NewsData reports on the West-Wide Governance Pathways Initiative (WWGPI) draft Step 2 proposal. The draft Step 2 proposal includes several components: regional organization (RO) scope and function, formation of the RO, governance of the RO, public-interest protections, and the stakeholder process. The article quotes United's Brian Turner, a member of the WWGPI Launch Committee, saying that this proposal represents a significant step toward improving electricity markets in the West and addressing long-standing barriers.
Regionalization of the Western grid in a wholesale energy market that includes California moved forward this week with the issuance of a draft proposal for a regional organization that would stretch across the West, overseen by diverse participants in an effort to address long-running governance issues.
The West-Wide Governance Pathways Initiative issued Step 2 of its proposal for a market that would stretch across much of the Western Interconnection, but would not be a full-blown regional transmission organization.
The fast-track effort began in July 2024, when a group of state regulators from Arizona, California, New Mexico, Oregon and Washington sent a letter to the Western Interstate Energy Board and the Committee on Regional Electric Power Cooperation, advancing a proposal “for ensuring that the benefits of wholesale electricity markets are maximized for customers across the entire Western U.S.,” according to the Step 2 document.
The proposal comes after years of efforts to regionalize the California Independent System Operator that have sputtered in the California Legislature. In a nutshell, many California entities don’t want to relinquish energy planning to other states, while other states are hesitant to join a regional market controlled by California. CAISO is required by law to serve the interests of Golden State energy consumers.
Brian Turner, regulatory director at Advanced Energy United and a member of the WWGPI Launch Committee, said that growing load across the West and frequent extreme-weather events have increased interest in the enhanced reliability and cost savings that a Westwide market could offer.
“The urgency for a Westwide market of some sort has been on the rise,” Turner said in a video interview. The increased power-sharing opportunities and other benefits of the Western Energy Imbalance Market, the real-time market that is controlled by CAISO and now stretches across much of the West, have made the WEIM an “absolute lifesaver,” he said, increasing interest in a wider organized market.
The CAISO Board of Governors and the Western Energy Markets Governing Body recently approved Step 1 of the WWGPI (California Energy Markets No. 1808). The initiative will be done in three steps total, Turner said.
Step 2 includes a governance proposal that would eventually lead to dissolution of the WEM Governing Body and a new governing board, although current members of the governing body could join the new board. Step 2 would also require legislative action in California, but Turner said he is not involved in any discussions regarding that. He did say he hopes the Legislature makes it a priority next year.
“We intended to put together a public-policy and public-participation framework that is as strong as any in the country,” Turner said, adding that “it kind of reflects a Western approach to this”—accounting for skepticism and aiming to convince stakeholders of the value in every step.
Step 2 includes creation of the new, separate regional organization—not an RTO—with completely independent governance over the extended day-ahead market that is due to be put in place in 2026. The new board would assume the authority that the CAISO Board of Governors and WEM Governing Body currently hold. This would allow the WEIM and EDAM footprints to stay intact and include California. It is also intended to create a “robust and independent stakeholder process” to drive and support additional market services or market design changes.
The proposal also includes significant protections of the public interest, with mechanisms to incorporate customer interests and protect state, local and federal policies through the RO. Each stakeholder will have a vote but less weight in the final decision-making, Turner said, to avoid logjams.
The Step 2 proposal does not represent a full set of consensus recommendations from the Launch Committee and is still a work in progress, the document says. The committee will continue its discussions in addition to accepting stakeholder feedback through workshops and written comments.
“This proposal breaks through a significant barrier and enables the additional progress for electricity markets through voluntary market structures that the West has been working towards for decades,” the document says. “While there is more work to be done to maximize customer benefits including affordability and reliability, minimize inefficiencies, and enable more clean energy resources and transmission infrastructure in the West, the Launch Committee is proud to offer this framework for fully independent governance over Western energy markets for stakeholder feedback and comments.”
The Step 2 draft proposal includes a number of components: regional organization scope and function, formation of the RO, governance of the RO, public-interest protections and the stakeholder process.
The RO will be incorporated as a 501(c)(3) nonprofit corporation with tax-exempt status, lowering costs and enabling it to utilize tax-exempt financing for long-term debt. A 501(c)(3) operates for the public benefit and has restrictions on lobbying in addition to a prohibition on engaging in political activities, the document says.
The Step 1 document approved last month elevated the WEM Governing Body to “primary authority” from “joint authority” with the CAISO Board of Governors over rules that would apply to the WEIM and EDAM. These decisions would be approved by the WEM Governing Body and then placed on the consent agenda for the Board of Governors. Whether the WEM Governing Body has this primary authority would be determined using an existing “applies to” test.
Another key element of the Step 1 initiative was the establishment of a dual-filing mechanism for situations in which the Board of Governors and the WEM Governing Body cannot agree. The Board of Governors is able to submit a “dual filing” to the Federal Energy Regulatory Commission that presents both proposals coequally. FERC then would be able to approve any part or all of either proposal. This would also cover situations in which either the Board of Governors or the Governing Body disagrees on whether tariff changes are needed.
While CAISO’s EDAM is moving forward, the Southwest Power Pool’s Markets+ day-ahead market proposal is also in development, potentially leading to the development of two large day-ahead markets across the West. However, Markets+ would not include California, the largest single-state source of generation in the West.
Read the full article here.