.
[3] EIM Governance Review Committee Workshop on Delegation of Authority Issues (Presentation), EIM Governance Review Committee, May 20, 2021, slide 9.
3.
Provide detailed comments on the scope of joint authority proposal:
Cal Advocates recommends that market rules that concern California BAA resource adequacy and resource sufficiency requirements ensure compliance with California environmental policy, govern the use of California transmission facilities, or are core to the function and operation of the CAISO, remain under CAISO authority.
Accordingly, we recommend that the following subsections in the CAISO tariff that the EIM GRC proposes for Joint Authority remain under the exclusive authority of CAISO only:
- Flexible Ramping Sufficiency Determination (subsection 29.34 EIM Operations (m))
- Locational Marginal Prices (subsection 27.1.1)
- Full Network Model (subsection 27.5)
- Treatment of Resource Adequacy Capacity in the Real Time Market (subsection 34.15)
- Determination of Uncertainty Requirement (subsection 44.2.4)
- Incremental Cost Calculation Under the Variable Cost Option, (b) Calculation of greenhouse gas cost adder (subsection 39.7.1.1.1)
- Calculation of Greenhouse Gas Allowance Prices (subsection 39.7.1.1.1.4)
- Methodology for Determining Day-Ahead Competitive Path Designations for Path 15 and Path 26 Transmission Constraints (subsection 39.7.3.3)
- Methodology for Determining RTM Default Competitive Path Designations for Path 15 and Path 26 Transmission Constraints (subsection 39.7.3.4)
These identified subsections pertain to the CAISO BAA only and enable the CAISO to confirm the system’s resource adequacy needs and impose the California Public Utilities Commission’s resource adequacy requirements on California Load Serving Entities, as well as ensure reasonable energy prices, address specific California facilities, or ensure compliance with California environmental policies. Therefore, there is sufficient justification to exclude these sections from the Joint Authority proposal.
While relying on the table of contents of Section 29 of the CAISO tariff that covers the rules that apply to EIM participants seems reasonable it is not sufficient for avoiding rules that apply to California BAA.[1] For this reason, the Public Advocates Office recommends additional discussion on issues of critical concern for EIM participants outside of California and for California BAA and the CAISO to finalize the Joint Authority proposal.
[1] Straw Proposal on Key Aspects of the Delegation of Authority Issue, EIM Governance Review Committee, May 12, 2021, p. 2.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The dispute resolution proposal to resolve “deadlocks” between the EIM GB and the CAISO Board would permit the CAISO Board to submit a proposal to FERC for approval in the event of an unresolved dispute with the EIM GB only if certain conditions are met. Cal Advocates proposes the following modifications to these conditions for the following reasons:
- At least
two one [stakeholder process] attempts to find agreement must be made.[1]
Given that a CAISO stakeholder process can take a year to complete, we recommend that the CAISO maintain its authority to proceed with short-term solutions through one stakeholder process such as the short-term solutions presented in the Market Enhancements for Summer 2021 Readiness Initiative. The CAISO should maintain its capacity to resolve reliability or market integrity issues such as widespread outages or unreasonable energy prices within a timeframe that avoids continued harm to ratepayers.
- As a last resort, the [CAISO] Board may authorize FERC filing if the Board, by majority
unanimous vote, makes a finding of impasse and that the proposed revision to the tariff is critical to preserve reliability or to protect market integrity[2] e.g., revision is needed to avoid outages or energy prices for California ratepayers that are significantly above the norm and unreasonable.
The existing CAISO Bylaws allow an affirmative vote of many of the CAISO Board of Governors to serve as an act of the Board.[3] Therefore, a unanimous vote should not be a required condition to allow the CAISO to address an emergency circumstance.
Cal Advocates also agrees with the comments made during the EIM GRC meeting on May 20, 2021 that further clarity is needed on the definition of “exigent circumstances” to ensure that it is not too narrow that the CAISO Board cannot take necessary actions to address emergency conditions.[4] If market rules exist that contribute to wide-spread outages such as those experienced in Summer 2020, the CAISO should be able to proceed with a FERC filing to address these rules without consent from the EIM GB.
- The CAISO is required to include whatever written opinion or other statement the EIM GB may want to offer regarding the proposal.
The EIM GB would be able to retain outside counsel in preparing opinion/statement.
Cal Advocates recommends the EIM GB clarify its market proposal concerns in a FERC filing rather than through a separate written opinion from an outside counsel.
An EIM participant can already use its own legal counsel to assist with its stakeholder comments during a CAISO stakeholder initiative process. If an EIM participant opposes a CAISO proposal, opposing arguments are already summarized in the stakeholder engagement summary included in CAISO FERC filings. If the EIM GB offers an opinion on a market proposal, it would also be included in the CAISO’s summary of the proposal deliberation in the FERC filing. Allowing a separate opinion from the EIM GB to accompany a CAISO FERC filing could hamper efficient FERC decision making, especially when addressing emergency circumstances. For these reasons, Cal Advocates does not support the request for funding for outside counsel to draft opposing opinions to accompany FERC filings because this separate opinion seems duplicative and unnecessary.
[1] EIM Governance Review Committee Workshop on Delegation of Authority Issues (Presentation), EIM Governance Review Committee, May 20, 2021, slide 9.
[2] EIM Governance Review Committee Workshop on Delegation of Authority Issues (Presentation), EIM Governance Review Committee, May 20, 2021, slide 9.
[3] Amended & Restated By Laws of California Independent System Operator Corporation, Section 12 Voting of Governors, 12.1. General, p. 4.
[4] Customized Energy Solutions, California ISO (CAISO) Energy Imbalance Market Governance Review Committee Meeting, May 20, 2021, p. 2.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
Cal Advocates recommends that the May 2021 Straw Proposal clarify that the scope of Joint Authority not include rules on the use of, and prioritization of California transmission infrastructure, such as rules regarding wheel through prioritization of California interties and transmission lines. The scheduled use of CAISO transmission should be within the exclusive jurisdiction of the CAISO Board and outside the EIM GB scope of authority. The CAISO has stated in different forums that it will address issues with wheel through priorities on California transmission infrastructure through a separate CAISO initiative later this year. Cal Advocates supports resolving issues with wheeling priorities on California interties and transmission through a separate CAISO stakeholder process.
Joint Commenters
Submitted 06/11/2021, 03:54 pm
Submitted on behalf of
American Clean Power Association, California Municipal Utilities Association, Environmental Defense Fund, Environmental Entrepreneurs, Independent Energy Producers Association, Natural Resources Defense Counsel, Union of Concerned Scientists, Professor William Boyd, Professor Arun Majumdar, Professor James Sweeney
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
The Joint Commenters support the Straw Proposal.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
The Joint Commenters appreciate the opportunity to submit these comments in support of the Straw Proposal presented at the Governance Review Committee (“GRC”) meeting held on May 20, 2021. Joint Commenters represent a diverse group of California and national stakeholders including environmental, business, and energy groups that have watched Western regional market debates for many years. The Joint Commenters support the Straw Proposal as a logical incremental step toward greater regional collaboration that should improve existing governance structures in the process.
Regional collaboration among Western states, including California, is a foundational part of achieving state decarbonization goals. It is difficult to foresee how California will meet its zero carbon goals articulated by Senate Bill 100 reliably and affordably without enhanced regional collaboration. Not only are resources in the future portfolios likely to involve out-of-state zero carbon resources, but transmission may be needed to interconnect such resources. As such, it is difficult to foresee a clear path forward without a partnership with our neighboring states. The Joint Authority proposal is a needed step to further regional collaboration. It shows our neighbors that we are serious about our future partnerships with them. Indeed, our neighboring states, such as Colorado and Nevada, are moving forward and legislating on how their utilities will study and participate in future Western regional markets. California needs to be at that table.
3.
Provide detailed comments on the scope of joint authority proposal:
The Energy Imbalance Market (“EIM”), kicked off by PacifiCorp and the CAISO in 2014, has been an unqualified success. It has reduced costs and emissions through more efficient dispatch of generation and utilization of transmission, resulting in well over $1 billion in savings. When PacifiCorp and the CAISO commenced their initiative, few would have predicted that it would grow to encompass approximately 80% of the consumer demand in the Western Interconnection, based on the current implementation plans. As a result of the EIM’s success, the GRC was formed by the CAISO Board of Governors and the EIM Governing Body to assess governance structures that would reflect the growth of the EIM, and possibly lay the foundation for greater regional collaboration.
The GRC’s Straw Proposal is a Joint Authority model which would require both the CAISO Board of Governors and the EIM Governing Body to approve any market design element that would be filed at the Federal Energy Regulatory Commission (“FERC”) if the filing involves CAISO Tariff provisions that apply to the EIM Entities in their capacity as EIM participants. This is a common-sense proposal because these provisions of CAISO rules directly apply to the EIM Entities and their customers, and the EIM Governing Body was set up specifically to focus on market rules that are applicable to the EIM. Today, many rules that apply to EIM Entities are only under the advisory authority of the EIM Governing Body because EIM is not the “primary driver” of the proposed market changes. This rule is not well-adapted to a growing EIM, nor does it lay a foundation for additional regional market opportunities.
