By - Jim Vess

California to go it alone on electric reliability, but may try to lure other Western states to join it

Energize Weekly, January 10, 2018

In a move further fragmenting the Western power sector, the California grid operator last week announced it would become its own reliability coordinator, leaving the 14-state regional system.

The move was prompted by the prospect of seven utilities and transmission operators in the Rocky Mountain region leaving the regional system, operated by Peak Reliability, to join the Little Rock, Ark.-based Southwest Power Pool (SPP), according to the California Independent System Operator (CAISO).

Those companies, the Mountain West Transmission Group, were lured by the chance to join the SPP’s wholesale power market. The West and the Southeast are the only two regions in the country without a wholesale market. SPP also provides reliability services.

Peak Reliability has been the official reliability coordinator for an area stretching across the West from Baja California, Mexico, to British Columbia since 2014. Utilities in the region pay Peak for services such as balancing the grid, outage protection and management.

But as utilities leave the system, costs for the others will mount. In an effort to combat this erosion, Peak announced in December that it was teaming up with PJM, the operator of the country’s largest wholesale market, to create a Western market. Peak officials say their market plan will be ready by the end of March.

A second group of Southwestern utilities is also studying joining SPP. This group, the Southwest Market Alternatives Group (SMAG), covers most of New Mexico, a chunk of Arizona and smaller portions of Texas, Nevada and California.

CAISO had floated the idea of creating a regional wholesale market using its in-state trading platform, but the effort floundered. Now, it says it will develop its own reliability services and offer them “to other parties across the West, at significantly reduced costs.”

“The ISO reluctantly takes these steps and will collaborate with the rest of the funding parties to ensure continuity of reliability services and to avoid any party being adversely affected financially,” Steve Berberich, CAISO president and CEO, said in a statement. “We will now seek to provide Reliability Coordinator services to our own system, as well as to other interested parties in the Western Interconnection.”

CAISO said it will hold informational meetings on its proposal in Folsom, Calif., Phoenix and Portland, Ore. in late January.

A reliability coordinator is responsible for complying with North American Electric Reliability Corporation (NERC) and regional standards. CAISO is planning to offer services including outage coordination and day-ahead planning, in addition to real-time monitoring for reliability.

CAISO said it will start a 20-month withdrawal period and have its reliability coordination unit certified and operational by the spring of 2019.

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