Comments on Western EIM Governance Review - Straw Proposal

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

The American Wind Energy Association (AWEA) is a national trade association representing a broad range of entities with a common interest in encouraging the expansion and utilization of land-based and offshore wind energy resources in the United States. AWEA’s more than 1,000 member companies include wind turbine manufacturers, component suppliers, project developers, project owners and operators, financiers, researchers, utilities, marketers, customers, and others.  AWEA-California is a project of AWEA representing companies that develop, own, and operate utility-scale wind, solar, storage, offshore wind, and transmission assets. AWEA-California is focused on driving immediate and sustained development of new utility-scale renewable energy to propel California toward a carbon-free electric future

AWEA generally supports the GRC’s Straw Proposal.  It appears to offer a reasonable and balanced governance structure while working within the confines of various statues and requirements that must be adhered to. We applaud the GRC for its work on this proposal and look forward to continued engagement on the development of a final proposal.

While AWEA generally supports the proposal, there is one area where the EIM/EDAM Governing Body must be given more authority in order to ensure that the market that is overseen by the Governing Body is consistent and efficient across its entire footprint. As discussed more in response to Question #6, AWEA urges the GRC to augment its proposal to provide the Governing Body with authority to approve the sections of EIM/EDAM Entity tariffs that address market implementation and operation. This will help ensure that, as the diversity of the EIM/EDAM footprint grows, the market maintains consistency and provides open access to different types of market participants.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

AWEA generally supports the proposed “joint authority” model, under which both the Board and Governing Body must approve an initiative that falls within their joint scope. The GRC’s proposal for addressing issues which are not approved by both bodies also appears to offer a reasonable path forward. Providing two opportunities for staff to further work with stakeholders to find a compromise that will enable approval by both bodies provides a meaningful opportunity for resolution of a conflict prior to competing proposals being filed at FERC.

AWEA also supports the enhanced durability of the delegation of authority, which would require a unanimous vote of the Board in order to change the delegation of authority to the EIM (or EDAM) Governing Body. Aligning the notice period with the proposed withdrawal period also appears to provide EIM Entities with an opportunity to exit the market if there is the potential for such a substantive change to the market’s governing structure.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

CAISO has proposed to give public interest/consumer advocates a vote in the nominating committee, putting them on equal footing with other stakeholder sectors. AWEA supports this change to the process for selecting Governing Body members, especially as the representatives from this sector have played a meaningful role in EIM and EDAM’s development and their perspectives are important to formalize with a voting role.

AWEA also supports specification of the diversity qualities that are being sought in selecting Governing Body members. Specifying these qualities upfront will help the search firm and stakeholders identify candidates that can meet the set of diverse qualifications being sought for an open Governing Body position. Having the set of diverse qualities that would best complement the remaining members identified upfront will be helpful in appropriately complementing the Governing Body and ensuring diversity is maintained.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

AWEA supports the recommendation to enhance the Regional Issues Forum (RIF) rather than create a formal stakeholder committee. Creation of a formal stakeholder committee would likely lead to significant disagreements over which stakeholders should be a part of the committee and the number of seats that different sectors should have on the committee. Alternatively, the proposal in the GRC’s Straw Proposal to enhance the RIF will allow a well-functioning and diverse set of stakeholders to continue to discuss issues and provide feedback to the Governing Body. Allowing the RIF to discuss matters that are part of ongoing stakeholder processes is an important enhancement to the functioning of the RIF and is critical to the RIF’s continued effectiveness as the EIM and EDAM expand and are further developed and critical issues are likely to be part of ongoing stakeholder initiatives.

The RIF should be able to share consensus opinions on ongoing stakeholder processes, but should not be restricted to only sharing consensus opinions. The RIF should share consensus opinions and other opinions (including minority opinions) with the Governing Body and the Board to ensure that those bodies are better informed on the variety of stakeholder opinions which may exist on a particular issue, even if the stakeholders themselves do not provide their perspectives directly to the Governing Body.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

In comments on the GRC’s Scoping Paper, AWEA advocated for the GRC to consider expanding the authority of the Governing Body to review EIM (EDAM) Entity tariff prior to those tariffs being filed with FERC or the relevant regulator. This new area of Governing Body oversight will become increasingly important to ensure the market operates under a consistent set of rules, especially as participants with more diverse regulatory oversight structures join the market and as the functions of the market potential expand from real-time to day-ahead. Having Governing Body review of individual participant tariffs will ensure the market operates efficiently and consistently and will help provide better assurances of fair and equitable treatment of all market participants in EIM/EDAM tariffs. This type of oversight is critical to ensuring a well-functioning and consistent market structure is maintained.

This type of consistency is not a currently a feature of the EIM because the EIM is implemented in part through the CAISO tariffs and in part through EIM Entity tariffs (and, presumably, EDAM would be similarly situated). Each EIM Entity tariff provision regarding the EIM looks slightly different, though FERC’s review of tariff modifications has kept most aspects of the EIM relatively similar. The EIM is now incorporating more and more entities that are not FERC-jurisdictional and which could (theoretically), implement rules and requirements within their tariff that are at odds with the rest of the EIM market.[1] Thus, there is a critical need to ensure that the rules implemented across EIM, and even more importantly EDAM, are consistent and do not create seams within the market or lead to the market divulging into individual “submarkets.”  

Governing Body authority over the tariff revisions of the sections of EIM/EDAM Entity tariffs that affect the market, prior to the tariffs being filed with the primary regulator (e.g. FERC), would help address these concerns and ensure implementation of the EIM/EDAM in each Balancing Authority Area (BAA) that chooses to participate is “consistent with” the overall market design.

Given the diversity of enabling utility tariffs and their oversight, this function will be an important one for the Governing Body to have going forward. Such an approval by the Governing Body will ensure consistency in the market and promote fair and equitable market access across the EIM (or EDAM) footprint. The GRC should explore what this structure would look like and the reasons it may be needed and appropriate for the EIM and EDAM going forward.

[1] Note there are multiple examples of inconsistent EIM rules and EIM implementation. For instance, one EIM Entity requires all resources to be designated as EIM Participating Resources. And another EIM Entity is contemplating not allowing resources owned by others to participate in the EIM upon initial operation. Other EIM Entities have implemented different requirements for EIM participation. It is these types of issues which should be standardized across the EIM (and even more importantly EDAM) to ensure an efficient market.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

AWEA generally supports providing the Governing Body with an increased role on the Department of Market Monitoring (DMM) Oversight Committee and with joint authority in approving members of the Market Surveillance Committee (MSC). The Straw Proposal provides a good mechanism for incorporating the Governing Body into DMM and MSC, given the restrictions it must work within.

An outside market expert to provide the Governing Body with advice is also an improvement to the current governance structure. As stated in prior comments, this outside market expert should be able to review and should understand the interactions of the markets (EIM/EDAM) with bilateral markets. The expert should be tasked, in part, with helping the Governing Body understand how actions in the bilateral market might impact the efficiency and outcomes of EIM/EDAM.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

AWEA supports the provisions of funding for the BOSR. We understand the potential equity concerns with having BOSR funding obtained from the CAISO tariff. However, if the BOSR is expanded to include non-voting public power representatives this may help address the equity concerns that have been raised. We encourage the GRC to continue its efforts to identify and recommend a funding source for the BOSR.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

As discussed more in response to Question #6, we encourage the GRC to evaluate expansion of the Governing Body’s authority to include an “approval” of EIM/EDAM entity tariff revisions that relate to market implementation and operations prior to those tariff revisions being field with the relevant regulatory body (such as FERC, a public power governing body, or a Federal Power Marketing Administrator). This type of authority is critical for the EIM and EDAM to function efficiently and as a consistent market across the footprint. It becomes more and more vital as the regulatory structures of market participants grows over time.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

Bonneville Power Administration (Bonneville) appreciates the opportunity to comment on the Draft Straw Proposal dated July 31, 2020 (Straw Proposal) prepared by the EIM Governance Review Committee (GRC).  Bonneville commends the GRC for the quality proposal it put forth given the number of varied perspectives and opinions offered to the GRC as a result of its initial Scoping Paper issued early in this EIM governance review effort.  The GRC’s consideration of alternative governance elements is a step forward in demonstrating its commitment to an independent, transparent, and inclusive EIM governance structure.  It is Bonneville’s hope that a final version of the Straw Proposal can be put in place as soon as possible, independent of developing the Extended Day-Ahead Market (EDAM) initiative.