The Joint Commenters support the Straw Proposal because it requires greater collaboration between the CAISO Board of Governors and the EIM Governing Body. Today many important items go the CAISO Board of Governors consent agenda where they receive little or no discussion. Greater collaboration is needed as regional market issues achieve greater prominence.
It is also important to note what the Joint Authority proposal does not do. It does not replace the CAISO Board with an independent Board. It does not modify the Governor’s appointment powers for the CAISO Board, nor the prerogatives of the Senate to confirm such appointments. Further it does not apply to rules such as Resource Adequacy, congestion revenues, or transmission planning, for example, because these rules do not apply to EIM. The proposal does, however, give the Board the ability to essentially veto any market changes that are proposed to go to FERC, and provides the Board with powers to act unilaterally in certain conditions such as an imminent threat to reliability or market integrity.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The Joint Commenters believe the dispute resolution mechanism in the Straw Proposal is appropriately streamlined and avoids many of the pitfalls inherent in the “dual FERC filing” concept introduced in earlier proposals. The Straw Proposal provides incentives for the CAISO Board of Governors and EIM Governing Body to work things out in the West, not at FERC.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
In short, the GRC’s Joint Authority proposal furthers California’s climate policies, is a needed step toward greater regional collaboration, reflects the tremendous growth of the EIM, and recognizes the continued sole role of the CAISO Board on matters central to California policy. It is a common-sense proposal that the Joint Commenters urge be immediately adopted.
Joint EIM Entities
Submitted 06/11/2021, 10:36 am
Submitted on behalf of
Avista, Arizona Public Service, Balancing Authority of Northern California, Bonneville Power Administration, Idaho Power Company, Los Angeles Department of Water and Power, NorthWestern Energy, PacifiCorp, Portland General Electric Company, Public Service Company of New Mexico, Puget Sound Energy, Salt River Project, Seattle City Light, Tacoma Power, Tucson Electric Power, Turlock Irrigation District, Xcel Energy
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
Support
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
The Joint Western Energy Imbalance Market (“EIM”) Entities appreciate the opportunity to comment on the May 12, 2021 Straw Proposal on Key Aspects of the Delegation of Authority Issue. The EIM Entities continue to thank the members of the Governance Review Committee (“GRC”) for their hard work, thoughtful consideration of these complex issues and stakeholder comments, and well-reasoned proposal.
As we noted previously, the GRC’s Revised Straw Proposal represents a significant step forward in enhancing independent governance of the EIM and the potential expansion to the Day-Ahead Market (“EDAM”), within the boundaries of existing California law. A guiding principle that has guided the EIM Entities since the beginning of discussions on EIM and EDAM governance is to reflect the integrated nature of the EIM and potential EDAM markets while also respecting the limitations on governance structures that must ensure that the CAISO Board of Governors must retain key authorities consistent with fiduciary duties as governors of the corporation as a whole. Therefore, the Joint EIM Entities are supportive of the changes made to the scope of joint authority proposal, as detailed further in these comments. Additionally, the Joint EIM Entities are generally supportive of the proposed dispute resolution process.
3.
Provide detailed comments on the scope of joint authority proposal:
Under the May 12, 2021 Straw Proposal, joint authority would extend to all proposals to change or establish any CAISO tariff rule applicable to the EIM Entity BAAs, EIM Entities, or other market participants within the EIM Entity BAAs in their capacity as participants in EIM. Section 29 would operate as a key dividing line.
In comparison to the July 2020 Straw proposal, in which the Governing Body would have had joint authority over any and all proposed changes to the real real-time market, the proposals have moved further away from independent oversight. Now, joint authority would only apply to a tariff rule applicable to the EIM Entities and their customers in their capacity as participants in EIM.
Nonetheless, the May 12, 2021 Straw Proposal is an improvement over the status quo, and to that extent, the Joint EIM Entities are supportive.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The Joint EIM Entities appreciate the GRC’s attempt to simplify the dispute resolution “jump ball process”, which led to dual Section 205 filings. The May 2021 Straw proposal attempts to provide opportunities to find agreement amongst the parties. The Joint EIM Entities appreciate this attempt and are generally supportive of this process.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
Northwest Requirements Utilities
Submitted 06/03/2021, 01:21 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
Thank you for the opportunity to provide comments on the Governance Review Committee’s (“GRC’s”) delegation of authority proposal presented to stakeholders on May 20, 2021 (the “May 20 proposal”). As you know, Northwest Requirements Utilities (“NRU”) is a trade association representing the common interests of 55 Load Following, Network Transmission customers of the Bonneville Power Administration (“BPA”). NRU members purchase a significant amount of BPA’s firm power and therefore have a significant interest in improving the Western Energy Imbalance Market’s (“EIM’s”) governance structure as BPA considers whether to join the EIM.
NRU encourages the GRC to move forward as quickly as practicable with a delegation of authority governance framework that implements joint authority. The May 20 proposal appears to be a carefully crafted compromise that all parties should treat as reasonable. The GRC has done an excellent job of providing ample time for stakeholder engagement and comment, and it is now time for the GRC to take next steps towards implementation of joint authority.
Although, under current timelines, it does not appear that joint authority will be in place prior to BPA deciding whether to join the EIM, it is nevertheless an important change to governance structure that will be beneficial to all stakeholders. More generally, as the GRC is aware, NRU believes that the EIM governance structure must be as independent and equitable as possible. A change to California law would be the best way to accomplish this, but, until there is such a change, creating and implementing joint authority between the Board of Governors and the EIM Governing Body is the best step forward.
For these reasons, the GRC should move forward with the May 20 proposal.
Thank you again for the opportunity to provides these comments.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
3.
Provide detailed comments on the scope of joint authority proposal:
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
NV Energy
Submitted 06/09/2021, 02:05 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
NV Energy appreciates this opportunity to comment on the May 12, 2021 Straw Proposal on Key Aspects of the Delegation of Authority Issue. From the initial EIM Governance Review Issue Paper in December 2018, the Governance Review Committee’s initial Scoping Paper in January 2020, the July 31, 2020 and December 14, 2020 Straw Proposals, and the April 12, 2021 Part 1 Draft Proposal; it has been a long journey. NV Energy expresses great appreciation to the members of the Governance Review Committee (GRC) for their long hours and thoughtful consideration of these vitally important issues. The website lists no less than 45 GRC meetings which do not count the numerous additional conversations and email exchanges with interested parties. The time has come to move forward with a proposal to expand the role of the EIM Governing Body commensurate with the extensive growth and proven benefits of the EIM.
At the May 5, 2020 public meeting, the GRC identified an overarching guiding principle for this effort -- ensure that any modifications to the governance of the EIM provide stakeholders throughout the West with confidence that the governance structure represents the market as a whole, broadly respects and considers the interests of all stakeholders, and is resilient under a wide range of market conditions. NV Energy supports this objective. FERC has referred to independence as the “bedrock principle” upon which the ISOs and RTOs must be built. In Order No. 2000, FERC stated that the governance structure should be independent "in both reality and perception." All other FERC-jurisdictional organized markets, including SPP’s Western Energy Imbalance Service Market, operate under the oversight of an independent governing board.
Currently the EIM Governing Body has primary authority over an extremely narrow scope of rules:
- when the market rule would not exist but for the EIM, in contrast to generally applicable rules of the real-time market; or
- for a proposed change to a market rule that is generally applicable to the entire real-time market, if an issue that is specific to the EIM balancing authority areas is the primary driver for the proposed change.
Primary authority is significant in that, for matters within this scope, the CAISO Staff must have the approval of the EIM Governing Body before proceeding with a tariff amendment. Additionally, the EIM Governing Body has an advisory role over rules that govern participation in the CAISO’s entire real-time market, including rules that specifically govern the real-time market or rules that generally apply to any participation in CAISO markets.
In the December 20, 2020 Straw Proposal, the GRC found that “[r]ealigning the scope of shared authority for both the Governing Body and the Board is appropriate in light of the strong commitment that stakeholders have demonstrated over the last five years to the success of EIM, and the increasingly integrated nature of the real-time market spanning areas of California that are outside the CAISO balancing authority area and throughout the West.” The truth and importance of this statement cannot be overstated. At the time the CAISO Board of Governors approved the EIM Transitional Committee’s plan in September 2015, PacifiCorp was the only participating EIM Entity. By 2023, 22 active Western EIM participants will represent over 83 percent of the load within the Western Electricity Coordinating Council. Since its inception, the CAISO has calculated that the EIM has produced almost $1.3 billion in customer benefits across the west, including $263 million to customers of CAISO’s load serving entities and $128 million to NV Energy’s customers.
The July 31, 2020 Straw Proposal stated, "With respect to scope of authority, we more specifically propose adding to the Governing Body’s existing approval authority all of the rules over which it currently holds only an advisory role. Thus, in the EIM-only context, the Governing Body’s affirmative approval would be required for any and all proposed changes to the design of or market rules governing the CAISO’s real-time market (including all EIM-specific rules). This authority also would include any proposed changes to tariff rules that apply generally to participation in all CAISO markets and for all market participants, such as rules governing credit, settlements and billing." The December 14, 2020 Straw Proposal presented two options:
- Option 1: Joint authority extends over all proposed changes to the market design or market rules that apply to the Energy Imbalance Market or the Real Time Market, except for any such rules that apply either (i) only to the CAISO controlled grid or (ii) only to the CAISO balancing authority area.
