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Energy Insights

February 2015  •  Issue 3

Steve Berberich photoWith 2014 barely in our rearview mirrors, the ISO is already gearing up for a new year and laying the foundation for the energy network of the future. The year 2015 promises to hold dramatic shifts in the energy generation and transmission landscape, as renewables become a bigger player in the power mix, and groundbreaking technology changes the way electricity is produced, stored and delivered.

In this issue of Energy Matters, you will read the highlights of the ISO's chief accomplishments in 2014 - including improved demand forecasting, infrastructure upgrades, and the November launch of the Energy Imbalance Market - and how they are shaping our next steps. There's a separate article detailing the in-depth benefits of the EIM marketplace.

This edition also profiles the new chair of the ISO Board of Governors, Richard Maullin, an energy policy pioneer who shares his story about energy, politics and the environment from Governor Edmund G. Brown Jr.'s first term 40 years ago.

There's coverage of the recognition I recently received as one of the nation's Top 10 influencers in the energy industry, an honor that I share with the entire ISO organization. This newsletter also gives overviews of the ISO's Energy Storage Roadmap and annual State of the Grid report, with links to the documents.

We also share our strategies for reaching out to stakeholders and other interested parties to help us improve service.

We hope you enjoy getting to know more about the ISO, the people that keep the electricity and the innovation flowing, and our role in creating the reliable, greener grid of tomorrow.


Steve Berberich, President and CEO

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New Board Chair Has Rich History in California

Richard MaulinAt the dawn of Jerry Brown's first gubernatorial term, a Middle Eastern war bubbled up into California's energy markets, and Richard Maullin was drafted into the politics of energy mostly by chance.

Now, it's dèjà vu 40 years later, with Brown beginning his historic fourth term as governor, and Maullin taking the reins of another energy policy leadership role. As the new chair of the ISO Board of Governors, Maullin is primed to make the state's independently operated electrical grid an important participant in California's pioneering effort to substantially reduce carbon emissions into the atmosphere, a campaign that has its roots in state policies adopted four decades ago.

Maullin was elected as the chair of the ISO Board in September 2014. At the time, Maullin had been reappointed to the ISO Board for a term ending in 2017.

Maullin had no particular experience with energy issues 40 years ago.

"The only contact I had with a utility was paying my electric bill," he recalled. But energy emerged as a hot global geopolitical issue during the 1973 Arab-Israeli War, when Arab countries imposed an oil embargo on the United States in retaliation for supporting Israel.

Maullin had recently graduated from University of California, Los Angeles, with a PhD in political science, and had served as Deputy Secretary of State from 1971 to 1974 under then-Secretary of State Brown.

When Brown was elected governor in 1974, Maullin became Brown's energy point person.

In 1975, after a few months of consulting on the politics of energy, Maullin was tapped to be the first chairman of California's Energy Commission, created when Brown took office.

"Somebody needed to take charge of forming this new state agency for reviewing and approving new power plants and aggressively pursuing energy conservation," Maullin said. "On the first day of the commission's existence, there was me and a secretary. We hired several hundred people in the first few months."

Maullin dove into energy issues during the tumultuous oil crisis and an era of rapidly growing environmental consciousness.

"There was increasing concern about unbridled and poorly regulated growth in the electricity sector, as well as heavy reliance on nuclear power and the seemingly mindless use of fossil fuels," he recalled.

According to Maullin, the California Energy Commission was borne out of wary agreement of opposing forces: environmentalists, who were calling for more effective regulation of power plants and independent mechanisms for forecasting demand and identifying energy resources, and the utilities, which were looking for clear rules and "one-stop shopping" for the review of power plant siting and energy transmission proposals.

In his five years as chairman of the energy commission, Maullin dealt with public policy decisions that had never cropped up before. He said the commission's mission wasn't wholly understood or articulated in the early days.

But even from the beginning, California was a leader among states on recognizing climate change and reducing greenhouse gases.

"Forty years ago, there was very intense debate about energy-efficiency, nuclear power and greenhouse gases," Maullin said. "Today's political environment surrounding power has its roots in movements 40 years ago."

Maullin also understands the historical context of the founding of the ISO. "The ISO is the offspring of a decades-long movement to guarantee grid reliability and to curtail the environmental consequences of unchecked use of fossil fuels," he said. After the deregulation of the power industry, the ISO created a marketplace for trading electricity.

The ISO survived Enron's notorious manipulation of the markets, an "ugly period," according to Maullin, and came out with a strengthened system for grid reliability and effective electric energy markets.

Maullin said the ISO has been building on its ability to forecast demand; match that demand increasingly with clean energy supplies at fair prices; and plan for future plants and transmission lines based on need.

"The ISO is respected not only statewide, but nationally, as a market-based approach to reliability, while being conscious and supportive of reducing greenhouse gases," he said. With the ISO's commitment, the state is on track to meet its mandate to generate 33 percent of electricity from renewable sources by 2020 and well-positioned to reach a new bar of 50 percent renewables by 2030.

"Market-based models are places where you get rewarded for the best designs," he said.

