Can't Help Falling in Love (with markets progress)

Can't help falling in love (with markets progress)

February flew by—and with just 28 days, it didn't leave much room for everything on the to-do list, including sending out this newsletter! While the start of February may have felt a bit quiet in terms of Pathways momentum, efforts heated up by the end of the month with the introduction of a bill in the California legislature. Read on for the latest energy market updates and developments around the West.

Leah Rubin Shen, Managing Director at Advanced Energy United

As always, share the newsletter with your friends and colleagues and encourage them to subscribe. Feedback or suggestions for content? Please reach out to us at westernrto@advancedenergyunited.org.

Pathways Initiative Updates

Legislation Introduced in California

The moment we've all been waiting for! California Senators Stern and Becker introduced Senate Bill 540, colloquially referred to as the Pathways bill, which marks another major step toward regional energy cooperation. This bill would enable implementation of the Step 2 proposal from the Pathways Initiative, allowing for California entities to participate in energy markets governed by an independent regional organization and operated by CAISO.

I'm heartened by the progress up to this point made by the Pathways Launch Committee, which has worked hard to ensure that a wide range of stakeholders have a seat at the table, state interests are preserved, and the reliability and cost-saving benefits of sharing resources across the West can be fully leveraged. This bill is the next step in achieving that vision. While the Launch Committee will not be formally lobbying for the passage of the bill, many of the individuals who participate will do so on behalf of their respective organizations. You can see a list of currently supporting organizations on this fact sheet.

For a good summary of the bill and its importance, this blog by EDF's Michael Colvin is an excellent resource.

Ongoing Stakeholder Engagement

ICYMI, Pathways also hosted a stakeholder meeting last week. Members of the Launch Committee gave a brief overview of the Pathways bill and discussed the next phases of the work to set up a new Regional Organization (RO). In the near-term, the Formation Committee (a subset of the Launch Committee) is working on items that can be addressed before the RO is formally launched, such as drafting corporate documents and developing the processes for the nominating committee.

Once SB 540 is signed into law, the RO Board will be nominated and seated. After the Board is seated, it will take over decision making, hire staff, and finalize and submit tariff changes. It is important to note that none of this work will interfere with the ongoing operations of the WEIM or the launch of EDAM, which will happen in parallel until the RO is ready to take over governance.

The Launch Committee also noted there is uncertainty about the status of the Pathways grant from the U.S. Department of Energy, and that even with the grant, additional funding is necessary. The Committee is developing a plan and will likely be coming back to stakeholders for additional funding.

There will continue to be opportunities to engage with the Launch Committee through monthly stakeholder meetings and potentially some workshops as well. For more information, visit the Pathways website.

Day-Ahead Market Updates

SPP Markets+ Begins Phase Two Developments

Last month, SPP announced that it received sufficient funding commitments from utilities across the West to support phase two of Markets+ development. The full list of utilities includes Arizona Public Service, Bonneville Power Administration (BPA), Chelan County PUD, Grant County PUD, Powerex, Salt River Project, Tacoma Power and Tucson Electric Power. As we noted in January, this funding commitment from BPA comes ahead of their expected day-ahead market decision on March 6.

Keeping Track of EDAM Commitments

The EDAM webpage maintains a list of which utilities are in which stage of commitment. Currently, eight entities have committed or are leaning toward EDAM: Balancing Authority of Northern California, LADWP, PacifiCorp, Portland General Electric, BHE Montana, Idaho Power, NV Energy, and PNM.

Powerex Raises Concerns about EDAM

Canadian-based Powerex raised concerns about EDAM last month, releasing a new paper identifying a "design flaw" and claiming it would burden non-CAISO participants with $1 billion in unjustified congestion charges. In response, CAISO and PacifiCorp released a joint statement rejecting these claims, arguing that Powerex (a Markets+ supporter) was distorting the data to serve its own economic interests. The Brattle Group also rejected these claims.

Updates Around the Region

Pacific Northwest

Uncertainty at BPA could cause a delay in its day-ahead market decision - but probably won't. The agency has been facing pressure after the Senators from Oregon and Washington urged it to carefully evaluate the costs and benefits of its market decision, and pressure has only increased with recent staffing uncertainty, including the departure of key executives and hundreds of employees accepting the Trump administration's "deferred resignation" offer. However, BPA confirmed in response to a letter sent this week by some PNW utilities and labor unions that it has no plans to change its timing. BPA is expected to issue its next "letter to the region" this week, on March 6.

Tacoma Power is among the latest to announce its intent to join Markets+ and is now the second municipal utility in the Northwest to do so.

Wyoming

In comments responding to the California Energy Commission's January 24 workshop on regional markets, the Wyoming Energy Authority expressed concerns regarding the proposed staffing structure for the markets under a new RO, saying that such an arrangement could compromise the impartiality required for effective oversight and market rule implementation. Due to PacifiCorp's WEIM participation and commitment to join EDAM, the state is more focused on the governance and evolution of these markets than it may have been in the past.

Colorado

Meanwhile, Xcel Energy filed last month to join Markets+, a decision that may have been influenced by outdated assumptions, and while not unexpected, could take the state in the wrong direction. My colleague Brian Turner lays this out in his latest blog (shameless plug), highlighting key considerations for Colorado's market decisions, the risks of outdated thinking, and why uniting with the rest of the West could be the best path forward.

Also worth noting: while several other utilities around the West have conducted studies assessing the relative costs and benefits of their day-ahead market choices and which energy market would be best for their customers, Xcel's filing lacks a thorough analysis.

Nevada

The Nevada Regional Transmission Coordination Task Force published its biennial report recommending severalopportunities for Nevada to advance its transmission infrastructure and strengthen regional cooperation across the West.

This year, the Task Force will be further exploring the economic benefits of joining a Western market, including potential areas where growth in demand for electricity or renewable energy generation would be accommodated by additional transmission or market opportunities for businesses and industries that could be located in the state.

Read my recent blog (another shameless plug!) to learn more about how the Task Force recommendations could impact Nevada's energy future.