- Option 2: Joint authority extends over all proposed changes to the market design or market rules that apply to the Energy Imbalance Market or the Real Time Market, except for any such rules that apply either (i) only to the CAISO controlled grid or (ii) only to the CAISO balancing authority area that are related to reliable operations (e.g., rules relating to resource adequacy, reliability must run contracts, the capacity procurement mechanism, or ancillary services).
Under the May 12, 2021 Straw Proposal, joint authority would extend to all proposals to change or establish any CAISO tariff rule applicable to the EIM Entity Balancing Authority Areas, EIM Entities, or other market participants within the EIM Entity Balancing Authority Areas in their capacity as participants in EIM. Section 29 would operate as a key dividing line.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
3.
Provide detailed comments on the scope of joint authority proposal:
NV Energy’s comments throughout the GRC’s stakeholder process have focused on maximizing the independent oversight of the CAISO markets. In comparison to the July 2020 Straw proposal in which the Governing Body would have had joint authority over any and all proposed changes to the real real-time market, the proposals have moved further away from that independent oversight. Now, joint authority would only apply to a tariff rule applicable to the EIM Entities and their customers in their capacity as participants in EIM.
Nevertheless, this proposal is an advancement of the status quo and to that extent, NV Energy is supportive. Accordingly, NV Energy would urge the GRC to move forward with this Phase 2 proposal expeditiously. Given the retreat from the scope of the joint authority model in the July31, 2020 Straw Proposal; however, NV Energy questions whether the current concept and existing scope of the EIM Governing Body’s primary authority should be retained and only the incremental expansion be subject to joint authority. This would add a level of complexity to the decisional classification for initiatives, but would be a more clearly demonstrated expansion of the current approach.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
We appreciate the GRC’s desire and attempt to simplify the dispute resolution “jump ball process.” Now instead of preparing dual Section 205 filings, the GRC proposes:
- If the two bodies do not on the first try both agree to approve a proposal that is subject to their joint authority, the matter would be remanded to CAISO Staff to identify through the stakeholder process a revised proposal that both bodies could approve.
- If, however, after following this process, the two bodies still remain deadlocked and cannot agree jointly on a next step, then the Board of Governors could, as a last resort, authorize a FERC filing if, and only if, all of the following conditions are met:
- The Board, by unanimous vote, makes both a finding that the two bodies are at an impasse and that exigent circumstances exist such that a revision to the tariff is critical to preserve reliability or to protect market integrity.
- The CAISO would be required to include in its FERC filing whatever written opinion or other statement the EIM Governing Body may want to offer regarding the proposal.
- The EIM Governing Body would have a right, at its discretion, to retain outside counsel to assist in preparing any such written opinion/statement on the proposal.
NV Energy offers for the GRC’s consideration a 4th step:
-
- In making the Section 205 filing, the CAISO Staff would include a statement that “if FERC found the EIM Governing Body’s alternative proposal to be superior, the CAISO would adopt it on compliance.”
This additional step is necessary to address the burden of proof at FERC under which the filing entity needs only to show its proposal is just and reasonable, it does not have to be better than any alternative. Without this additional step, the EIM Governing Body would have to demonstrate not only was its proposal better, but also that the Board of Governors’ choice was unjust, unreasonable, or unduly discriminatory. This problem was illustrated in a recent CAISO Order in Docket No. ER21-1551 where FERC stated, “[b]ecause we are accepting CAISO’s proposal as just and reasonable, we need not further consider Six Cities proposed alternatives.”
Without this added language, there is not much reason for the EIM Governing Body’s retention of counsel and development of a statement. The EIM Governing Body will have expressed its will through the dissenting vote, and the affected market participants will have the opportunity to protest the CAISO’s Board of Governors directed filing at FERC. With the inclusion of the statement; however, the EIM Governing Body’s action will have real importance – it will permit FERC to be able to pick which alternative is better for the market. This is a vital change in the dynamic, both for the EIM Governing Body’s position statement, and for the market participants seeking “confidence that the governance structure represents the market as a whole.” It enables FERC to identify and require the CAISO to implement the option FERC finds superior. Moreover, it does not require any additional costs or process from that contained in the GRC’s proposal – it is simply an additional paragraph in the filing letter that attempts to build upon the GRC’s proposal and give it additional purpose. The definition for exigent circumstances may also need to be broadened to include situations such as FERC-mandated compliance filings.
Again, NV Energy thanks the BGR for their commitment and for their consideration of these comments.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
Pacific Gas & Electric
Submitted 06/11/2021, 03:42 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
PG&E supports with caveats.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
PG&E appreciates the excellent collaboration and hard work by the members of the Governance Review Committee (GRC) over many months to craft this Straw Proposal. PG&E is broadly supportive of the creation of a Joint Authority regime for the EIM and believes this Straw Proposal represents a significant step in the direction of articulating a workable structure and jurisdictional scope for such a regime. In particular, the new dispute resolution mechanism is a major improvement over the previous dual filing construct, and PG&E fully supports this element of the proposal.
Several areas in the Straw Proposal remain vague and would benefit from further clarification in the next (draft final) version. Specifically, PG&E proposes the GRC consider the following additions:
- The GRC should clarify that rules governing the use of CAISO intertie transmission and wheeling across the CAISO Balancing Area (BA) remain under the exclusive authority of the CAISO Board of Governors.
- With regard to Market Power Mitigation, the GRC should codify the understanding of stakeholders that, while Local Market Power Mitigation for the EIM will move under the Joint Authority, System Market Power Mitigation (i.e. when prices throughout the CAISO BA are found to be uncompetitive) will remain a topic under the exclusive authority of the CAISO Board of Governors.
- As a general matter, the GRC should clarify the process to be followed when classifying the decisional authority for initiatives that do not fall within any existing tariff section and the mechanism for resolution of classification disputes.
Finally, PG&E recommends (and proposes that the GRC endorse) the creation of a new Office of Balancing Area Affairs within the CAISO organization. This new Office, paid for by BA members only and consisting of (at minimum) a dedicated director-level position, would represent and advocate on behalf of the CAISO BA interest, as distinct from the broader EIM perspective.
3.
Provide detailed comments on the scope of joint authority proposal:
The GRC Proposal recommends a general principle to be applied in determining the appropriate decisional authority for a given tariff rule change. The proposal states:
Joint Authority extends to all proposals to change or establish any CAISO tariff rule(s) applicable to the EIM Entity balancing authority areas, EIM Entities, or other market participants within the EIM Entity balancing authority areas in their capacity as participants in EIM.[1][italics added]
PG&E supports this principle. However, the caveat at the end of this sentence is extremely important, as many EIM Entities participate in other CAISO markets outside of EIM and conduct non-EIM transactions in other capacities, either as the same entity or through corporate affiliates or subsidiaries. For example, many EIM Entities conduct wheeling transactions over CAISO BA transmission under the CAISO’s open access transmission tariff. This feature of the CAISO tariff long predates the existence of the EIM and does not depend in any way upon an entity’s participation in the EIM.
CAISO, in its role as a BA for the California (and portions of Nevada) footprint, must maintain the right to establish rules for the use of the transmission that was planned and is still almost entirely paid for by native load customers, subject to the CAISO Transmission Planning Process and to open access tariffs approved by FERC. The CAISO transmission tariffs include not only rules for internal transmission and cost allocation within the BA, but also rules governing the use and cost allocation of CAISO transmission that supports non-EIM bilateral transactions by other neighboring Balancing Area entities, even when such entities (or their corporate affiliates) may also participate in the EIM. PG&E notes that equivalent rules exist within the Open Access Transmission Tariffs of the EIM Entity Balancing Areas, over which the EIM BAs retain full decisional control (subject to their applicable regulatory authority) to set the rates, terms, and conditions for bilateral transactions into and across their respective transmission systems.
Given recent discussions on this topic in the context of the Summer 2021 Readiness initiative, PG&E believes it would be appropriate for the GRC to specifically call out the governance of intertie transmission and wheeling within the next (draft final) proposal. PG&E requests the GRC include language to specifically affirm that: The tariff rules governing the use of CAISO intertie transmission and wheeling across the CAISO Balancing Area (BA) remain under the exclusive authority of the CAISO Board of Governors.
A second area where clarification would be helpful is the topic of Market Power Mitigation. Here, the GRC proposal should make explicit and codify the distinction between the existing Local Market Power Mitigation related to EIM, which would rightly fall under the Joint Authority, and the System Market Power Mitigation tariff, for situations in which prices for the CAISO BA as a whole are determined to be uncompetitive. PG&E requests the GRC include language to specifically affirm that: The tariff rules governing System Market Power Mitigation are under the exclusive authority of the CAISO Board of Governors.