In addition to Bonneville’s comments provided herein, it is also supportive of comments provided by the Public Power Council and the Public Generating Pool, and has signed on to the EIM Entities comments.  While there may be a few nuances between the submitted comments, Bonneville agrees with the general content submitted on behalf of these entities and has noted below where there is a notable difference with the EIM Entities comments.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

Bonneville supports the GRC’s recommendation for Joint Authority between the CAISO Board of Governors (Board) and the EIM Governing Body (Governing Body).  Joint Authority advances greater independence to the market oversight function through an equal versus an advisory-only role for the EIM Governing Body.  Further, a joint structure enhances the decision-making process by facilitating robust information exchanges and interactive discussions.

Bonneville agrees it is prudent to develop a process to resolve potential deadlocks where the Governing Body and the Board disagree on whether to approve a proposal.  Bonneville is also supportive of the proposal requiring an iterative process with an attempt to reach agreement before a dual filing to the Federal Energy Regulatory Commission (FERC) for its consideration.  Bonneville believes this process will encourage collaboration, and, as a result, dual filings would be exceedingly rare. 

The Straw Proposal states this iterative process would only occur “where a change in rules is clearly needed,” and requests comment on whether this iterative process “could appropriately address a situation where a change in the tariff is not clearly needed . . . .”  This seems to leave open a definition of which changes would qualify as “clearly needed” and who would make that determination.  Therefore, Bonneville proposes that, where there is a deadlock between the Governing Body and the Board, members of the two bodies would vote on whether to engage in the iterative process or take no action on the proposal.  If a majority of the members support the iterative process, the proposal will go through the iterative process.  A tie would also default to the iterative process.

The Straw Proposal also requests comment on the number of attempts before allowing a dual filing with FERC.  Bonneville proposes that one attempt be made through an iterative process before a dual filing be made to FERC. 

Bonneville understands the need for short-term emergency filings in response to exigent circumstances and does not oppose retaining the current provision.  The Straw Proposal provides three options to address these emergency filings under a Joint Authority construct.  Because Bonneville expects emergency filings to be extremely rare, Bonneville could support either of the first two options, with one caveat: Bonneville requests that CAISO staff be required to first attempt to assemble both bodies within a reasonable time, perhaps remotely, and only where a joint meeting is infeasible would a one-body approval be allowed.  Bonneville does not support the third option, which would allow CAISO staff to file without either body’s approval.

Regarding the decisional classification process, Bonneville notes that the GRC’s proposal to move to a Joint Authority model will largely moot the decisional classification issue.  Indeed, one of the advantages of the Joint Authority model is that it creates a “bright line” in defining the Governing Body’s approval authority.  However, if the GRC modifies its Joint Authority proposal in response to comments, and the decisional classification therefore becomes more important, Bonneville believes the decisional classification issue will need to be revisited.

The Straw Proposal includes three tie-breaker alternatives if there is an evenly split vote among Governing Body and Board members regarding a classification decision.  Bonneville supports the second option, which alternates authority between the chairs of the two bodies.  This option helps address concerns with structural bias favoring either body without adding unnecessary administrative burden.  As with the decisional classification process generally, if the GRC modifies its Joint Authority proposal, Bonneville would expect an opportunity to comment on this tie-breaker role within that new context.

Bonneville continues to emphasize the significance of durable commitment to the delegation of authority to the EIM Governing Body.  Such durability is essential to sustaining participation in the EIM and attracting support for possible day-ahead market services.  Bonneville urges the GRC to recommend that any changes to the delegation of authority require unanimous approval by the Board and the Governing Body.  Both bodies should consider such changes with the specific advice of the Regional Issues Forum (RIF) and the Body of State Regulators (BOSR) as well as a public comment opportunity.  Further, funding for the Governing Body should be established as a renewing fixed commitment and not rely on being prioritized and appropriated in a broader budgeting process. 

The GRC proposes that the effective date of any charter revisions should correspond to the period of time required of market participants to give notice and withdraw from the market.  If that period of time is 180 days, then the effective date for any changes adopted to the delegation of authority should correspondingly be at least 180 days.  Further, this provision should apply to the current EIM, and for the EDAM if established.  Bonneville suggests that the effective date for any changes to charter revisions be the amount of time required for market participants to give notice and withdraw from the market, plus 90 days.  This will provide enough time to allow entities to consider the changes and deliberate with their stakeholders as to whether withdrawal from the market is the appropriate course to pursue.

As discussed above, Bonneville is supportive of the joint authority model proposed by the GRC.  It is important for the GRC’s final recommendation to clarify when this joint authority proposal will be put in place and what issues will be subject to this new jurisdiction model.  The Straw Proposal suggests that joint authority over the real-time market should be implemented in the near term.  However, the timing for joint authority over the EDAM is not as clear cut.  The Straw Proposal makes a general statement about expanding joint authority to the day-ahead market once the EDAM is approved by FERC, but it also refers to joint authority over the EDAM market design.  In the interest of clarity and to promote durability and confidence in the market’s governance, the GRC should clarify that the EDAM market design must be directed and approved through the joint authority model.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

Bonneville is supportive of the GRC’s recommendations regarding selection of Governing Body members.  Specifically stating diversity selection criteria to encompass geographic background and experience are welcome additions to ensure a strong mix of perspectives on the Governing Body.   

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

Bonneville supports the GRC’s proposed structure of a Modified RIF as an improved form of stakeholder engagement.  The Modified RIF will now serve as a body that engages with issues in a manner that complements the CAISO’s process, and is not constrained to only those Energy Imbalance Market issues that are not part of the CAISO stakeholder process.  However, to be successful Bonneville believes the Modified RIF will need to have certain characteristics.

While complementary to the existing stakeholder process, Bonneville expects the Modified RIF will function as a fully independent body that will, among other things: (1) establish its own charter;[1] (2) have authority to develop and propose its own issues; (3) provide a forum for knowledge exchange as well as for robust discussion of market issues; and (4) communicate regularly and directly with the Governing Body and Board at joint meetings.  Through this expanded and more formal and transparent structure, stakeholders have the assurance that their opinions and concerns will be considered.  Recognizing that the RIF’s members will have a wide range of positions on issues, Bonneville further suggests that a Modified RIF should be encouraged to present both majority and minority opinions to the Governing Body and Board to ensure the full context of an issue is measured as decisions are made.[2] 

The GRC also requests input on existing sector classifications that are used for selecting stakeholder liaisons for the RIF.  Bonneville suggests the following revised classifications:[3]

1. EIM Entity
   An Entity already a part of the EIM or with a signed Implementation Agreement and in the process of joining the EIM.
2. EDAM Entity
   If an EDAM is officially established.
3. PTO
4. IPP/Power Marketer
5. Public Interest/Consumer Advocate
6. California Public Power
7. Northwest Public Power
   Bonneville proposes regional public power sectors because the interests of public power in various regions can vary significantly.
8. Southwest Public Power
   Bonneville proposes regional public power sectors because the interests of public power in various regions can vary significantly.
9. Major Intertie Operators
   Major Intertie Operators represent operational and reliability considerations and perspectives. The purpose of this sector is for major path operators to the California and EIM footprint to focus on implications of the existing and future market design in respect to system operations and reliability.  This sector would not be duplicative to the existing Reliability Coordinator (RC) role CAISO provides for RC West, whose focus is more on real-time operations, not the development or modifications of the market. 
10. Neighboring Balancing Area Authority
    This sector may not be needed in the future as more entities join the EIM.

