Please provide your organization's comments on the 20-Year Transmission Outlook.
The Bay Area Municipal Transmission Group (BAMx) appreciates the opportunity to comment on the CAISO 20-Year Transmission Outlook (20-Year Outlook Update, hereafter) and Approach to Offshore Wind, presented at the CAISO Stakeholder meeting on August 16, 2023. BAMx acknowledges the significant effort of the CAISO staff to develop this material.
In these comments, BAMx raises some major concerns about the skyrocketing CAISO Transmission Access Charges (TAC) and the CAISO’s financial fiduciary responsibilities to Californians and grid users. BAMx’s comments should be construed as attempting to assist the State in its journey to achieve its climate goals and not as any opposition to taking the necessary steps. Further, BAMx recognizes that electric rates may continue to rise as a necessary outcome in achieving the State’s climate goals. That said, it is imperative and incumbent on the CAISO to design and develop an appropriate and cost-effective electric grid to accomplish those goals.
In order to understand the TAC impact of the potential CAISO-approved transmission projects, BAMx developed a High Voltage Transmission Access Charge (HV TAC) forecast for the period of 2023-2036. The HV TAC is expected to be approximately $37.8/MWh in 2036 relative to the existing $14.45MWh, a 160% increase in the 13-year timeframe. This forecast included the CAISO approvals through the 2022-2023 Transmission Plan and additional transmission upgrades identified in the last 20-year Outlook. For details, see BAMx comments on the Draft 2022-2023 Transmission Plan, dated April 25, 2023. These HV TAC projections show the extraordinary impact building and paying for the projects proposed by the plan would have on the ever-increasing CAISO-wide HV TAC. Hopefully, it will motivate decision-makers to carefully select transmission options that respect the need to pick options that maximize cost containment and select cost recovery options that respect accounting for the total cost, including transmission costs, in resource selection criteria.
Need to Look into Transmission Cost Containment Mechanisms
BAMx strongly supports the CAISO analysis that distinguishes between those costs that are presumed to be recovered through the CAISO TAC and those that do not. BAMx supports concepts like the subscriber model, which provides an opportunity for developers to deliver generation to California without increasing the TAC and without picking the winner by selecting a project in the Transmission Planning Process (TPP). Such a mechanism ensures Load Serving Entities (LSEs) choose to buy power from the most cost-effective projects. Besides reducing the impact on the TAC, it promotes cost causation when evaluating out-of-state (OOS) and offshore wind (OSW) generation resource projects. BAMx believes that the subscriber model could apply to the remaining OOS projects. Besides promoting cost causation cost recovery for OOS projects, it also fosters cost recovery via OOS entities that may benefit from installing these projects. Overall, BAMx believes that the subscriber model should be applied to the remaining OOS projects and offshore wind projects and would have a tremendous positive impact in containing the ever-growing TAC.
Need to Utilize Resource Portfolios Based on Most Recent Transmission Capability and Cost Estimates
From the August 16th stakeholder meeting, BAMx got the impression that just like the resource portfolios used in the 2022-2023 and 2023-2024 Transmission Planning Processes, the portfolios that would be studied as part of the 20-Year Transmission Outlook update will be based on the older version of the transmission capability estimates that were developed as part of the White Paper in July 2021. The CAISO developed more recent estimates in June 2023. The June 2023 estimates are based on the CAISO’s most recent assessments and incorporate on-peak and off-peak limits and identified transmission upgrades for 104 transmission constraints compared to 44 in the 2021 White Paper. BAMx is concerned that the resource portfolios used in the 20-Year Outlook will not benefit from this latest information and, therefore, may result in identifying transmission upgrades that could have been avoided if the resource portfolios were adjusted based on the most recent transmission capability estimates. Therefore, BAMx urges that the CAISO screen the draft resource portfolios currently under consideration for the 20-Year Outlook and make the necessary adjustments if they are inconsistent with the latest June 2023 transmission capability limits.
Need to Fully Understand the Extent of TAC Impact and Need for Robust Cost Estimates
The 20-Year Transmission Outlook, dated May 2022, did a good job of providing the cost estimates associated with different types of transmission, including upgrades to the existing CAISO footprint, Offshore wind integration, and OOS wind integration. However, we believe the 20-Year Outlook missed the costs associated with some system upgrades required for starting point generation interconnection, such as the Wheeler Ridge –Kern 230 kV DCTL Project and the Kramer –Victor –Lugo Path Upgrade Project.