Further, as a more administrative point, PG&E requests the GRC add language to describe the process for determining the decisional classification for initiatives that do not fit within any existing tariff section and the resolution of any disputes that may arise with respect to their classification. While the “Draft Table of Contents with Illustrative Joint Authority Designations”[2] provides an excellent starting point for understanding the application of the proposed principle cited above, PG&E notes that sometimes initiatives arise that do not fit within any existing tariff section, and whose approval may result in the creation of wholly new sections or subsections of the tariff. PG&E requests that the GRC proposal specify the administrative process for developing the assignment for such initiatives where there is no clear precedent or guidance in existing tariff language, including the method for stakeholders to contest an initial classification and present arguments in favor of an alternative, and how a final determination of the decisional classification is to be reached. An example of such language is contained in the current EIM Governance Charter Section 2.2.2, “Dispute Resolution Procedure”[3], which was developed in the context of the current decisional classification regime. PG&E requests that the GRC affirm whether the language of this section will apply (or may require further modification) under the new Joint Authority decisional classification scheme, as the process for resolving disputes that may arise with regard to an initial classification by CAISO Staff.
[1] http://www.caiso.com/InitiativeDocuments/Straw%20Proposal%20-%20Delegation%20of%20Authority%20Issues%20-%20EIM%20Governance%20Review.pdf, p. 1
[2] http://www.caiso.com/InitiativeDocuments/DraftTariffTableOfContents-IllustrativeJoint%20Authority%20Designations.pdf
[3] https://www.westerneim.com/Documents/CharterforEnergyImbalanceMarketGovernance.pdf
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
PG&E supports the Straw Proposal’s proposed Dispute Resolution mechanism.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
PG&E recommends – and proposes the GRC endorse in its proposal -- the dedication by CAISO of a new Office of Balancing Area Affairs (OBAA), consisting of, at minimum, a dedicated director level position (with likely additional supporting personnel reporting to them), to be funded exclusively by full CAISO Balancing Area participants via the CAISO Grid Management Charge. This Office would review and evaluate CAISO policy proposals from a CAISO BA perspective and, for initiatives under the Joint Authority, would advocate on behalf of the collective best interest of the CAISO BA members and customers on issues that come before the Board of Governors and EIM Governing Body.
It is notable that the CAISO Balancing Area is the single largest load entity within the EIM footprint (and the broader WECC), and yet, to date, it is the only BA within the EIM, which does not participate directly within the CAISO stakeholder process.[1] PG&E believes the time has come to remedy this oversight and ensure equitable representation for CAISO BA interests, equal to those of the other BAs in the EIM.
By creating an OBAA, CAISO would acknowledge and give an organizational face to the dual roles that CAISO Staff have heretofore had to play – acknowledging that there can be tradeoffs and divergence between the interests of the CAISO Balancing Area and the broader EIM. As a matter of advocacy, and in the interest of maximizing representation in the EIM, PG&E believes that it will be healthy over the long term to separate these two roles institutionally, in order to ensure that the Balancing Area perspective continues to receive an appropriate allocation of CAISO Staff resources and attention, even as the breadth and scope of shared market issues grows.
PG&E recognizes that some parties will have concerns with regard to communications that may occur between Staff involved in the OBAA and other CAISO Staff involved in policy development. Such communications should not provide an unequal opportunity for advocacy that is not available to other stakeholders. PG&E believes that such concerns can readily be managed through internal protocols and, where necessary, information firewalls, that prevent inappropriate access to non-public information. PG&E looks forward to further discussion to develop this idea further.
[1] EIM Entities, who are themselves Balancing Area Authorities (BAAs), participate directly in the CAISO stakeholder process to represent their BA interests. In most instances, the EIM Entities are vertically integrated utilities, and they or their corporate affiliates participate in EIM market activities under multiple functional guises, as, e.g. transmission owner/operators, generation owner/operators, load serving entities, and as wholesale power marketers. The CAISO BA is unique among EIM BAAs in that CAISO – as an independent system operator – is institutionally separate from the various participating transmission owning utilities, load serving entities, generation owners, and wholesale power marketers doing business in its markets.
POU EIM Entities
Submitted 06/11/2021, 04:56 pm
Submitted on behalf of
Balancing Authority of Northern California, Los Angeles Department of Water and Power, Salt River Project, Seattle City Light, Turlock Irrigation District
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
The POU EIM Entities generally support the Governance Review Committee (“GRC”) Straw Proposal – Delegation of Authority Issues (“Straw Proposal”).
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
The POU EIM Entities generally support the Straw Proposal. First, we support the Joint Authority model that recognizes that elements of the market that apply to Energy Imbalance Market (“EIM”) Entities as EIM participants are of critical importance and that importance should be reflected in how decisions are made. This does not solely apply to market rules that are “primarily driven” by the EIM (roughly the current test), but also those market rules that have broader applicability within the CAISO Tariff structure.
Second, we support Joint Authority as a means to further collaboration between the EIM Governing Body and the CAISO Board of Governors. This collaboration is essential not only to develop sound market rules, but also to lay the foundation for greater regional collaboration.
Third, the Straw Proposal appropriately categorizes certain matters, whether that be the CAISO’s own Resource Adequacy rules or EIM Entities’ analogous state or local procurement responsibilities, as not subject to Joint Authority. Given the structure of the EIM, these matters are appropriately not within the scope of Joint Authority.
It should be noted that in prior iterations of GRC work product,[1] the GRC had proposed formulations of Joint Authority that could have been broader and applied to market rules that affected EIM outcomes. While the Joint Authority proposal was not fully formulated by the GRC, the POU EIM Entities would have likely supported that direction as well. However, much has changed in the intervening period since the GRC began its work, including the August/September 2020 grid reliability and market challenges. With this current proposal focused on the governance applicable to the EIM, the POU EIM Entities believe the Straw Proposal represents a significant step forward to enhance independent governance of the EIM. Therefore, the POU EIM Entities support the GRC’s recommendations.
[1] Governance Review Committee Revised Straw Proposal, December 14, 2020, at 12.
3.
Provide detailed comments on the scope of joint authority proposal:
See response to Prompt 2, above.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The POU EIM Entities support the modifications proposed by the GRC to simplify any dispute resolution process and move away from the prior proposals that include dual Section 205 filings at the Federal Energy Regulatory Commission. The Straw Proposal attempts to provide opportunities to find agreement amongst the parties and keep disagreements between the CAISO Board of Governors and EIM Governing Body largely out of the hands of federal regulators. The Straw Proposal also makes it appropriately difficult for the Board of Governors to act unilaterally on matters that are within the scope of Joint Authority by requiring a unanimous finding of an exigent circumstance. While this test may require further clarification, the POU EIM Entities appreciate this attempt at simplification and are generally supportive of the proposed dispute resolution process.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
The POU EIM Entities want to reiterate our appreciation for the addition of a POU Liaison on the Body of State Regulators as part of the GRC’s Phase 1 recommendations that were approved by the Board of Governors and the EIM Governing Body in May. The addition of a POU Liaison is a key element of our support for the overall package.
The POU EIM Entities urge the GRC to focus on the following areas to clarify and complete the Straw Proposal: (1) provide more detail on the circumstances that would meet an “exigent circumstances” test that would allow the CAISO Board of Governors to act unilaterally; (2) flesh out the continued advisory role of the EIM Governing Body; and (3) determine whether there will be a trigger, as in prior iterations,[1] upon which a certain threshold of EIM Entity withdrawals could vest the Board with the authority to modify EIM Governance. These matters need further attention from the GRC as the GRC completes its work and presents recommendations to the Board and Governing Body.
[1] Id. at 23.
Powerex Corp.
Submitted 06/11/2021, 01:22 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
Support
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
Powerex appreciates the opportunity to comment on the May 12, 2021 Straw Proposal on Key Aspects of the Delegation of Authority Issue and sincerely thanks the members of the Governance Review Committee (“GRC”) for their significant effort in developing the proposal, particularly considering the diverse stakeholder interests, priorities and perspectives that exist throughout the western region.
Powerex generally supports the GRC’s Revised Straw Proposal as an incremental improvement towards a more independent governance framework for the EIM, while respecting the current limitations required by existing California law. In particular, Powerex supports the joint authority proposal as a step forward from the status quo for the EIM.
3.
Provide detailed comments on the scope of joint authority proposal:
Under the May 12, 2021 Straw Proposal, joint authority would extend to all proposals to change or establish any CAISO tariff rule applicable to the EIM Entity BAAs, EIM Entities, or other market participants within the EIM Entity BAAs in their capacity as participants in EIM. Section 29 of the CAISO tariff would operate as a key dividing line.
This proposal appears to be an advancement from the status quo and to that extent, Powerex is supportive. However, in comparison to the July 2020 Straw proposal, in which the EIM Governing Body would have had joint authority over any and all proposed changes to the real-time market, the proposal has moved further away from achieving an independent governance and oversight framework for the CAISO-operated real-time market (including the EIM). While the proposal represents an improvement relative to today, the proposed scope of joint authority is limited such that it will not result in joint authority over all proposed changes to the real-time market that may impact EIM Entities and their ratepayers, but only to changes that apply to EIM Entities (as EIM participants).
