Late last month, the West-Wide Governance Pathways Initiative, a group supported by Western utilities and state regulators, approved a plan that could overcome an initial obstacle toward the creation of a shared regional electricity market that includes California.

The ​“straw proposal” approved last month is just a first step in a longer plan created by the group, which was launched last year with support from utility regulators in California, Arizona, New Mexico, Oregon, and Washington state. In simple terms, it provides the California Independent System Operator (CAISO), which manages the transmission grid and energy markets in most of its home state, a pathway to share authority over a future West-wide energy market.

Together, these utilities and CAISO make up nearly half of the West’s electricity demand, said Brian Turner, a director at clean energy trade group Advanced Energy United and an initiative launch committee member. That’s ​“an attractive market — one might say, a market that would be hard for other entities to turn their back on,” he noted.

Members of the West-Wide Governance Pathways Initiative are hoping this first step toward changing that — putting other states and utilities on equal footing with California in governing EDAM — will start to entice utilities to prefer the option that includes the region’s biggest energy market after all.

“Utilities are really the most direct audience for this discussion,” Turner said. And those utilities have a common question, he said: ​“What’s the best market for you?”

Choosing between a market with — or without — California

“The BPA put in writing what has been stated quietly across the region,” Mona Tierney-Lloyd, head of regulatory and institutional affairs for distributed energy and demand response provider Enel North America, told Canary Media in an April interview. That’s why she’s heartened by the breadth of support the West-Wide Governance Pathways Initiative has garnered for its multistep plan to ​“successfully pass some form of governance change.”

The goal of that plan, approved last week, is to ​“take governance off the table” as a concern for utilities and regulators across the region, according to Advanced Energy United’s Turner. ​“Step one goes pretty far in that regard. Step two would go further.”

Building a bridge between California and the rest of the West

The newly approved plan starts by giving the standing five-member governing body for the Western Energy Imbalance Market, made up of former utility regulators and utility executives from across the Western U.S., an equal stance with CAISO.

Today, that body holds joint authority with CAISO’s board of directors over decisions for that real-time market. But if those two groups can’t agree on what policies to pursue, CAISO’s preferred policy is filed with FERC, while WEIM’s governing body is limited to filing a ​“statement of opposition” to that course of action, Turner said.

Under the plan, any disputes between CAISO and the WEIM will lead to both groups filing for federal approval simultaneously — a so-called ​“jump-ball filing.” ​“Both filings go to FERC, they have equal status, and then FERC decides which they think is more just and reasonable,” Turner said.

These seemingly minute distinctions over governance and authority are in fact a very big deal for bringing skeptical utilities and regulators on board, Turner said. But to achieve true independence, EDAM will need its own regional organization with ​“sole authority over those sections of the tariff that have impact on the Western market,” he said. Step two of the initiative’s plan lays out how to develop that governing body while preserving CAISO’s authority over California-specific matters.

CAISO will need California lawmakers to pass legislation authorizing it to carry out that next phase, according to a legal analysis commissioned by the initiative. But Turner highlighted that the law to make this happen is considerably less complicated than the legislation that’s foundered in the state over the past decade.

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