It appears that the proposed 20-Year Outlook update will not include an estimate of future HV TAC, which BAMx recommends the CAISO reconsider. BAMx believes the stakeholders must be kept informed of the 20-Year transmission plan’s financial impacts. On the other hand, BAMx is encouraged that the CAISO will develop cost estimates for all transmission upgrades identified in this update. BAMx urges the CAISO to provide preliminary engineering/planning cost estimates with the appropriate level of contingency to account for cost uncertainties in this early study cycle. For example, one industry practice is to include 100% contingency to account for uncertainties when the cost estimate is based on a preliminary project scope. These estimates can then be further refined based on the stakeholder feedback by the time the 20-Year Transmission Outlook is finalized in May 2024. It is critical that the transmission cost estimates are robust and realistic so that the policymakers and decisionmakers can make informed decisions based on the 20-Year Transmission Outlook. One such example of preliminary transmission cost estimates rendering misleading transmission cost assessment is the Eldorado – Lugo 500 kV line, which was estimated to cost $1 Billion in the last 20-Year Transmission Outlook issued in May 2022. However, the Draft 2022-2023 Transmission Plan identified another transmission project, i.e., Trout Canyon-Lugo 500 kV, which was similar in scope but was estimated to cost $2 billion. In other words, a closer look at the transmission scope and cost yielded a 100% increase in the transmission cost within less than the year when the original cost estimates were developed.
BAMx Supports the Alignment of Annual Transmission Plan and 20-Year Outlook
BAMx requests the CAISO to fully explain how the transmission considerations and approvals in the 2023-2024 TPP would be aligned with the 20-Year Outlook. As BAMx explained in its comments on the CAISO 2022-2023 Draft Transmission Plan (April 25, 2023), more information was necessary to systematically compare the transmission upgrades recommended in the Transmission Plan and those envisioned in the 20-Year Transmission Outlook. Although BAMx could map some of the approvals in the 2022-2023 Transmission Plan to those in the 20-Year Transmission Outlook, there were others that could not be mapped. The CAISO needs to provide much-needed insights into how the 2023-2024 Transmission Plan would align with the 20-Year Outlook update. BAMx urges the CAISO to give an early indication of this alignment at the November 2023 stakeholder meeting, where the CAISO is expected to provide preliminary policy- and economic-driven assessment.
 BAMx consists of City of Palo Alto Utilities and City of Santa Clara, Silicon Valley Power.
 See BAMx Comments on 2022-2023 Draft Plan, April 25, 2023.
 CAISO 20-Year Transmission Outlook, May 2022.
 20-Year Outlook, pp. 37-38.
Please provide your organization's comments on the approach to offshore wind.
Need to Incorporate All Transmission Facility Cost
The proposed plan for the 20-Year Outlook update does not distinguish between “gen-tie” facilities and network facilities in accessing OSW. BAMx believes it would be helpful for the CAISO to classify the envisioned transmission by definitions used in the CAISO tariff. We believe those characterizations would be interconnecting customer interconnection facilities (or gen-tie) that connect the OSW to appropriate onshore substations (points of interconnections) and other transmission facilities required to achieve an economically justified distribution of the new wind resources throughout the CAISO grid.
Need More Clarity on the Scope of Transmission to Access OSW
During the August 16th stakeholder meeting, the CAISO did not present the details on the scope of the following three transmission options.
- 500 kV AC line to Fern Road;
- Onshore overhead VSC-HVDC to Collinsville; and
- Offshore sea cable VSC-HVDC to Bay Area.
Although the May 2022 20-Year Outlook included the description of these transmission options, the detailed scope of these transmission options was missing. For example, one of the CAISO 20-Year Outlook presentations in 2021-2022 TPP, the Offshore sea cable VSC-HVDC to Bay Area project envisioned a VSC-HVDC subsea cable to a converter station in the Bay area (somewhere in the vicinity of SF) with 3 AC connections to Potrero, East Shore, and Los Esteros. Please confirm this scope, and identify the capital cost of all the elements in each transmission option.
Need for Least Regrets Approach and Cost-Benefit Assessment
BAMx supports the CAISO’s approach for preforming the high-level assessment in the 20-Year Outlook, Sensitivity Portfolio in the 2023-2024 TPP, and Base portfolio in the 2023-2024 TPP to recommend projects to integrate OSW in the three steps. BAMx appreciates the CAISO’s efforts in the earlier 20-Year Transmission Outlook and the proposed plan to perform studies to access the OSW resources. However, as the “West Coast Offshore Wind Transmission Literature Review and Gaps Analysis.” prepared by the Pacific Northwest National Laboratory (“PNNL Report,” hereafter), a considerable amount of work needs to be completed before choosing the preferred transmission option(s) for OSW. In particular, the PNNL Report identifies a series of challenges to delivering, transmitting, and producing electricity from offshore wind plants, especially floating offshore wind.