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
Powerex appreciates the GRC’s attempt to simplify the dispute resolution process in response to stakeholder comments and Powerex is generally supportive of the proposed process.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
Powerex appreciates the GRC’s efforts and supports the latest proposal as an incremental improvement to EIM governance. At the same time, Powerex feels it is important to recognize that the EIM governance and oversight framework remains workable only in the context of the EIM, and would not be suitable to broader application. It is workable for the EIM as a result of the EIM being a voluntary, sub-hourly market that represents a relatively small share of overall western electricity trade. For most participants, EIM trade opportunities are generally incremental to their existing forward and day-ahead bilateral market activities – activities that represent a much larger share of the wholesale energy transactions occurring across the western grid.
Successfully expanding organized markets in the western interconnect to the day-ahead timeframe (e.g., through EDAM) would, unlike the EIM, represent a significant shift in western wholesale energy markets. A regional day-ahead market is likely to represent a much larger share of transactions –perhaps ten times the size of EIM or more–with such transactions occurring between a diverse group of participants across a broad regional footprint. And unlike the incremental (and voluntary) opportunities afforded by the EIM, a regional day-ahead market may ultimately replace the majority of bilateral market transactions (and opportunities) that exist today.
The current governance framework for EIM falls well short of establishing an acceptable framework for the continued development and expansion of regional markets to the day-ahead timeframe. Powerex believes that moving forward with a day-ahead organized market will require western stakeholders to commit to developing a truly independent multi-state governance structure that equitably represents the priorities, interests and perspectives of the diverse range of market participants and ratepayers across the West.
Public Generating Pool
Submitted 06/11/2021, 09:32 am
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
Support with caveats.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
PGP commends the GRC, CAISO Staff and stakeholders for the substantial work that has gone into developing a package of proposed changes on delegation of authority issues. We believe these changes reflect an improvement to the existing governance framework of the EIM and represent an important step forward in regional collaboration.
While PGP previously supported a broader scope of joint authority and dual filing at FERC in the event of a dispute, PGP supports this proposal because it appropriately expands the Governing Body’s authority over market rules that apply to EIM Entities or to market participants within EIM Entity balancing authority areas (BAAs), uses a clear rule to define joint authority and provides strong incentives for the CAISO board and the Governing Body to resolve any differences of opinion.
While PGP overall supports this proposal, we make the following limited requests/recommendations:
- PGP requests the GRC recommend that advisory authority be formally authorized for the EIM Governing Body on all real-time market issues and any issues that may impact an EIM Entity or market participant within an EIM Entity BAA in their capacity as an EIM market participants.
- While the dispute resolution proposal is written as a last resort option, PGP believes mechanisms should be in place to ensure the disputed path filing approach is not overused and asks the GRC to consider additional safeguards.
- PGP encourages the GRC to review previous comments on other issues such as the approach to decision classification and durability before making any draft final recommendations.
Furthermore, it is important to note that PGP supports the package of proposed changes as important improvements to the existing EIM governance only. Should EDAM proceed forward, it will be necessary to consider future changes to governance in the context of the EDAM market design. PGP has noted its concerns in past comments about the legal limitations to the ISO Board’s ability to delegate or share authority that may present a challenge to achieving an acceptable governance framework for EDAM. However, we are committed to partnering with CAISO and stakeholders to attempt to work through these challenges when they arise.
3.
Provide detailed comments on the scope of joint authority proposal:
PGP supports the proposed rule for the scope of joint authority. PGP initially recommended that the EIM Governing Body have primary authority over all real-time market rules and later supported the joint authority recommendation, wherein the scope of joint authority would cover all real-time market rules except for market rules/design that are related to reliable operations of the CAISO controlled grid or Balancing Authority Area. However, PGP recognizes that neither of the previous options the GRC put forth for the scope of joint authority were fully supported by stakeholders and did not provide a clear rule, which could pose challenges in the decisional classification process.
While PGP had hoped for a broader scope for joint authority, PGP supports the proposed rule because 1.) The scope appropriately captures the importance of the EIM Governing Body having authority over rules that apply to EIM Entities or market participants within EIM Entity BAAs, and 2.) The use of “applicable to” makes the rule clear and easier to apply during the decision classification process.
There will be many tariff modifications and rules that are not “applicable to” the EIM Entities but could have significant impact on them. PGP believes impacts to EIM Entities should be recognized and codified in the governance process. PGP requests the GRC recommend that advisory authority be formally authorized for the EIM Governing Body on all real-time market issues and any issues that may impact an EIM Entity or market participant within an EIM Entity BAA in their capacity as an EIM market participants.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
PGP interprets the dispute resolution proposal as providing a strong incentive for the Governing Body and the ISO Board to reach agreement prior to filing a tariff rule or modification. PGP believes this should be the overarching goal of the joint authority model and that tariff rules or modifications that do not have the support of both the Governing Body and the ISO Board should occur only in very limited and extreme circumstances.
While PGP preferred the dual filing approach, PGP appreciates that this approach provides an added incentive for the Governing Body and the ISO Board to reach agreement by establishing a high threshold for the ISO Board to act without agreement from the Governing Body. PGP believes the unanimous vote of the ISO Board finding that the two bodies are at an impasse and that the tariff change is needed to protect reliability or market integrity is essential. Further, the requirement to include a written opinion, supported by outside counsel, by the EIM Governing Body in the CAISO’s tariff filing is equally essential as it provides an important independent voice for the EIM Governing Body to FERC in a situation of dispute.
While the dispute resolution proposal is written as a last resort option, PGP believes mechanisms should be in place to ensure the disputed path filing approach is not overused. PGP does not offer any specific proposal but requests the GRC consider some additional safeguards which might include an after-the-fact review and evaluation of the disputed filing process, a time-limited tariff change, or external review by the Market Surveillance Committee and Market Expert of the exigent circumstance determination.
PGP supports this approach to dispute resolution only if all the actions needed prior to a solo ISO Board filing that does not have joint approval and the requirement to include a Governing Body statement are maintained and not eroded in any future GRC proposal.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
PGP recognizes that the straw proposal addressed only the scope of joint authority and dispute resolution. However, the delegation of authority section of the proposal includes other issues that are not addressed in this straw proposal. PGP encourages the GRC to review previous comments on other issues such as the approach to decision classification and durability before making any draft final recommendations.
PGP would like to remind the GRC of the following comments from PGP on these other delegation of authority issues:
- PGP supports the GRC proposal on decisional classification with the exception of the tie-breaker rule. In the event of a dispute between the Governing Body and CAISO Board on decisional classification that results in a tie, PGP recommends that the tie-breaker authority to alternate between the chairs of the two bodies, rather than having the CAISO board act as the tie-breaker in all instances.
- PGP supports the ability for the Board to be able to more rapidly change the delegation of authority if a great majority of EIM entities (85% of net energy load outside the CAISO BAA) give notice that they intend to withdraw from the EIM.
- PGP recommends the addition a small notice period for those EIM entities that may remain in the market. Specifically, we recommend that the ISO Board of Governors provide a 30-day notice to rescind the delegation of authority and that EIM entities that are still in the market are able to exit within 30 days.
Public Interest Organizations ("PIOs")
Submitted 06/14/2021, 05:13 pm
Submitted on behalf of
Western Resource Advocates, Western Grid Group, Renewable Northwest, and Northwest Energy Coalition
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
PIOs support the GRC’s Straw Proposal on Delegation of Authority issues.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
PIOs support the GRC’s revised proposal for joint authority, including the application of the “does it apply” rule. We believe that this application of joint authority significantly expands the EIM Governing Body’s decisional authority – something that PIOs have advocated for throughout this stakeholder process – and further, results in a bright line test that will be far easier to administer than the Option 1 and Option 2 approaches to joint authority included in the GRC’s prior Straw Proposal.
Additionally, we strongly recommend maintaining advisory authority for the EIM Governing Body under the joint authority model for EIM governance. Advisory authority will be critical for empowering the EIM Governing Body to provide its opinion to the CAISO Board of Governors on critical matters that may not “apply” directly to EIM Entities, but that still “impact” EIM Entities.
Finally, PIOs support the GRC’s revised approach to dispute resolution under the joint authority model and believe that it is an improvement upon the prior proposal that created the potential for “dual” Section 205 filings at FERC.
3.
Provide detailed comments on the scope of joint authority proposal:
Under the current joint authority proposal, any proposal to amend the tariff in an area covered by joint authority would go to both the CAISO Board of Governors and the EIM Governing Body for discussion and approval before CAISO staff could move forward with a Section 205 filing at FERC. Approval would require a majority vote of both bodies. In contrast to the GRC’s prior proposal for joint authority, the current proposal creates a bright line test for defining joint authority – i.e., the “does it apply” rule. Specifically:
Joint Authority extends to all proposals to change or establish any CAISO tariff rule(s) applicable to the EIM Entity balancing authority areas, EIM Entities, or other market participants within the EIM balancing authority areas in their capacity as participants in the EIM. This scope excludes from joint authority, without limitation, any proposals to change or establish tariff rule(s) applicable only to the CAISO balancing authority area (“BAA”) or to the CAISO-controlled grid.[1]
PIOs appreciate the additional clarity embodied in the “does it apply” test for joint authority. In practice, this should be far easier to implement than the Option 1 or Option 2 definitions for joint authority provided in the December 14th Revised Straw Proposal.[2] Although not included in this latest version of the Straw Proposal, PIOs strongly recommend maintaining advisory authority for the EIM Governing Body under the joint authority model for governance. Advisory authority will be critical for enabling the EIM Governing Body to provide its opinion to the CAISO Board of Governors on critical matters that may not “apply” directly to EIM Entities, but that still “impact” EIM Entities. For example, recent changes made to CAISO’s load, export and wheeling priorities (addressed as part of CAISO’s Summer Readiness filings at FERC) constitute tariff changes that do not directly apply to EIM Entities, but that certainly impact EIM Entities.[3] As such, the EIM Governing Body should be able to continue advising the CAISO Board on such matters.