Maullin recognized the "enormous challenge" of integrating renewables into the grid, because of the more variable nature of wind and solar generation. He said the launch of the Energy Imbalance Market, which broadens the footprint for dispatching power, is a major step toward the creation of a regional marketplace for electric power.

"State borders don't necessarily correspond with the weather and energy production," Maullin pointed out. "Hopefully, we will continue to expand EIM to work with other balancing authorities to optimize production with an eye toward protecting our environment and economy."

Energy storage technology will also be key to incorporating more renewables into the grid, he said.

In his non-government life, Maullin is a founding partner of FM3, a nationally known public opinion research firm that has done public affairs work around the world. He speaks fluent Spanish and is knowledgeable in Yiddish, French and Portuguese.

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Report Shows Energy Imbalance Market Producing Benefits

EIM Reducing CostsA regional real-time energy market launched by the California ISO and Oregon-based PacifiCorp in November 2014 created an estimated $5.97 million in benefits in its first two months of operation. The ISO report is located here.

The benefits stemmed from the western Energy Imbalance Market (EIM), which allows market participants to buy and sell power over a larger geographical area, so they can find the lowest prices on energy and more effectively manage the growing infusion of renewably sourced electricity flowing into the grid.

The new market — profiled in the ISO's last edition of Energy Matters — draws electricity from power plants every five minutes to meet demand. It allows the ISO and its partner, Oregon-based PacifiCorp, to move renewable energy over a large region, depending on need. For instance, when wind farms are generating excess energy in California, PacifiCorp could import the low-cost power to fill its customer demand. And conversely, when renewable power plants in PacifiCorp's territory are producing an excess, the ISO can supply its customers with lower priced energy.

A study conducted before the launch of the EIM predicted that annual benefits in the marketplace would be $21 million to $129 million, so the actual benefits of $5.97 million in two months is on pace with that forecast.

The benefits are expected to increase as other balancing areas enter the real-time market. Las Vegas-based NV Energy is set to begin participating in the market October 1, 2015, meaning Nevada will be added to California, Oregon, Washington, Utah and Idaho in the EIM. For more information on the benefits of the EIM, click here to read the press release and find a link to the report.

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ISO Makes Big Strides in 2014 to Modernize the Grid

Big Strides Modernizing Grid The California ISO and western industry leaders are at the forefront of transforming the grid into a cleaner, more sustainable electric generation and delivery system.

While much of the ISO work is technical, ISO's accomplishments in 2014 have supported building a smarter, stronger power grid that's safe, secure and reliable. These accomplishments include improving weather forecasting, upgrading grid infrastructure in Southern California and launching the first-ever Energy Imbalance Market in the West.

Improving Forecasts

To efficiently balance energy supply with demand, the ISO depends heavily on accurate predictions of temperatures, cloud cover and wind speeds – particularly important as renewable energy production expands to meet the state's low-carbon energy goals. In 2014, the ISO made significant improvements to its forecasts, from updating them every two hours to every five minutes. Meanwhile, software enhancements improved the combined wind and solar day-ahead forecast by more than 10 percent over the 2013 average. Accuracy of the overall day-ahead demand forecasting also improved. The ISO is continuing to push for more enhancements, such as producing a better forecast of when exactly a cloud bank will cover a solar field.

Upgrading Infrastructure

The unexpected retirement of the 2,200 megawatts of Southern California's San Onofre Nuclear Generating Station in 2013 created a significant challenge to maintaining reliability. The ISO, regulators and Southern California Edison worked closely to take a holistic approach in rebuilding the Orange County and L.A. Basin grid, including approving infrastructure upgrades in 2014 to provide voltage support. Voltage acts like pressure does in moving water through a hose or pipe. Without voltage support, electrons won't move through the transmission line. The ISO's 2013-2014 Transmission Plan recommended three voltage support projects to be completed between 2017 and 2020 to fortify existing transmission while taking into account increasing demand through 2020. Work continues to redesign the Southern California grid and may also include building new generation and transmission facilities.

The Energy Imbalance Market

The launch of the Energy Imbalance Market (EIM) was one of ISO's top accomplishments for 2014. The EIM is an energy market across six western states that automatically dispatches the lowest cost power in the region to meet real-time energy demand. The market will cut operating costs while allowing energy resources, such as solar and wind generated power, to be shared across a wider region. The new EIM also enhances reliability by allowing neighboring grids to share information to best utilize lowest cost or renewable resources. Read more about this groundbreaking market here.

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Berberich Shares National Recognition with His Employees

Image PlaceholderISO CEO Steve Berberich was named one of "10 Most Influential People of 2014" in the nation by SNL Energy, a leading industry news organization. The list, in its second year, recognizes leaders who had a significant impact on the electric power, natural gas and coal industries.

Berberich was honored for leading the ISO during a "banner year," including the launch of the Energy Imbalance Market. He was lauded for his work in grid management, renewable energy integration and environmental policy support. "The SNL listing distinguishes the ISO as a driving force in this country toward innovation in power grid reliability and green energy sources," Berberich said. "I view this as a shared recognition for our whole organization."