- Lack of prioritization for interregional coordination;
- Limited representation of future supply and demand patterns;
- Lack of technological readiness of floating transmission and offshore wind plant infrastructure, and undefined viable subsea cable routes;
- No validation of OSW generation attributes, etc.
As the PNNL report summarizes, “If guided intentionally, offshore wind may provide critical contributions to the bulk electricity transmission system through geographic and technological diversity. However, modifying transmission systems to accommodate these resources incurs long planning processes, uncertain siting requirements and construction timelines, and potentially high costs.”
BAMx supports the CAISO’s recommendation for approving transmission projects that are found needed to meet the needs of the Base portfolio in the 2023-2024 TPP only. Approving the transmission upgrades that are found needed in the Sensitivity portfolio and not in the Base portfolio would be counter to the CAISO’s FERC-approved tariff. Furthermore, there is significant uncertainty and challenges around the development of OSW wind resource development as identified in the PNNL Report, especially on the North Coast. Approving major transmission infrastructure based on speculative resource development may lead to underutilized assets at ratepayers’ expense, if not stranded. In summary, it is reasonable to consider approving a transmission project in the 2023-2024 TPP that has the flexibility for expansion to higher levels in the sensitivity portfolio and the 20-year outlook. However, it should not lead to approval of the transmission project(s) that well-exceeds the need identified in the Base portfolio.
During the August 16th meeting, the CAISO identified multiple transmission path alternatives based on the number of links from each transmission technology to meet deliverability requirements for the North Coast OSW assumed in the 2023-2024 Base Portfolio. In addition to the synergy with the Sensitivity Portfolio and 20-Year Outlook, the identification for transmission to access OSW in the 2023-2024 TPP must be based on a robust cost-benefit assessment. As an example, the Offshore HVDC (Bay Area) option adding 2,000MW of transfer path capability needs to be compared with the Onshore HVDC (Collinsville) option adding 1,400MW of transfer path capability based on a benefit-cost assessment. BAMx urges the CAISO to present its benefit-cost methodology in the next stakeholder meeting and update it based on stakeholder feedback.
Incorporate Deliverability Assessment Reforms in the 20-Year Outlook
On August 22, 2023, the CAISO issued a straw proposal on the Deliverability Assessment Methodology Revisions. Some of the changes proposed to the deliverability assessment methodology by the CAISO, such as the study of High System Need (HSN) and Secondary System Need (SSN) and excluding generators that have an insignificant impact on the high capacity and low impedance 500 kV constraint may have some meaningful impact of the need for delivery network upgrades to accommodate the resource portfolios. We recognize that the CAISO will not be able to implement these changes in time for the 2023-2024 TPP assessment, but given the “information only” nature of the 20-Year Outlook, we request the CAISO to implement these changes to the deliverability studies in the 20-Year Outlook. We also support the CAISO’s proposal to work with the National Renewable Energy Laboratory on OSW wind data to assess the potential impact of additional information on dispatch assumptions on deliverability studies.
 “Preliminary results for PG&E Area –Offshore Wind,” CAISO 2021-2022 Transmission Planning Process Stakeholder Meeting, November 18, 2021.
 CAISO stakeholder Meeting Presentation, “20 Year Transmission Outlook and Approach to Offshore Wind,” August 16, 2023. p.24.
 “West Coast Offshore Wind Transmission Literature Review and Gaps Analysis.” Prepared by the Pacific Northwest National Laboratory (PNNL) for the United States Department of Energy (DOE) Energy Efficiency and Renewable Energy Wind Energy Technologies Office (WETO), February 2023.
 PNNL Report, pp.15-16.
 CAISO stakeholder Meeting Presentation, “20 Year Transmission Outlook and Approach to Offshore Wind,” August 16, 2023. p.23.
 Per the CAISO's FERC-approved tariff, a Category 1 policy-driven transmission solution has to be identified to be needed "in the baseline scenario and at least a significant percentage of the stress scenarios."
 CAISO stakeholder Meeting Presentation, “20 Year Transmission Outlook and Approach to Offshore Wind,” August 16, 2023. p.23.
 CAISO stakeholder Meeting Presentation, “20 Year Transmission Outlook and Approach to Offshore Wind,” August 16, 2023. p.42.