Finally, in concurrence with the GRC’s recommendations in the December 14th Revised Straw Proposal, PIOs continue to support both boards meeting whenever possible in a single joint session to consider matters that are within their joint authority. We continue to believe that enhanced communications and cooperation enabled by the joint authority model will resolve most issues.
[1] Governance Review Committee, EIM Governance Review: Straw Proposal on Key Aspects of the Delegation of Authority Issue, May 12, 2020, p. 1, available at: Straw Proposal - Delegation of Authority Issues - EIM Governance Review.pdf (caiso.com) (“GRC Delegation of Authority Straw Proposal”).
[2] Governance Review Committee, EIM Governance Review: Revised Straw Proposal, Dec. 14, 2020, p. 12, available at: Revised_Straw Proposal_Western_EIM_Governance_Review.pdf (caiso.com).
[3] See, e.g., Public Comment Letter from Southwest Load-Serving Entities to the Western Energy Imbalance Market Governing Body (April 16, 2021), available at: Microsoft Word - EIM GB Letter on Wheeling Priorities v(1) (westerneim.com); Public Comment Letter from Bonneville Power Administration to the Western Energy Imbalance Market Governing Body (April 19, 2021), available at: Portland HQ Letterhead (westerneim.com); and Public Comment Letter from Powerex to the Western Energy Imbalance Market Governing Body (April 19, 2021), available at: Public-Comment-Letter-from-Powerex-re-Summer-Readiness-Load-Export-Wheeling-Priorities-April-19-2021.pdf (westerneim.com).
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
Under this proposal, if the two bodies do not initially agree to approval of a proposal that is subject to their joint authority, the matter would be remanded to CAISO staff to identify, through the stakeholder process, a revised proposal for both bodies’ consideration.[1] If the two bodies still cannot agree to approve the proposal, they could jointly decide to abandon the proposal or jointly agree, with input from CAISO management, on an alternative way to resolve the matter.[2] If the bodies continue to remain deadlocked and cannot agree on an appropriate next step, then the Board could, as a last resort and on its own, authorize a Section 205 filing at FERC, but only after meeting the following conditions:
- The Board, by unanimous vote, makes both a finding that the two bodies are at an impasse and that exigent circumstances exist such that a revision to the tariff is critical to preserve reliability or to protect market integrity;
- The CAISO would be required to include in its FERC filing whatever written opinion or other statement that EIM Governing Body may want to offer regarding the proposal; and
- The EIM Governing Body would have a right, at its discretion, to retain outside counsel to assist in preparing any written opinion or statement on the proposal.[3]
PIOs support this approach and appreciate that it continues to include an iterative stakeholder process to provide opportunities for the bodies to work closely with stakeholders and CAISO staff and management to arrive at a mutually agreeable solution. Additionally, PIOs believe that this approach is preferable to the GRC’s prior approach for dispute resolution – i.e., the “dual filings” approach – as it avoids the uncertainty created by permitting FERC to decide between the bodies’ two competing positions in future 205 filings.
Additionally, PIOs strongly support the EIM Governing Body having the ability to retain outside counsel to assist it in preparing a written statement or opinion, should it choose to do so. This will enable the Governing Body to independently opine on 205 filings falling within joint authority where both an impasse and exigent circumstances exist. In this way, an accurate and complete picture can be presented to FERC when CAISO makes a 205 filing under such rare circumstances.
Regarding the EIM Governing Body’s ability to retain outside counsel in preparing such opinions, PIOs request clarification from the GRC regarding how outside counsel will be compensated. PIOs find it reasonable that outside counsel for the Governing Body be compensated just as the outside market expert for the Governing Body will be compensated. In other words, because the role of outside counsel in this instance would be aligned with the Governing Body’s mission to promote the success of the EIM for the benefits of all participants, including the interests of both the CAISO BAA and the EIM BAAs, the costs should be recovered from all market participants, including those in the EIM BAAs.[4]
[1] GRC Delegation of Authority Straw Proposal at 3-4.
[2] Id.
[3] Id.
[4] Specifically, this would result from applying the CAISO’s current cost allocation methodology, which recovers from EIM market participants a pro-rata share of overhead costs associated with market operations. It is the same approach that currently applies to similar costs, such as the costs for both the DMM and the MSC. See: Governance Review Committee, EIM Governance Review: Governance Review Committee Part One Draft Final Proposal, April 12, 2021, pp. 20-21, available at: PartOneDraftFinalProposal_EIMGovernanceReview.pdf (caiso.com).
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
As previously noted, PIOs support the GRC’s Straw Proposal on Key Aspects of the Delegation of Authority Issue, but also recommend that the GRC consider addressing the following items in its next iteration of the Straw Proposal:
- PIOs strongly recommend that under the joint authority model for EIM governance, that advisory authority for the EIM Governing Body be preserved such that the Governing Body remains empowered to advise the Board of Governors on those issues that fall outside its joint authority, but that necessarily impact EIM Entities.
- PIOs recommend that the GRC clarify the funding mechanism to enable outside counsel for the EIM Governing Body where agreement cannot be reached between the two bodies under joint authority and exigent circumstances exist such that the Board must move forward with a 205 filing at FERC. In these instances, where the Governing Body chooses to retain outside counsel to prepare a separate opinion (to be included in CAISO’s 205 filing), PIOs recommend that the costs associated with outside counsel be paid in the same way that costs for the DMM, MSC and the Governing Body’s outside market expert will be paid.[1]
[1] Id.
Public Power Council
Submitted 06/11/2021, 04:19 pm
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
PPC supports the Joint Authority concept and the current straw proposal as an improvement over the status quo EIM governance; however, we are disappointed to see that the proposal has narrowed the proposed scope for Joint Authority and would not apply Joint Authority to all issues that could impact EIM Entities.
PPC also understands that the scope of the current proposal is limited to the EIM and is not intended to be used as a basis for EDAM. PPC notes that this proposal would not sufficiently address the concerns of PPC and our members on appropriate representation of the interests of market participants outside of California and the CAISO BAA in a day-ahead market.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
PPC appreciates the GRC’s efforts to work with stakeholders to further explore positions related to the delegation of authority proposal. PPC continues to believe that Joint Authority, depending on how it is implemented, would be a significant improvement compared to the status quo EIM governance structure through giving an expanded role to the EIM Governing Body. The EIM Governing Body is designed to be representative of the diverse stakeholders participating in CAISO’s EIM. It is critical that this representative body be delegated as much decision-making authority as possible to continue to make participation in the EIM an attractive option for entities outside of the CAISO BAA. Joint Authority could potentially be a fair way to ensure representative decision-making, depending on how it is constructed. PPC is supportive of the Joint Authority concept developed by the GRC but is concerned that it could be inappropriately narrowed. The proposal to apply Joint Authority only when rules apply to EIM Entities, not when they are impacted by rules does introduce some additional risk for EIM Entities compared to earlier proposals made by the GRC.
3.
Provide detailed comments on the scope of joint authority proposal:
In our comments submitted on the GRC’s revised straw proposal in February, PPC expressed our interest in establishing broad applicability for Joint Authority to “provide more assurance to EIM participants that rules affecting their market participation would be subject to joint authority.” [1] This interest remains unchanged and we are concerned that this proposal may not result in application of Joint Authority to all rules that have substantial impacts on EIM and its participants. The proposed rule specifically targets rules that apply to EIM Entities, not rules that impact them. This distinction creates an area of risk for EIM Entities where they may be impacted by a rule, but the EIM Governing Body would not have a role in the decision-making process. The highly integrated nature of the real-time market and EIM make this outcome a realistic possibility. It would be helpful to better understand what would happen in instances where EIM Entities are significantly impacted by rules that would significantly impact markets outcomes, and result in indirect impacts to EIM Entities, without specifically applying to them.
PPC understands that the current proposal was developed in part to address the desire expressed by some stakeholders to establish a “bright-line” for decision making authority. We appreciate that the GRC provided “Illustrative Joint Authority Designations” which were helpful to understand how the proposal may apply to certain rules or initiatives. Based on the discussion at the May 20 workshop, it appeared that perhaps those designations were not as clear as originally anticipated and that there would still need to be a classification process as there is today to determine whether or not the proposal would be under joint authority. Future discussion with the GRC on whether this proposal is providing the bright line for decision-making that was intended would be helpful to better understand whether there are still areas of uncertainty in how decision-making would be applied under this proposal.
PPC also questions whether the decision classification as proposed could lead to unintended consequences and would like to think this through with other stakeholders. What is the potential for solutions to be structured in certain ways to drive decision-making into one forum vs. another? Does this create a risk not only that certain stakeholders will not be appropriately represented in decision making, but also that less efficient solutions are proposed to avoid certain decisional classifications?