Bonneville appreciates the GRC’s consideration of the role of public power and power marketing administrations (PMA) in the west.  Bonneville has been supportive of elevating the role of public power and PMAs.  While the GRC’s proposal is not what Bonneville was looking for, Bonneville is willing to work with the GRC recommendation, but it would be preferable for the liaison roles to have voting roles.  Bonneville would endeavor to work collaboratively with BOSR members to align BOSR goals and objectives with those of public power and the PMAs.  Bonneville suggests the GRC or its successor review the effectiveness of this alignment and be willing to reevaluate the role of public power and PMAs during future governance structure review processes.  Should the BOSR not ultimately propose inclusion of PMAs and public power within their committee, Bonneville will seek establishment of a separate stakeholder committee for their representation.

[1] Including provisions such as: (1) each Governing Body/Board meeting will include a standing agenda item for the RIF, sufficiently in advance of any Governing Body decision; (2) Governing Body/Board can refer issues to the RIF; (3) the RIF may invite Governing Body members to attend RIF meetings; (4) taking positions on potential Governing Body decisions; (5) making alternate recommendations; and (6) providing educational material to Governing Body/Board on relevant issues.

[2] Bonneville’s comments are much more prescriptive regarding the Modified RIF than the EIM Entities’ comment.  This is an area where Bonneville believes the GRC should provide direction in order to ensure that the modifications made to the RIF are meaningful.  Bonneville also offers more comments regarding the role of public power and Power Marketing Administrations as new liaison roles in the Body of State Regulators.

[3] While Bonneville’s sector suggestions have some similarity to those in the EIM Entities’ comment, there are notable differences.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

Noted below.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

Bonneville appreciates the GRC’s consideration of potential changes for the CAISO Roadmap process and understands the importance of allowing CAISO management to set schedules and prioritize issues with input from stakeholders and a full understanding of resources and market imperatives.  However, Bonneville would like to see a more influential role for the Governing Body and the Board in the roadmap process.  The change that Bonneville is advocating for would give the Governing Body and the Board the authority to prioritize or deprioritize specific issues.  The Governing Body and Board would not provide input on every roadmap issue and would only request prioritization or deprioritization on the issues that are of particular importance to either of them.  This change would not take the ultimate roadmap finalization away from CAISO management.  Rather, it would give the Governing Body and Board a more formal avenue for input into the roadmap process by making roadmap recommendations to the CAISO that are given more weight than general stakeholder input.  If CAISO management decided to deviate from the prioritization recommendations made by the Governing Body and the Board, CAISO management should be required to provide a full explanation of the reasons for the deviation to the Governing Body and the Board.  This construct would allow the Governing Body and Board to give more direction to the roadmap process without overly impinging on CAISO management’s ability set priorities.      

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

Bonneville supports the Straw Proposal’s increased interaction between the Governing Body and Department of Market Monitoring (DMM), and seconds the GRC’s belief that “it is necessary for the Governing Body and the Board to have equal access to market data, information and analysis produced by DMM and MSC.”  The proposal to invite a Governing Body member to executive session meetings of the DMM Oversight Committee is appreciated.  Given that the Governing Body member’s participation would not include exercising the authority of the Board as a voting member, and that the Governing Body member is expected to relay what is learned to the rest of the Governing Body, Bonneville supports extending the invitation to all Governing Body members.

Bonneville supports the GRC’s proposal for the Governing Body to have joint authority over the approval of Market Surveillance Committee (MSC) members.  This proposal helps assure that the MSC is institutionally oriented to consider the interests of the full market footprint.

Bonneville strongly supports the GRC’s proposal for the Governing Body to retain the services of an outside market expert (OME).  The Governing Body’s unique authority and perspective will cause it to prioritize issues differently than the Board; it may need expertise in evaluating alternatives on certain subjects, while the Board would prioritize the DMM’s and MSC’s work elsewhere.  Having the OME directly report to the Governing Body should also increase confidence in EIM participants that the Governing Body’s decision-making is fully informed and independent. 

Bonneville believes that the GRC’s proposal should not limit the scope of issues the OME could address.  While the EDAM market design and implementation may dominate the OME’s workload, nothing should restrict the Governing Body’s ability to request other analysis from the OME.  The proposal should include the flexibility for the Governing Body to direct the OME to produce the analysis it determines it needs most.

Bonneville appreciates the GRC’s proposal that the OME begin work before any final decision on EDAM market design, and is very supportive of retaining the OME’s services as early as possible.  It is critical that the OME be able to support the Governing Body as it exercises joint authority over the current development of the EDAM market design.  It would be a mistake to wait until a decision adopting an EDAM is imminent before allowing the OME to begin providing its services to the Governing Body.  Providing increased expertise early on, resulting in more informed policy development, should help smooth the decision-making process, whereas late-breaking analysis could be disruptive.[1]

Bonneville understands the GRC’s proposal to set a five-year term on the OME contract in order to provide an opportunity to reconsider the role of an OME.  It is assumed that the decision whether to enter a new OME contract would be subject to joint authority, with the Governing Body then unilaterally selecting the OME.  However, a certain degree of deference should be given to the Governing Body’s determination of the OME’s value at that time.  If the Governing Body expects to have a full workload for the OME, and sees benefit from the OME’s analysis, then the Governing Body should be allowed to enter a new contract with an OME.

Bonneville also requests that the GRC proposal include additional detail regarding how the OME will be selected.  It appears in the Straw Proposal that the Governing Body will be given a sufficient budget, and will have the authority to unilaterally select the OME.  Bonneville supports the Governing Body selecting the OME.  The Governing Body should consider certain criteria in making that selection to ensure independence and relevant market experience.  Specifically, the OME—whether an individual, group of individuals, or firm—should have market experience both with the CAISO and other regulated markets.  The GRC should consider whether the same firm that assists the Nominating Committee in identifying candidates could be used to identify potential OMEs. 

[1] The EIM Entities comment suggests that the OME may only be needed if the EDAM proposal goes forward.  As described above, Bonneville’s position is that the OME is an important asset that the Governing Body needs regardless of the status of EDAM and that the OME should be brought in as soon as possible. 

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

Bonneville agrees with the GRC in seeking further stakeholder input and proposals for possible funding for the BOSR.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

Bonneville is supportive of stakeholder input on a mechanism for EDAM mission and criteria development.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

Bonneville is supportive of the re-evaluation of the governance as proposed by the GRC.  It is important to monitor and evaluate the effectiveness of any governance proposal over a pre-specified period of time and make adjustments as determined necessary to ensure efficient and robust governance that factors in all stakeholders’ interests.  BPA agrees with the five years’ time span.  The creation of the GRC after five years of the Transitional Committee-adopted proposal is an excellent example of change in ISO governance needed due to the growth of the market and the potential expansion to the EDAM.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

Bonneville understands that the Public Power Council’s comment raises questions regarding the potential conflicts between Section 345.5 of California Public Utilities Code and the requirements of the Federal Power Act.  Bonneville believes these are important question to raise and requests that the CAISO legal staff address Public Power Council’s questions. 