The selection process relied on the industry expertise in the SNL Energy newsroom. SNL Energy reporters and editors submitted nominations of people who impacted the energy sector over the past year. The final list of people was selected by a committee of 10 veteran energy journalists at SNL Energy. Others on the list included Gina McCarthy, U.S. Environmental Protection Agency Administrator, and Booth Goodwin, U.S. Attorney for the Southern District of West Virginia, along with many CEOs of large energy corporations and environmentalists.

Click here to read the article.

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Energy Storage and State of the Grid Reports Now Available

California's Roadmap to Energy Storage

Image PlaceholderEnergy storage technology is being hailed globally as the next game-changing step toward greener, low-carbon energy and power grid reliability. And California, a longtime leader for reducing greenhouse gas emissions, has now positioned itself as the country's frontrunner in promoting storage.

The ISO, the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) recently unveiled a comprehensive roadmap to assess the current market environment and regulatory policies for connecting new energy storage technology to the state's power grid.

"Advancing and Maximizing the Value of Energy Storage Technology - A California Roadmap," which can be found here on the ISO website, is the product of collaboration by the three organizations and input from more than 400 interested parties, including utilities, technology companies, generators and environmental groups.

Energy experts see storage as a critical component to reducing global warming. California currently has several pilot projects, and wants to advance the commercialization of energy storage technology and to streamline connection to the grid.

The roadmap identifies any areas in the state's energy policies that could be improved for smoothing the way to getting technology to market and on the grid.

Technology to store energy is vital to optimizing the grid, increasing renewable energy sources and reducing greenhouse gas emissions.

State of the Grid Report

Image PlaceholderThe ISO also released its annual overview of the power grid, which shows that the ISO and western industry leaders are at the forefront of transforming the grid into a cleaner, more sustainable electric generation and delivery system. The State of the Grid, which is now available on the ISO website here, chronicles the efforts undertaken by the nonprofit, public benefit corporation's power and market experts to maintain reliability as well as integrate renewables in creating a modern, smarter electric power network.

Designed for reading on personal computers, mobile phones and tablets, the "State of the Grid: A Review of 2014" presents in a reader-friendly way the major issues and work underway to use flexible generation plants that can start and stop frequently as well as ramp and down on short notice. In addition, read about efforts to prepare the high-voltage grid that supports electric vehicles as well as the current state of energy storage and what it means for operating an efficient and cost-effective power grid.

The easy-to-navigate digital publication also includes an update on the ISO's Energy Imbalance Market, or EIM. Launched in November 2014 with our first participant, Portland-based utility PacifiCorp, the market optimizes resources across the ISO and PacifiCorp, which includes California, Oregon, Washington, Utah, Idaho and Wyoming. A pioneering effort, the EIM means ISO can use renewables when and where needed, which maximizes their value and efficiency.

The ISO website also has "Going green" and "Looking ahead" icons that will lead you to fact sheets and more about the rapidly changing world of electricity generation. Information includes how the ISO meets consumers' need for power while simultaneously addressing climate change, cleaning our air and water, and greening the grid.

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ISO Actively Engaged with Wide Range of Audiences

The California ISO operates a wholesale energy marketplace, with about 140 participants that directly buy and sell wholesale power moving across the high-voltage transmission lines crisscrossing the state. And like any other business, the ISO recognizes the importance of being responsive to its customers, using many channels to get feedback from clients and other stakeholders.

The ISO's customers can be market participants, like power generators and utilities, or entities with an interest in ISO policies and processes, such as transmission line and generator owners and developers. But the ISO also invites a wider stakeholder audience to help make market changes, including environmental groups, industrial and agricultural organizations, and solar, wind and energy storage associations.

The ISO has several ways to hear from stakeholders and industry experts:

Voice of the Customer Focus Groups - Executives and managers from across the power industry are invited to participate on a panel and give input on ISO systems and processes.

Touch Point Mapping - The ISO identifies other companies that get a high number of help desk tickets or customer service inquiries. A panel of ISO managers and directors interview all levels of that company's staff to find out what's working well and where there are areas to improve. These interactions have led the ISO to implement new training programs, create new user interfaces and data reports and have resulted in faster access to information for solving customer service issues.

Executive Outreach - The ISO's leadership team personally reaches out to customers to hear observations about ISO's performance and areas of importance to those customers. They also use it as an opportunity to discuss needed policy and market enhancements.

Executive Survey - The ISO conducts an annual, third-party executive survey of customers, industry associations, market participants, regulatory commissioners and industry leaders asking questions about ISO efficiency. The answers are used to track performance yearly, and to stay on top of current industry developments or market changes, including agency mandates, such as adding renewable resources or energy storage technology into the grid.

Weekly calls - The ISO schedules weekly calls with generators, transmission operators, scheduling coordinators and market participants to discuss operations, developments and challenges stemming from weather, market conditions or power outages. In addition, an in-person Market Performance and Planning Forum is held to provide updates on new enhancements.

The information from these programs helps shape the ISO's corporate goals, improving grid management and continuing to ensure a safe, reliable and increasingly renewable power source for its customers.

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