The role of advisory input in the revised decision-making process should also be further addressed. PPC recommends that as part of any advisory role that would be established for the EIM Governing Body, it should be required that:
- The EIM Governing Body provide an opinion on the specific proposal that will be considered by the Board, and
- To the extent the Board disagrees with the Governing Body option it should respond in writing and this response should be made available as part of publicly posted materials related to the policy initiative.
[1] PPC comments on Governance Review Revised Straw Proposal, submitted February 3, 2021. https://stakeholdercenter.caiso.com/Comments/AllComments/f6b52c90-63a6-4802-bc36-4c907ae22e5c#org-9d175506-6fd6-4aee-9ed9-c4919be970ff
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The GRC’s revised proposal is not ideal but may be the best possible approach given the constraints under which the GRC is operating. PPC understands that the GRC’s recent proposal is an attempt to responsive to concerns from stakeholders. We are disappointed that the new proposal would not allow for consideration of a proposal supported by the EIM Governing Body that may be viewed as superior by FERC when compared to the proposal supported by the Board of Governors. To the extent that the GRC and stakeholders are able to address a workable solution for allowing the consideration of superiority, PPC is supportive of that concept.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
PPC continues to appreciate the hard work of the GRC to develop the best possible governance within the parameters allowed under current California law. We continue to support governance that adequately and equitably represents participants in the market, and as such continue to support truly independent governance for organized markets.
Six Cities
Submitted 06/11/2021, 05:13 pm
Submitted on behalf of
Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
In general, the Six Cities support the approach outlined in the Straw Proposal as striking a reasonable balance between the interests and objectives of participants in the EIM, for whom participation in EIM markets is voluntary, and participants for whom EIM participation is not voluntary, such as the Six Cities. In particular, the joint authority model as proposed appears to provide opportunities for increased collaboration as between the EIM Governing Body and the CAISO Board of Governors while preserving the primary authority of the CAISO Board of Governors in critical areas. As outlined below, the proposed approach to resolution of disputed issues between the Board of Governors and the Governing Body may benefit from further refinement.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
As noted, the proposal addresses the Cities’ interests in preserving the sole authority of the CAISO Board of Governors in key areas of governance that do not involve policies or rules that apply to EIM participants in their respective capacities as EIM participants. In particular, this dividing line for the scope of primary authority reflects areas where EIM participants have sought to preserve their own authorities (and those of their state regulators), such as transmission planning and resource adequacy. While CAISO policy in these areas may affect the EIM, CAISO policy in these areas, generally speaking, does not apply to EIM participants acting in that capacity. Because EIM participants external to the CAISO do not seek to limit their sole authority in areas outside of their EIM participation by delegating any new authorities to the Governing Body (even where there may be tangential impacts to the EIM), it is not reasonable to require the CAISO and its market participants to do so. Changes in the scope of authority delegated to the EIM Governing Body should involve areas where policies and rules will directly apply to EIM participants or involve areas where a transfer of governance authority to the EIM Governing Body is reciprocal as between the CAISO and EIM participants.
3.
Provide detailed comments on the scope of joint authority proposal:
The framework for joint authority between the CAISO Board of Governors and the EIM Governing Body that is described in the Straw Proposal appears to strike a reasonable balance between areas where collaboration is appropriate (such as the real-time market) and areas of sole authority where independence needs to be retained, such as resource adequacy and transmission access and planning. The Six Cities support the stated scope of Governing Body authority, which covers rules that “apply to” EIM participants “in their capacity as participants in the EIM.”
This scope description has the benefit of being relatively simple to apply. It is also appropriately tailored – if a rule “applies” to an entity that participates in the EIM, but it doesn’t apply to that entity in its capacity as an EIM participant, then the rule is excluded from joint authority. Throughout stakeholder proceedings, the Six Cities urge that the designation of sole or joint approval authority be identified (as it is now) and subject to stakeholder comment.
The tariff section-based rubric of sole versus joint authority is a useful tool. Where provisions are identified as within the joint authority scope due to cross references in Section 29 of the CAISO tariff, which contains the rules for the EIM, the Six Cities recommend a close review of those cross-referenced sections to confirm that placement of those sections within the joint authority scope is reasonable.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
The proposal related to dispute resolution would benefit from additional detail, but it appears to be conceptually workable. The Six Cities recommend that the Governance Review Committee evaluate the following additional elements:
- Where a remand to further stakeholder proceedings occurs due to unresolved issues, the Six Cities recommend that the Board of Governors and Governing Body provide a statement of reasons or an explanation of the issue(s) preventing joint approval. Presumably there would be discussion of this at the joint Board of Governors/Governing Body meeting to address the proposal, but a particularized statement of why the proposal is unable to receive joint approval would provide appropriate parameters for further stakeholder activities.
- The proposal would benefit from added detail regarding the use of outside counsel for position statements by the Governing Body. The Six Cities recommend that topics such as independence (i.e., outside counsel should not also represent market participants), the applicable funding mechanism, and any appropriate limitations on the activities for which outside counsel may be engaged (i.e., outside counsel may be used for the position statement, but does not extend to active participation in regulatory proceedings by FERC or the states).
- As discussed during the stakeholder workshop, the Six Cities urge the Governance Review Committee to ensure adequate provisions for emergency filings that need to be made on an expedited basis. By “emergency filings,” the Six Cities are referring to filings that are of a time-sensitive and urgent nature, such that use of a full stakeholder process and normal governing authority meeting schedules are not workable. Use of this process is envisioned for policies and rule changes that are identified as required immediately or within a matter of days.
Finally, the Six Cities support deferring consideration of further changes that may be necessary in connection with potential expansion of the day-ahead market until a later date.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
The Six Cities have no additional comments at this time.
Western EIM Body of State Regulators
Submitted 06/11/2021, 12:00 pm
Submitted on behalf of
Western EIM Body of State Regulators
1.
Please provide your organization’s overall position on the EIM Governance Review Straw Proposal – Delegation of Authority Issues:
Comments of the
Western Energy Imbalance Market Body of State Regulators to the
EIM Governance Review Committee’s
Key Aspects of the Delegation of Authority
June 9, 2021
The Western Energy Imbalance Market (EIM) Body of State Regulators (BOSR) appreciates the opportunity to submit consensus comments on the EIM Governance Review Committee’s (GRC’s) Straw Proposal on Key Aspects of the Delegation of Authority published on May 12, 2021 (“Phase 2 Straw Proposal”).[1] The EIM BOSR’s role is provided for in the Charter for Energy Imbalance Market Governance. The BOSR is a self-governing, independent body composed of one commissioner from each state public utilities commission in which load-serving regulated utilities participate in the EIM, including the ISO real-time market.[2] This currently includes the states of Arizona, California, Idaho, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.[3] One of the BOSR’s responsibilities is to express a common position, where possible, in the CAISO stakeholder processes or to the EIM Governing Body on EIM issues.[4]
I. Background on EIM Governance Review
The GRC’s role is to develop, through an open stakeholder process, recommendations for changes in the EIM governance structure to the EIM Governing Body and CAISO Board of Governors (“CAISO Board”). [5] On May 6, 2021, after over a year of work, the GRC submitted a final proposal on Governance Review Issues 2-6 to the EIM Governing Body and CAISO Board (Phase 1 of the GRC review).[6] The proposal was unanimously approved by both bodies in its entirety. The GRC is taking more time to develop a final proposal for Issue 1, Delegation of Authority (Phase 2 of the GRC review).
[1] The Phase 2 Straw Proposal is available at: http://www.caiso.com/InitiativeDocuments/Straw%20Proposal%20-%20Delegation%20of%20Authority%20Issues%20-%20EIM%20Governance%20Review.pdf.
[2] Charter, Energy Imbalance Market Body of State Regulators at 1 (rev. April 30, 2021) (“BOSR Charter”). See also, Charter for Energy Imbalance Market Governance, V.1.3 (rev. March 27, 2019), § 5.
[3] Load-serving regulated utilities from the states of Montana and Colorado have stated their intent to join the Western EIM. Commissioners from these states and the Province of British Columbia have been invited to participate in the BOSR.
[4] BOSR Charter, Purposes and Responsibilities at 1.
[5] At this time, the GRC has limited their scope to adjustments to the EIM governance related to EIM participation. Adjustments to facilitate possible further expansion through the Extended Day-Ahead Market (EDAM) will be addressed in separate conversations.
[6] Western EIM Governance Review, Governance Review Committee Part One Draft Final Proposal (April 12, 2021), available at: http://www.caiso.com/InitiativeDocuments/PartOneDraftFinalProposal_EIMGovernanceReview.pdf.
2.
Provide a summary of your organization's comments on this proposal and how it meets your interests related to delegation of authority for the EIM:
II. The BOSR’s Comments on the Phase 2 Straw Proposal
The Phase 2 Straw Proposal considers the scope of issues covered by joint authority, and the process to be followed if the CAISO Board and EIM Governing Body do not agree on whether to approve a proposal within their joint authority. Many of the recommendations in the Phase 2 Straw Proposal are largely consistent with the BOSR’s views as expressed in previous comments in the EIM Governance Review[1] and the BOSR’s previous consensus comments continue to represent the BOSR’s views on the governance issues contained therein. The BOSR adds the following comments to those positions.