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

• CESA does not support one aspect of the proposal at this time.

2. Provide summary of your organization’s overall position on this proposal:

The California Energy Storage Alliance (CESA) is an industry group that serves as the voice of energy storage for CA, with roughly 100 members, committed to advancing the role of energy storage in the electric power sector through policy development and continuous engagement with regulatory bodies and other stakeholders. We are technology and business model-neutral and promote opportunities and markets for the wide variety of energy storage solutions, including with different energy storage durations.

As energy storage solutions propagate and more energy storage is needed in California and the west, CESA expects to continue its CAISO-related advocacy, which will include siting of storage in ex-California areas.  As such, we are focused on supporting the EIM’s success and expansion.

            With respect to the EIM Governance proposals, CESA does not support the inclusion of an Outside Market Expert (OME).  The Market Surveillance Committee (MSC) (as detailed further below) is reasonably capable of addressing EIM market design issues; as such, CESA recommends an expansion of the MSC's role instead of the creation of an additional entity.  This makes sense based on capabilities and also on limiting the number of parties having ‘opinion-type’ authorities for the CAISO.  An additional body could also increase costs and complexity, unnecessarily.

CESA otherwise appreciates the efforts of the ISO to incorporate the feedback of stakeholders within this initiative. In particular, CESA commends the Governance Review Committee (GRC) for offering a balanced and reasonable proposal.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

CESA opposes the GRC's proposal to ensure the Governing Body access to an additional Outside Market Expert (OME) if the Extended Day-Ahead Market (EDAM) moves forward. In the Straw Proposal, the GRC argues that due to the historical focus and expertise rooted in California-directed policies and the interest of California load, the MSC might not be reasonably equipped to address broader market issues from a multifaceted perspective. Thus, the GRC believes that an OME would provide an important external perspective that could bolster confidence in the market and encourage participation in EIM and EDAM. CESA disagrees with this conclusion.

            First, CESA does not consider that currently the MSC has a distinct California bias. The MSC is composed of three nationally-regarded experts that have worked in several states on electric market issues. They have experience in several of the US markets, including CAISO, PJM, and the Midcontinent Independent System Operator (MISO) Moreover, they have conducted research that has been published on peer-reviewed journals, some of them on topics related to energy markets beyond the US, such as the European Union. The MSC’s knowledge and expertise are not geographically limited and should not be wasted or disregarded due to a perceived California bias.

            Second, the establishment of an OEM would be redundant and inefficient. The institution of another surveilling body could lead to confusion with regards to policy and implementation, particularly for issues that transcend regular CAISO operations and could impact EIM or EDAM. Having two oversight authorities could result in the Governing Body and the ISO sending inadvertedly contradictory signals to market participants, for example.

            In the spirit of efficiency and clarity, CESA recommends maintaining the authority of the MSC in all market design and related matters. The MSC is a credible body with experts able to provide valuable advice on matters related to EIM and EDAM, as well as to regular ISO matters.  The MSC has also shown a repeated interest in understanding and incorporating stakeholder input from all vantages, and CESA expects this responsible approach from the MSC will and should continue.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

Chelan PUD fully endorses the Governance Review Committee’s guiding principle that EIM and EDAM governance should “provide stakeholders throughout the West with confidence that the governance structure represents the market as a whole, broadly respects and considers the interests of all stakeholders, and is resilient under a wide range of market conditions.” Chelan agrees this is the right principle for developing a governance structure for a multi-state market. While Chelan continues to consider a fully-independent board—divorced from the political power of any particular state—as the best governance model for a multi-state market, Chelan recognizes that the GRC’s task, and the task of interested stakeholders, is to evaluate whether a regionally acceptable governance approach is possible under the CAISO’s existing legal framework.

Chelan generally supports the GRC’s proposed governance framework, in which the Governing Body and CAISO Board of Governors share decision-making through joint authority. However, ensuring this governance structure will truly be “resilient under a wide range of market conditions” will require additional consideration of the durability elements of the proposal and additional regional dialogue about CAISO’s legal obligations. Later in these comments, Chelan recommends a governance design dispute resolution mechanism that could bolster the durability of the proposed shared authority framework and asks CAISO to provide additional information on how the proposed governance structure will work within CAISO’s existing legal framework.

Chelan also supports the Public Generating Pool, Public Power Council and Public Power Utilities’ comments.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

Delegation of Authority for Market Rules to the Governing Body

In its comments in response to the GRC’s scoping paper, Chelan PUD advocated for a delegation of authority that would enable the Governing Body to autonomously craft and sustain real-time and day-ahead market rules and prevent the CAISO Board from unilaterally moving forward with new market rules. Based on the legal assessment attached to the GRC proposal, Chelan understands that CAISO’s view is that under existing law the CAISO Board needs to maintain a “concurring role in decisions about changes to market rules in order to preserve the showing of control needed to maintain its tax-exempt status and to discharge its ultimate responsibility to manage the company and exercise its fiduciary duty to the corporation.” Overall, Chelan views the GRC’s proposed approach to the issue of delegation of authority as a workable compromise, so long as the proposed delegation is sufficiently durable and effective third-party dispute resolution is available to address stalemates between the Governing Body and Board.

Scope of Authority

Chelan supports extending the Governing Body’s “scope” of authority to cover all real-time market rules in the context of EIM, and all real-time and day-ahead market rules in the context of EDAM. Chelan agrees with the GRC that due to the interdependent nature of the EIM and CAISO’s real-time market, any change to CAISO’s foundational real-time market design will unavoidably impact the EIM footprint outside the CAISO BAA. Moving to an EDAM will expose the EIM footprint to even greater dependence on the CAISO markets’ designs. Since the Governing Body is chartered with considering the interests of the market footprint as a whole, it is appropriate to condition all real-time market rule changes on its approval and condition all real-time and day ahead market rule changes on its approval in the event EDAM moves forward.

Type of Shared Authority

With respect to the issue of which “type” of authority should be delegated to the Governing Body, Chelan anticipates the true test for any shared governance model will likely come during a time of high-stakes, contentious decision-making. During such a time, primary authority and joint authority would function much the same way: both the Governing Body and Board would have the ability to effectively veto each other and prevent a market rule change from moving forward, subject to dispute resolution. In those high-stakes circumstances, Chelan does not think the additional procedural hurdle present under the primary authority approach—the Board needing to pull an item off its consent agenda—would provide significant meaningful protection compared to a joint authority approach.

The distinction between primary authority and joint authority would likely be more apparent during times of lower-stakes decision-making. In those circumstances the Board would be more likely to approve the Governing Body’s decision via the consent agenda process, rather than opting to pull the item off the consent agenda for further deliberation. Therefore, in Chelan’s view, primary authority is the preferred model because it should lead to decision-making and stakeholder advocacy being focused in the Governing Body’s arena at most times.

The GRC observed that the Board has never pulled a single EIM Governing Body primary authority decision off its consent agenda. Chelan does not see this as proof that the Board is likely to always defer to the Governing Body’s decisions moving forward, but rather a reflection of the reality that the Governing Body’s current scope of primary authority is quite narrow, the EIM is still a relatively new market and EIM transactions have historically constituted a modest portion of Western Interconnection trading. The likelihood of the EIM community facing contentious issues in which a single market design decision could result in a significant transfer of value between market participants, or transfer of value between regions, will only increase as the EIM footprint continues to grow, and will certainly multiply if EDAM moves forward. Therefore, Chelan anticipates that even under a primary authority approach, the CAISO Board would likely inevitably be compelled to use its procedural tools to prevent a market rule from moving forward.

