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Energy Insights

February 2016  •  Issue 6


Steve Berberich photoCalifornia is a leader in the transition to the clean, reliable energy grid of the future. It was already on track to satisfy state mandates for supplying 33 percent of the state's electricity from renewable sources. Now, a new law has pushed that goal higher, calling for half of the state's power to come from renewable sources by 2030.

To achieve that goal, the California ISO is making important progress toward the launch of a multi-state regional energy market, which many believe will unlock valuable economic and environmental benefits. It could be part of the solution to reducing carbon emissions that cause pollution and global warming, while saving energy and infrastructure costs.

In this newsletter, learn about the clean energy network of tomorrow, why it's critical to the West, a timeline of milestones, and the legislation, studies and policies needed to make it happen.

Also, find out how the ISO is informing the public about the advances in the coming months toward a regional market, and how to join the discussion.

These are only the first steps in a years-long process of reshaping the grid. By laying a strong foundation, and getting input from the public, consumers and our stakeholders along the way, we envision building an electricity network that will be sleeker, greener and more cost effective, one that will serve the entire West for many years to come.


Steve Berberich, President and CEO

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Benefits of a regional market

A regional grid uses a mix of the lowest cost resources from a larger geographic area. For example, morning solar power in California can be used in other states, while wind power from Wyoming produced later in the day can be used to satisfy California's demand. In addition, renewable energy would not have to be turned down or off during times of excess production, as that power can be moved to meet demand in other areas.

PacifiCorp, a Pacific Northwest utility, is currently exploring joining the ISO to create a regional market. The ISO and the utility released a study that finds a regional grid leads to significant cost savings. The study projects that PacifiCorp's integration into a regional ISO would produce between $3.4 billion and $9.1 billion in combined gross cost savings in its first 20 years of operation.

A large, diverse regional grid would also help make it easier for states to meet state and federal environmental goals that include the federal Clean Power Plan and California's goal of meeting 50 percent of electricity needs with renewable resources by 2030.

The analysis also found that a regional grid is likely to reduce greenhouse gas emissions because of efficient management and coordinated planning. Wind and solar generation will be more available across the region, reducing the need to start up natural gas or coal plants. The regional study estimates that full participation by PacifiCorp will reduce greenhouse gas emissions by as much as 2.6 million metric tons per year.

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Why is legislation needed?

Under the California state law that created the ISO in 1996, the governor appoints board members, and the state Senate confirms the appointees. California Senate Bill 350 (SB 350) recognizes the need to include board members from throughout the region. SB 350, signed into law last year, provides a path for the ISO to modify its governance structure.

The law requires the ISO to complete a series of studies on the environmental, economic and operational impacts of a regional energy market, along with analysis of needed infrastructure.

ISO intends to submit the completed studies and governance modifications to the California governor by this summer. PacifiCorp plans to get regulatory approvals in six states in 2017, and in 2018, the two entities can start the transition to a combined network. According to this timeline, operations are expected to begin in January 2019.

An ambitious timeline will ensure all participants can start realizing the benefits of a regional market as quickly as possible. The timing is important, given that California set a goal of getting half its electricity from renewable sources by 2030, and states need to lower carbon emissions to comply with the federal Clean Power Plan. To meet these goals, it's critical for the ISO to begin the process of stakeholder initiatives and engagement, public meetings, draft proposals and studies, so the new market can begin producing environmental benefits — and the region can begin reaping the cost savings of operating a centralized grid.

Timeline for regional integration activities

Note: Timeline designed to allow PacifiCorp to obtain state regulatory approvals before the end of 2017

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Following the discussion

FollowingDiscussionThe restructuring of the energy network is a major undertaking, and will take time, careful attention to detail, and perspective from many different voices.

The ISO is committed to transparency and open discussion during the stakeholder initiative process and SB 350 studies, and there are many ways to get engaged in these efforts.

Two stakeholder initiatives — Regional Resource Adequacy (Regional RA) and Transmission Access Charge Options (TAC Options) — started in late 2015. To find out more about the Regional RA initiative, click here. To learn more about the TAC Options, click here.

Two more initiatives, Regional Integration California Greenhouse Gas Compliance and Metering Rules Enhancements, are set to begin in the first quarter of 2016.

The first public meeting on the methodology for SB 350 studies will be held at the ISO offices, Monday, February 8. The deadline for registering to attend in person is February 4. Click here for more information on how to register, or how to participate by web conference or phone.

The California ISO hosts bi-weekly web conference calls the first and third Tuesday of every month for all parties interested in regional integration activities. The purpose of these calls is to provide an update of the current and upcoming activities associated with regional integration. Click here for a link to the stakeholder calendar.

For regional integration fact sheets, timelines and links to related resources on initiatives and SB 350, click here to visit the ISO's "Benefits of a regional energy market" web page.

To subscribe to the ISO's Market Notices related to regional integration, click here.

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ISO reorganization supports regional efforts

The ISO recently underwent an internal corporate reorganization to shift resources to creating a regional energy market.

When Karen Edson, ISO vice president of Policy & Client Services, announced her retirement effective April 1, that role was divided into two officer-level positions, one devoted to regional and federal affairs - which will be filled by Stacey Crowley - and another dedicated to customer and state affairs, which will be filled by Thomas J. Doughty.

Restructuring the organization in this way allows for more focus on the process of integrating entities into a regional grid, and developing policies to smooth the way to a multi-state market, while maintaining excellent customer service. All of the work will lead to an accelerated shift to cleaner energy, and cost savings for the western states.

For more information, click here to see the press release.

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