[1] The BOSR submitted comments to the GRC on January 18, 2019, February 21, 2020, August 27, 2020, and January 29, 2021, available at: https://www.westernenergyboard.org/category/library/eim-bosr-library/.
3.
Provide detailed comments on the scope of joint authority proposal:
Issue 1: Scope of Issues Covered by Joint Authority
The GRC continues to recommend the joint authority model. As proposed, joint authority would require an affirmative vote, after discussion, of a majority of both the EIM Governing Body and the CAISO Board before CAISO could file new tariff rules for approval at the Federal Energy Regulatory Commission (FERC). Under the Phase 2 Straw Proposal, joint authority extends to:
…all proposals to change or establish any CAISO tariff rule(s) applicable to the EIM Entity balancing authority areas, EIM Entities, or other market participants within the EIM Entity balancing authority areas in their capacity as participants in EIM. This scope excludes from joint authority, without limitation, any proposals to change or establish tariff rule(s) applicable only to the CAISO balancing authority area or to CAISO-controlled grid.[1]
The BOSR understands this to mean that the scope of joint authority would include all proposals to change or establish any CAISO tariff rule(s) (i.e., initiatives) that currently fall under the Governing Body’s primary authority and the vast majority of the initiatives that fall under the Governing Body’s current advisory authority. Advisory authority currently includes rules that govern participation in the ISO’s entire real-time market, including rules that specifically govern the real-time market or rules that generally apply to any participation in ISO markets.[2] The BOSR strongly supports joint authority and the scope proposed in the Phase 2 Straw Proposal.
As the CAISO performs real time dispatch of a substantial portion of the generating fleet in the Western Interconnection to meet the real time loads approaching 80% of the region, a decision making approach that brings the parties together to evaluate proposals and ensures decision makers consistently hear from all parties is beneficial to the market’s long-term function and ability to deliver economic benefits to all participants. While the joint authority proposal results in the EIM Governing Body giving up primary authority over certain decisions, the proposal provides significant benefits. It invites the CAISO Board to more explicitly engage in decisions that impact the EIM participants and envisions the EIM Governing Body engaging more fully in the function of the real time market. Joint meetings, providing the opportunity for joint briefings, dialogue between the CAISO Board and the EIM Governing Body and common stakeholder presentations, will support holistic decision making and allow for further engagement. This will benefit the market and all participants through decision makers gaining a deeper understanding of the issues and relative positions of differently situated entities.
Advisory Authority
On May 20, 2021, the GRC conducted an informational meeting to explain and answer questions about their Phase 2 Straw Proposal.[3] Members of the GRC verbally stated that the EIM Governing Body would continue to have advisory authority though advisory authority is not included in the Phase 2 Straw Proposal document. The GRC gave two examples of initiatives that do not fall within the scope of joint authority as it is proposed but over which the EIM Governing Body currently has advisory authority: 1) System Market Power Mitigation; and 2) Export, Load and Wheeling Priorities. Initiatives such as these propose changes to rules that do not “apply” to EIM Entities and other market participants outside of the CAISO BAA. (The test for joint authority is based on the application of rules.) However, initiatives such as these significantly impact EIM Entities and other market participants outside of the CAISO BAA. It is important that the Governing Body continue to have the opportunity to formally submit advice to the CAISO Board and that the CAISO Board has the obligation to consider the Governing Body’s advice before approving any proposed rule change included in initiatives such as these that significantly impact EIM Entities. The BOSR strongly supports formally including advisory authority, as defined in section 2.2.1 of the EIM Governance Charter, in the next version of the proposal. At a minimum, the scope of advisory authority should include issues that fall within the EIM Governing Body’s current advisory authority but outside of the scope of joint authority.
Scope Exceptions
During the May 20, 2021 GRC meeting there was some dialogue about potential exceptions to the scope of joint authority as it is proposed. A concern was expressed that under the proposed scope damaging decisions, such as those that put the reliability or financial stability of the CAISO at risk, could be made with catastrophic consequences for entities inside of the CAISO BAA.[4] As we move away from primary authority to a more collaborative and thus beneficial structure that mirrors the scale of the dispatch footprint, it is important to remain cognizant of the different circumstances of distinct classes of entities, specifically, the voluntary nature of EIM entities outside of the CAISO BAA and the full participation by the entities within the CAISO BAA, and the different risks these entities perceive that they have under proposed changes to the governance structure. However, it is just as important to be conscious of how closely aligned the fundamental interests of these entities are.
All entities benefit from a well-functioning stable market, supported by a financially viable market operator that delivers reliable power broadly. If something catastrophic happens in the CAISO markets, the impacts will be felt by all market participants in and outside of the CAISO BAA. Even those who are not EIM participants would experience negative impacts if the market was not well-functioning. Further, the Charter for EIM Governance imposes a fiduciary duty on the Governing Body to all market participants, not just those outside of the CAISO BAA, and to promote, protect and expand the success of the EIM.[5] This firmly protects against decisions that undermine the fundamental responsibilities of the CAISO as a market operator. Additionally, joint authority requires the affirmative vote of each body in sequence, thus the CAISO Board retains their capacity to meet their fiduciary responsibility to the corporation.
[1] Phase 2 Straw Proposal at 1 (emphasis added).
[2] These comments are based on the definition of advisory authority found in the Charter for Energy Imbalance Market Governance, §2.2.1.
[3] The recording if the May 20, 2021 GRC General Session will be posted at: https://www.westerneim.com/Pages/Governance/GovernanceReviewCommittee.aspx.
[4] See comments by Jeff Nelson, Southern California Edison, GRC General Session, May 20, 2021.
[5] Charter for EIM Governance, §2.1.
4.
Provide detailed comments on the dispute resolution and deadlocks proposal:
Issue 2: Dispute Resolution
The BOSR generally supports the dispute resolution mechanism recommended if either governing body does not approve a proposal, i.e., there is a deadlock. This includes sending the proposal back to CAISO staff, who would commence another round of the public stakeholder process culminating in another vote of the two bodies on a new proposal. If the two bodies still do not agree on the proposal, they could jointly decide to abandon the proposal or jointly agree on “some other way to resolve the matter.” If the two bodies still do not agree, i.e., there remains a deadlock, the CAISO Board could authorize a FERC filing if all the following conditions are met:
(i) The Board, by unanimous vote, makes both a finding that the two bodies are at an impasse and that exigent circumstances exist such that a revision to the tariff is critical to preserve reliability or to protect market integrity.
(ii) The CAISO includes in its FERC filing whatever written opinion or other statement the EIM GB may want to offer regarding the proposal.
(iii) The EIM GB can, at its discretion, retain outside counsel to assist in preparing any such written opinion/statement on the proposal.
To be clear, the stakeholders in the GRC process are striving for the best proposal within the limitations imposed by the California Corporations Code which applies to the CAISO Board. Under the Corporations Code, the CAISO Board has ultimate responsibility for all corporate activities, which must be under its “ultimate supervision.”[1] Submitting a proposed tariff change to FERC that is not supported by both governing bodies is not ideal. However, the current proposal is an improvement over the prior proposal in terms of efforts to resolve issues prior to escalation. The GRC has added a threshold that CAISO can file with FERC a tariff change approved solely by the CAISO Board only if exigent circumstances exist. Thus, there is added pressure to resolve differences in the West and reach a compromise by Western stakeholders.
Finally, the BOSR notes that the language used for a possible third round of process to resolve a deadlock is very broad, i.e., “jointly agree on some other way to resolve the matter.” The BOSR is not opposed to some flexibility in determining the process at this point, however, the GRC should specify some parameters. At a minimum, the process should be open and transparent, for example, the GRC could specify that CAISO’s open meeting rules apply.
[1] California Corporations Code §5210. See EIM GRC Draft Straw Proposal, Appendix A (July 31, 2020) (full discussion of the Corporations Code and limitations to CAISO Board’s delegation of authority), available at: http://www.caiso.com/InitiativeDocuments/StrawProposal-EIMGovernanceReviewCommittee.pdf.
5.
Provide additional comments on the Straw Proposal or what the GRC should consider in the delegation of authority for the EIM:
Conclusion
There is an urgency to demonstrate that there is a commitment to continue engagement and increase partnership between California entities and other market participants. The benefits of regionalization to customers across the EIM footprint are well understood and the interest in maximizing the benefits that can be realized from further cooperation is at a high point in the West.[1] It is the BOSR’s position that meaningful progress, in the near-term, on the issue of delegation of authority is necessary to demonstrate the willingness of all participants to move forward on regionalization in the CAISO markets.
[1] As examples of state policy discussions regarding regionalization, the Nevada Legislature recently passed SB 448, which states that, with certain exceptions, the Public Utility Commission of Nevada shall require every transmission provider in Nevada to join a regional transmission organization on or before January 1, 2030, and both chambers of the Colorado Legislature have passed SB 21-072 which requires transmission owners to join an organized market or RTO by 2030, subject to review and approval by the Colorado Public Utilities Commission. SB 21-072 is in final reconciliation as of June 9, 2021.