The GRC noted one key advantage to the joint authority approach is that it should encourage collaboration, and promote cohesion and common understanding between the Governing Body and the Board, in part by exposing both bodies to hearing the concerns of all interested stakeholders across the footprint at the same time. Chelan agrees a continued practice of joint decision-making and deliberation should generally result in increased collaboration, cohesion and common understanding between the two bodies. For that reason, and because Chelan does not view the primary authority model as providing meaningful additional protection during particularly contentious decisions, Chelan considers the joint authority approach to be an acceptable compromise.

Process for Resolving Potential Deadlocks

Chelan supports the general process outlined by the GRC for resolving deadlock. Under this process the two bodies have more than one opportunity to reach agreement, and if they do not, alternative proposals may be filed with FERC. Chelan agrees the bodies should make at least two attempts to reach agreement before the option of filing alternative proposals become available. Requiring at least two rounds of deliberation makes it more likely the bodies will reach consensus. The shared decision-making process should strongly incentivize finding a regionally acceptable solution to a market design problem and FERC should be relied on as a tie breaker only as a last resort.

Chelan recommends that if the bodies do not reach agreement after two rounds, then either body could trigger the process for CAISO management moving forward with filing alternative proposals with FERC. Chelan anticipates this process could work even in a situation where one body supports CAISO management’s proposed tariff change but the other body does not and has no alternative proposed tariff change it supports. In this case that other body in effect supports the status quo market design, and the status quo market design is what would be treated as the alternative proposal in the FERC filing.

For both proposals to be on equal footing in front of FERC, the Governing Body will need to be empowered to manage the presentation of its preferred alternative. Multiple procedural mechanisms may be available to ensure this will occur. One idea is to include the Governing Body’s comments as part of the CAISO filing (and any subsequent answers). The Governing Body should also be empowered to develop a direct relationship with FERC. The Governing Body will likely need access to funding for travel in order to build and sustain that relationship and should not be restricted in its ability to independently communicate with FERC.

Short-Term Emergency Filings

Chelan anticipates an “exigent circumstances” tariff filing process will rarely, if ever, be used but recognizes the need for that process to be available in the event an emergency filing is needed to prevent market manipulation, or address an imminent threat to reliability, and it’s not possible to immediately assemble the full Governing Body and CAISO Board. Chelan is open to options for securing approval for such an emergency tariff filing that align with the spirt of “joint authority.” Of the options listed in the straw proposal, alternating approval between the Governing Body and Board is likely the most consistent with the concept of joint authority. However, Chelan recommends the GRC also consider the option of requiring approval from both the Governing Body Chair and CAISO Board Chair. Regardless of the approval mechanism, Chelan recommends changing the maximum term for any such amendment to one week but also requiring that the full Governing Body and Board be convened as soon as possible after adoption of the temporary tariff amendment—but no later than one week—to consider whether to proceed with extending the amendment or pursue a different solution. One week should be sufficient, particularly now that remote conferencing is ubiquitous. And if circumstances are truly exigent, the Governing Body and Board should have a heightened focus on developing a lasting solution. Chelan also recommends further definition around what constitutes "exigent circumstances."

Decisional Classification Process

Chelan agrees disputes over decisional classifications will be very rare under the joint authority approach. Nevertheless, maintaining the practice that the CAISO Board Chair serve as the tiebreaking vote in the event of disagreement between the Board and the Governing Body on a decisional classification does not align with the spirit of “joint authority.” Of the options listed in the straw proposal, alternating the tiebreaker role between the Board Chair and the Governing Body Chair is the most consistent with the concept of joint authority, but is an imperfect solution. Chelan recommends the GRC also consider the option of having the decisional classification default to “joint authority” in the event of an unresolvable dispute on classification between the Governing Body and Board. If either of the two bodies believes a particular market rule is a real-time or day-ahead market rule, that may sufficiently indicate that the rule will impact the market as a whole and should fall under the bodies’ joint authority. Chelan remains open to other ideas put forward by stakeholders.

Durability

Chelan views the durability of the Governing Body’s delegated authority to be as important as the “scope” and “type” of that authority. The CAISO legal counsel’s attachment to the straw proposal highlights that CAISO’s purpose is to “promote the reliability and efficiency of the grid in California.” More specifically, California law appears to charge CAISO with managing its markets in a manner that “reduc[es], to the extent possible, overall economic cost to the state’s consumers” and “maximize[es] availability of existing electric generation resources necessary to meet the needs of the state’s electricity consumers.”^[1] Market participants outside California need sufficient assurance that CAISO’s mandate will not be realized through an EIM or EDAM that systematically increases costs or reduces availability to consumers in other states. The Governing Body’s oversight over market design functions as the most critical component of that assurance. Meaningful checks must be in place to preserve the Governing Body’s role to prevent a future where utilities outside California could be effectively hostage to a market that routinely leans towards the interests of California.  

CAISO counsel concluded that the CAISO Board may not irrevocably delegate its authority and the GRC’s proposal reflects this constraint by providing the Board with unilateral power to change the Governing Body’s delegated authority. Based on this legal constraint, Chelan accepts that unanimity is the appropriate voting threshold for making such a change. However, in practice, there could be a workaround to the unanimous vote requirement. The context under which the CAISO Board would consider revoking or limiting the Governing Body’s delegated authority (against the recommendation of the Governing Body) would most likely be during a highly contentious disagreement over market design. These circumstances could easily become politically charged. Because the CAISO Board members are political appointees of California, the California governor (with Senate approval) could simply remove and replace any Board members that disagreed with revoking or limiting the Governing Body’s delegated authority, effectively forcing unanimity.

For this reason, Chelan recommends adding additional protection for the durability of the Governing Body’s delegated authority in the form of dispute resolution. The GRC’s proposal already contains a dispute resolution process for market rule design disputes between the Governing Body and Board that Chelan believes could serve as a model for governance design disputes. That dispute resolution mechanism could provide the Governing Body and Board with two attempts to reach agreement on a governance change. If during that second attempt the Board does not secure a Governing Body advisory opinion supporting its desired governance change, the Board would be able to move forward with its change (subject to the unanimous vote and notice requirements) upon receiving an affirmative declaration from FERC that the proposed change meets FERC’s independence standards.

Chelan also strongly supports including a mandatory notice period for implementing governance changes that aligns with any notice period EIM or EDAM entities have for withdrawing from the EIM/EDAM market. This aspect of the proposal appropriately recognizes that entities that choose to enter the market, do so with the reasonable expectation the market they participate in will be governed in part by a body that is chartered with representing the interests of the entire market footprint.

Last, Chelan recommends the GRC consider additional protections to ensure the Governing Body cannot be functionally nullified, for example by having its funding, or its discretion over that funding, eliminated. One option for achieving this type of protection could be to include language in the CAISO bylaws requiring the CAISO to provide adequate resources to the Governing Body, including financial resources, for it to be able to effectively fulfil its mission.

^[1] CA PUC 345.5 (emphasis added)

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

Role of the Public Interest and Consumer Advocates Sector Representatives on the Nominating Committee

Chelan PUD supports providing the “Public Interest Groups and Consumer Advocates” sector representative a voting role on the Governing Body nominating committee.

Selection Criteria: Enhance Diversity

Chelan supports expanding the Governing Body selection criteria to include social diversity in addition to professional and geographic diversity.

Terms of Governing Body Members

Chelan supports the GRC’s proposal to extend a Governing Body member’s term for 60-days in the event a replacement has not yet been confirmed, if requested by the nominating committee, approved by the Governing Body and agreed to by the sitting member.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

Governing Body Meeting Process

Chelan agrees the Governing Body’s current meeting processes and outreach efforts are generally working well although Chelan remains open to improvements suggested by other stakeholders. As the EIM footprint continues to grow, and particularly if EDAM moves forward, Chelan anticipates the market community will increasingly benefit from continuing to vary the geographic location of in-person meetings. The Governing Body’s current approach to rotating meeting locations should serve as a good model for the joint sessions of the Governing Body and CAISO Board that will be needed under the joint authority framework.

