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Industry Musings Blog

Review our industry blog highlighting our experts' thoughts on
industry trends and complexities.

Tied Up in Nots

By Ziad Alaywan, P.E. Time to Get Real. With the CAISO past the quarter century mark, it is time to assess the progress made toward regional expansion. Although I am agnostic about this topic, I remember the RTO West discussions of the late 1990s and the many attempts since then to turn the CAISO into an RTO. On the surface, it makes a lot of sense. Historically, California imported 25% of its energy from out-of-state suppliers. It is also interesting that four out of the last five CAISO CEOs were non-Californians, and two were from the Northwest. I imagine every new CEO quickly understood that the only way to reduce CAISO costs, including transmission, was to expand the CAISO footprint. Twenty-five years later, with regional EIM representing only 5% of the market, regional expansion is still far off. I have always wondered whether governance is really the main obstacle preventing regional expansion! Why should anyone expect an out-of-state utility in Oregon to join the CAISO when California utilities such as LADWP, SMUD and IID, which have more load than the states of Oregon and Nevada combined still are not part of the CAISO? Maybe we should prioritize finding ways to attract those in-state utilities to join the CAISO. This would clearly lead to improvements to the existing market. Since the summer of 2020’s one-day shortage event, the CAISO implemented a rule whereby exports from CAISO to any non-CAISO utilities, even if it is in California, can be curtailed before CAISO firm load is shed. This can occur even when the CAISO is a net importer. Implicitly, the CAISO would rather shed load served by utilities outside of the CAISO rather than do the same within its footprint. After 25 years, the CAISO is here to stay, but instead we may reconsider focusing inward. Let’s face it, when my wife goes back to her home in Montana, she would rather rent a car in Montana rather than drive her California car showing California license plate. Why? I will let you figure it out. Hint! We are not welcomed with open arms outside of our Golden state.

Published April 21, 2023, to the Western Power Trading Forum's "The Friday Burrito", Vol. XXVI #12

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