Modifying the Regional Issues Forum to Enhance Opportunities for Stakeholder Engagement

Chelan supports enabling the Regional Issues Forum to tackle issues that are part of an active CAISO-led stakeholder process. Although the RIF’s historic role as a venue for education and discussion of general issues impacting the EIM community has proved valuable, Chelan anticipates both stakeholders and the Governing Body and CAISO Board will see increased value if the RIF also focuses on “live” market design issues.

Allowing stakeholders to debate market design issues through the RIF should facilitate deeper understanding of various perspectives (e.g. different resource types, different regions) and provide a convenient space for stakeholders to collaborate on analyzing and developing market design alternatives. The Governing Body and Board should also benefit from the enhanced quality of stakeholder interaction, in part due to the increased likelihood that RIF discussions will result in broader groups of stakeholders reaching consensus on specific market design proposals. Chelan agrees the RIF should have the option to provide written recommendations on market design to the Governing Body and Board. Chelan does not have a specific proposal for the process the RIF should follow to develop a recommendation and thinks it would be appropriate to allow the RIF to develop that process.

Representation for Federal Power Marketing Agencies and Consumer-Owned Utilities

Chelan supports establishing consumer-owned utility and power marketing agency liaisons on the BOSR. There are numerous consumer-owned utilities across the West with diverse interests and Chelan recommends establishing a sufficient number of liaison positions for consumer-owned utilities to account for that diversity.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

Chelan has no general comments on other potential areas for Governing Body involvement.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

Initially, Chelan PUD thought providing the Governing Body with decision-making authority over the CAISO policy initiatives roadmap would serve as a means to ensure CAISO prioritizes its work in a way that appropriately reacts to the needs of the EIM (and potentially EDAM) market footprint. However, upon further reflection, Chelan agrees with the GRC’s concern that subjecting the roadmap to formal approval by the Governing Body (or CAISO Board) could negatively impact the flexibility, efficiency and productivity of the CAISO in advancing policy initiatives. Therefore, Chelan supports retaining the approach that the Governing Body and Board provide input on the roadmap and the final content of the roadmap is left to CAISO management’s discretion. However, Chelan recommends the GRC also consider an option that would allow the Governing Body and Board to add priority issues to the roadmap if necessary, to ensure they are addressed in a timely manner. Chelan also recommends CAISO work with stakeholders to develop evaluation criteria that CAISO would use when choosing which initiatives to include in the roadmap and when determining which initiatives necessitate priority resources and timing. 

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

Department of Market Monitoring and Market Surveillance Committee

Chelan PUD agrees with the GRC that the Governing Body will need equal access as the CAISO Board to market data, information and analysis produced by the CAISO Department of Market Monitoring and Market Surveillance Committee. Chelan also supports the GRC’s recommendation to provide the Governing Body with joint authority to approve MSC members. With respect to DMM oversight, Chelan supports the Governing Body having the maximum level of involvement possible. The GRC concluded that both FERC and corporate law significantly limit that involvement. Accepting that, Chelan supports the GRC’s recommendation to have a Governing Body member regularly attend the DMM Oversight Committee executive sessions.

Chelan anticipates these proposed changes could incrementally enhance DMM and the MSC’s responsiveness to and expertise of market issues impacting market areas, participants and ultimately ratepayers outside California. However, Chelan considers these changes to be insufficient for ensuring the Governing Body has the necessary resources to make informed decisions on complex market design matters, particularly in the context of EDAM. As explained below, Chelan believes an outside market expert will be a critical resource for the Governing Body.

Outside Market Expert

Chelan strongly supports providing the Governing Body with the authority and budget to retain an outside market expert, and the discretion to select that market expert. The Governing Body needs adequate access to analytical resources and information in order to effectively fulfil its role of developing market rules for a multi-state footprint. Chelan views Governing Body access to an outside market expert as useful for EIM but critical for EDAM. A multi-state EDAM will introduce significant complexity to CAISO’s market design, requiring careful consideration and understanding of many issues including non-ISO resource adequacy, day-ahead trading and transmission practices. Chelan agrees the continued need for that outside market expert should be reevaluated after a reasonable period of market operation (five years seems reasonable). But significant deference should be given at that time to the Governing Body’s assessment, in consultation with market participants and other stakeholders, of whether retention of an outside market expert still provides value.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

Chelan PUD does not object to the BOSR securing technical expertise or other resources it determines it needs to effectively participate in CAISO policy initiatives. Chelan agrees with the GRC that the appropriate funding source for any such resource is likely the state commission jurisdictional utilities and securing funding through a generally applicable CAISO market charge would not be equitable.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

Chelan PUD agrees the EIM Governing Body’s mission and accompanying decision-making criteria remain appropriate for EIM although Chelan is open to improvements suggested by other stakeholders.

Chelan expects the Governing Body’s mission statement will need to be revised if EDAM moves forward and agrees that the specific revisions will depend on the EDAM market design. Chelan supports the GRC re-evaluating the mission statement, and accompanying decision criteria, once proposed EDAM market design has reached a sufficient level of maturity, perhaps after draft final straw proposals are completed for all three EDAM “buckets.” Chelan also recommends considering whether a mission statement and decision criteria should be developed that are applicable to both the Governing Body and CAISO Board and that would guide the exercise of their joint authority decision-making.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

Governance Reevaluation

Chelan PUD supports building in a stakeholder-led review of the governance structure no later than five years after any new governance structures have been implemented as a result of the GRC process.

Timing of Implementation of GRC Recommendation

Chelan agrees there should be an opportunity to reevaluate governance once the EDAM market design is sufficiently mature. Assuming the GRC maintains its current timeline for developing a governance proposal, Chelan supports the GRC remaining available to further consider any EDAM-specific aspects once the CAISO staff has developed a draft final proposal that addresses the main elements of the proposed EDAM market design.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

Chelan PUD appreciates that CAISO provided an assessment of some of its legal limitations along with the GRC straw proposal. Chelan joins the Public Power Council in requesting that CAISO provide additional information on its California statutory obligations, specifically in the context of the GRC’s straw proposal and in the context of the Federal Power Act. Understanding CAISO’s legal limitations and obligations is critical to evaluating the resiliency of any governance model and to understanding whether the CAISO Board, in the context of EIM or an EDAM, may be compelled to act in a way that places primary importance on the interests of California rate payers, perhaps at times to the detriment of ratepayers within the market footprint outside California. Based on CAISO’s response to the Public Power Council’s questions and additional stakeholder discussions, Chelan may support additional modifications to the GRC’s straw proposal.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

The California Municipal Utilities Association (CMUA) is supportive of the Governance Review Committee’s (GRC) Straw proposal and appreciates the comprehensive approach to a myriad of interlocking governance issues reflected in the Straw Proposal.  Our comments below focus on a few open issues and reinforce public power concerns in various areas.  We suspect that stakeholders may have narrow asks that push governance design boundaries in certain areas.  We urge the GRC to consider these views carefully, but not to stray too far from the careful balance struck in the Straw Proposal, and to focus on filling gaps that the GRC has identified and upon which it has sought stakeholder comments.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

CMUA supports the way in which the move to Joint Authority, the expansion of authority of the Governing Body, and the proposed durability, fit into a comprehensive whole.  We support the move to joint authority, which should encourage greater collaboration on key market design issues, and reflects in a realistic way that the Board of Governors should be affirmatively acting upon key market questions.  CMUA supports the expansion of authority to the whole of the Real Time Market in the case of EIM, and to the Day Ahead Market in the case of EDAM.  This recognizes the interlocking nature of various Tariff elements.  While CMUA has lingering concerns that the requirement that a unanimous vote to modify key governance issues is not sufficiently flexible to adapt to future changed circumstances, we recognize that effective durability provisions are essential for many stakeholders and are acceptable in the context of the broader governance proposals contained in the Straw Proposal. 

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

CMUA believes the current use of the Nominating Committee has worked extremely well to identify and select high quality candidates to serve on the EIM Governing Body.  CMUA recognizes the key contributions made by public interest organizations serving on the Nominating Committee in an advisory capacity, and supports the proposal to make them full voting members.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

CMUA supports the proposals to move toward greater utilization of joint meetings and also focus additional meetings of the Board away from the Folsom Headquarters.  The dispersement of EIM Governing Body meetings has been helpful to engage stakeholders in several regions within the EIM footprint, and helps outreach efforts, which all support confidence in market decisions among participants. 

CMUA also supports an augmented Regional Issues Forum (RIF) as a vehicle for greater stakeholder engagement.  To be candid, in other governance discussions, CMUA has urged the CAISO to move to a formal stakeholder advisory committee to reform the current process to look more like how stakeholder engagement is accomplished in other RTOs.  However, given that the EIM, and even the EDAM, are not true Day Two markets and do not implicate key resource and transmission planning and cost allocation policies, we agree with the GRC that utilizing an augmented RIF in lieu of these aforementioned alternatives is a logical next step.  The RIF has proven to be an invaluable tool for stakeholder education and dialogue, and clarifying its role in the overall stakeholder process is an efficient and effective way to augment existing processes.

CMUA also supports an advisory liaison role for public power on the Body of State Regulators (BOSR).  While in past governance debates some stakeholders have objected to a role for public power on the BOSR or other regional state committees, the plain fact is that roughly one-third of the load in the Western Interconnection is served by public power entities that are not subject to state ratemaking jurisdiction.  It simply makes sense that these entities have a voice on the BOSR as the BOSR considers issues that affect retail consumers.  While CMUA recognizes that public power entities are also market participants, the dual role of such entities as market participants and regulators cannot be avoided.  Finally, it cannot be overlooked that the BOSR has no decisional role at the CAISO.  Thus, the liaison role for public power is an advisory role to an advisory body.  We cannot see why this would create consternation.

As it relates to the specifics of the number of liaisons for public power on the BOSR, CMUA urges three, to be allocated to (1) Pacific Northwest public power entities; (2) California public power entities; and (3) Desert Southwest/Rocky Mountain public power entities.  This would ensure that the diversity goals the GRC is memorializing in the Straw Proposal are effectuated.   From a California perspective, we note that California entities are still not afforded the same optionality of market alternatives and participation as entities in other regions.  Thus, it is essential that participation for California POUs is hardwired into this proposal.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

CMUA has no comment on this issue.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

CMUA supports the GRC Straw Proposal. 

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

CMUA supports these aspects of the of the Straw Proposal.  We would like to further comment on the establishment of an Outside Market Expert (OME).  CMUA understands the proposal to be applicable to EDAM, and we support that approach.  The EIM as currently constructed is working well, and introduction of additional voices into market design questions could be damaging.  However, we also recognized that recent grid stressed events may have some stakeholders seeking an accelerated timeline for the establishment of the OME.  We would appreciate the GRC addressing this issue specifically in its next Proposal. 

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

CMUA supports the approach on BOSR funding contained in the Straw Proposal.  First, CMUA completely agrees that states need tools to enable understanding of market design choices and the impacts of these complex issues on state energy policy.  Nevertheless, we firmly oppose any proposed CAISO-administered charge as a vehicle for funding these efforts.  Market charges are generally paid for by all market participants, not just entities subject to state ratemaking jurisdiction, and this distinction is critical when assessing the efficacy of using a CAISO administered charge for this purpose.  Also, it seems inevitable that if a CAISO charge is established to fund the BOSR, a long line of suitors will form outside the CAISO’s door hoping to use CAISO funding sources for similar or other purposes.  This has certainly been the experience in California for programs that use ratepayer funding to support advocacy for various groups.

CMUA would prefer an alternative that sourced BOSR funding either through direct state expenditures (much like what is done for current California agency engagement in CAISO initiatives), or through a new retail rate mechanism at the state level.  To reiterate, CMUA supports the resources necessary for full and robust participation by BOSR, but not through the auspices of a CAISO administered charge.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

CMUA has no comments.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

CMUA has no comments.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

CMUA has no comments.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

Support with caveats

The EIM Entities appreciate the opportunity to comment on the Draft Straw Proposal dated July 31, 2020 (Straw Proposal).  First and foremost, the EIM Entities would like to thank the members of the Governance Review Committee (“GRC”) for their hard work, thoughtful consideration of these complex issues, and impressive work product. The Straw Proposal represents a significant step forward in enhancing independent governance of the Western Energy Imbalance Market (“EIM”) and the potential expansion to the Day-Ahead Market (“EDAM”), within the boundaries of existing California law. The EIM Entities hope that the Straw Proposal can be refined, approved, and implemented by the end of this year or early 2021.

The EIM Entities emphasize that the EIM (and potential future EDAM) governance and oversight framework must be robust and durable under all grid and market conditions. In light of the recent August heat wave event, the EIM Entities believe that further review of the governance and oversight approach to the EIM (and potential future EDAM) may be warranted once more complete information and analysis on this August heat wave event is available.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

The EIM Entities strongly support the proposal for joint authority between the EIM Governing Body (“GB”) and the CAISO Board of Governors (“BOG”). The EIM Entities agree that the EIM and by extension the EDAM “is deeply intertwined with, and inseparable from, all other aspects of the real-time market, that this integration has continued to increase as the EIM has grown.” Therefore, the norm is for an initiative to be generally applicable. Moving from an advisory role for the GB to full joint authority provides greater independence to market oversight while maintaining consistency with California law under the delegated authority approach.

The EIM Entities also agree that this bright line will be easier to administer than the current approach which contains a subjective criterion as to the motivation behind an initiative. Moreover, a generic market rule may have significantly different effects on the CAISO’s Balancing Authority Area as opposed to the EIM Entities’ Balancing Authority Areas operating under an Open Access Transmission Tariff (“OATT”) structure, but, under the current approach, the GB would only have an advisory role.  These shortcomings are remedied by the joint authority proposal.

The EIM Entities support the proposed majority voting structure. While most of the decisions to date have been on a consensus basis, the majority voting is appropriate given the current 5-member size of the GB and the BOG.

The EIM Entities support the proposal to have initiatives considered at a joint meeting whenever possible. This will enable GB and BOG members to hear the questions of the other body and the CAISO staff responses and permit dialogue between the GB and the BOG prior to undertaking the vote and should foster collaboration.

The EIM Entities appreciate the need to include a dispute resolution process as part of the final proposal and agrees that, if there is no agreement, the initiative should be taken back to stakeholders to explore ways to address the identified concerns and to establish a revised proposal for the two bodies to consider.

If, however, in this second attempt the GB and the BOG are still deadlocked, the EIM Entities would recommend proceeding with the dual filings at FERC. It is important to remember the significant time between when an initiative is first considered and when it is presented for an initial vote, especially under the CAISO’s current policy of not seeking conceptual approval prior to developing the necessary tariff changes. Two or more additional rounds of process may significantly delay the initiative implementation schedule. Moreover, it may lead a market participant to file a Federal Power Act Section 206 complaint at FERC to address the situation if the CAISO cannot act expeditiously to resolve a market flaw. 

The deadlock breaking process should appropriately address a situation where a change in the tariff is not clearly needed and one body supports CAISO management’s proposed change but the other body does not and has no alternative it would support. First, most initiatives are not needed but rather represent incremental improvements to the market. Only in rare instances, the CAISO has filed amendments necessary to address design flaws. By not providing a dispute resolution path, the GRC would essentially be giving the GB and the BOG veto power over market improvements. As to the process to follow in this situation, the EIM Entities would recommend a modified version of Section 11.1.5 of the ISO New England Participants Agreement along the following lines:

If, after attempting to resolve a deadlock through an additional stakeholder process the GB and the BOG propose different versions of an initiative or one body proposes to adopt an initiative and the other votes to maintain the status quo, the CAISO will prepare a section 205 filing, with approval from the GB and BOG, laying out the following rules for review:

In the case of a dispute between alternatives, the CAISO shall, as part of the Section 205 filing, describe the alternate market rule proposals in detail sufficient to permit reasonable review by FERC and provide an explanation from both the GB and the BOG as to why each body believes its own proposal is superior to the proposal approved by the other body. FERC will not be required to consider whether the then-existing filed rate is unlawful and may adopt either the GB proposal or the BOG’s alternate proposal whichever it finds to be just and reasonable and preferable.

In the case of a dispute where one body votes in favor of the initiative and the other votes to maintain the status quo, the CAISO shall, as part of the required Section 205 filing, describe the market rule proposal in detail sufficient to permit reasonable review by FERC, explain the GB or BOG’s reasons for not adopting the proposal, and provide an explanation as to why the GB or BOG believes the proposal is superior to the status quo. The FERC will not be required to consider whether the then-existing filed rate is unlawful and may adopt the market rule proposal if it finds the revised rule to be just and reasonable and preferable to the status quo.

The GRC recommends an exigent circumstances provision to address the potential challenge of assembling both bodies for a vote to consider action that is urgently needed to prevent market manipulation or preserve reliability. The EIM Entities support an exigent circumstances provision that is narrowly tailored to the need to these situations and permits only a temporary amendment. 

The EIM Entities agree that disputes on the proper decisional classification should be far less likely to occur under the proposed joint authority proposal. To address the potential for a dispute about whether or not a proposed rule change is a real-time (or for EDAM, day-ahead) market rule, the EIM Entities would support the option of randomly selecting an odd-numbered subset of the members of the two bodies, to decide the proper classification by a majority vote.

The GRC proposes several measures to ensure the durability of the governance proposal:  (1) a requirement for a unanimous vote of the BOG for any changes to governance; (2) no changes could be adopted without stakeholder input and advisory input of the GB, RIF, and the Body of State Regulators (“BOSR”); (3) there would be a mandatory notice period for implementing any proposed change that is at least equal in length to any notice period that EIM or EDAM entities may have for withdrawing from the EIM/EDAM market. The notice period would apply to all changes to the delegation of authority, unless both the BOG and the GB unanimously agree to waive the notice period. The EIM Entities support the proposed durability measures.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

The EIM Entities do not oppose the recommendation to amend the selection policy so that the representative of public interest groups and consumer advocates becomes a voting member of the Nominating Committee as opposed to an advisory member as is currently the case.  The EIM Entities have had representatives on the committee and opportunity to observe the diligent and collaborative work of the committee. The EIM Entities support the proposal to permit a 60-day “holdover period” if: (1) requested by the Nominating Committee, *2) approved by the GB, and (3) agreed to by the retiring member.

The EIM Entities support the proposed modifications to the selection criteria to emphasize diversity of expertise, geographic background, ethnicity, gender and perspective, so that the GB reflects a broad variety of personal backgrounds and life experience.  In considering potential re-nominations, the Nominating Committee should evaluate which set of diverse qualities would best complement the remaining members and ask the executive search firm to identify at least two qualified candidates to interview, in addition to the sitting member.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

The GRC recommends allowing or even encouraging the Regional Issues Forum (“RIF”) to discuss matters that are part of an ongoing stakeholder process. The EIM Entities support this modification which will likely only be utilized for significant, widely applicable initiatives.  The EIM Entities agree the RIF can serve as an additional avenue for stakeholders to become educated, collaborate, and exchange views.  While several stakeholders had supported establishment of a formal Stakeholder Advisory Committee similar to structures in other RTOs, the EIM Entities agree with the GRC that the incremental augmentation of the role of the RIF is a logical step at this juncture.

The GRC also seeks comment on whether any changes should be made to the existing sector classifications that are used for selecting stakeholder liaisons.  The EIM Entities would propose the following for greater specificity:

1.         EIM Entity

2.         EIM Entity Participating Balancing Authority Area Transmission Owning Utility

3.         PTO Transmission Owning Utility

4.         IPP/Power Marketer

5.         IPP/Power Marketer

6.         Public Interest/Consumer Advocate

7.         Public Interest/Consumer Advocate

8.         California Publicly Owned Utility

9.         External Publicly Owned Utility

10.       Neighboring BA

The GRC recommends finding a way for federal Power Marketing Agencies (“PMAs”) and consumer-owned utilities to participate in the existing BOSR, proposing that the BOSR be asked to establish ex officio, non-voting liaison positions for PMAs and consumer-owned utilities who participate in the EIM. The EIM Entities do not oppose the recommendation but believes the issue should be decided by BOSR.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

Please see responses below.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

The EIM Entities commend the GRC for their thoughtful consideration of this issue and do not oppose the recommendation. The EIM Entities appreciate the recommendation that the CAISO management and staff explain the reasoning behind the priorities. That recommendation could be extended to regular reports on progress and changes to the scope of initiatives at the regular meetings.

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

The EIM Entities believe it is critical that EIM (and EDAM) governance and oversight be rigorous under all possible grid and market conditions. These comments were largely prepared prior to the recent August heat wave event and accordingly the EIM Entities did not have sufficient time to consider the potential implications of this event, if any, to the topic of EIM (and EDAM) governance and oversight enhancements. The EIM Entities believe this topic may need further review once more information and analysis on this event is available. 

The Straw Proposal states that FERC regulations require that a market monitor must report to the ISO or RTO’s board of directors with management members removed. That is a potentially narrow reading of the regulation which provides, “[t]he Market Monitoring Unit must report to the Commission-approved independent system operator's or regional transmission organization's board of directors, with its management members removed, or to an independent committee of the Commission-approved independent system operator's or regional transmission organization's board of directors.” It is not clear whether or not the independent GB would constitute an independent committee or if the committee must be made up of board members. A strong argument could be made to FERC that the independent GB is more in line with the intent of the regulation.

Nevertheless, the GRC recommends that a GB member be invited to attend the executive session meetings of the DMM Oversight Committee and participate in the discussions to reassure EIM participants and stakeholders that DMM is monitoring the entire market footprint. The EIM Entities support this improvement. As noted in the Straw Proposal, the participation and advice of this GB member during committee meetings would provide another means to ensure that DMM has the benefit of the perspectives of the GB.

The EIM Entities support the recommendation that the GB have joint authority to approve members of the Market Surveillance Committee (“MSC”). This is consistent with joint authority over the real-time and day-ahead market initiatives.

The Straw Proposal recognizes that design and initial implementation of EDAM will have long-term implications for the entities considering investment and pose issues of great complexity. The EIM Entities support the proposal that the GB should have an outside market expert should EDAM move forward.  The EIM Entities agree that the market expert would need to have access to necessary data to comment on policy issues and to conduct specified evaluations of the impacts of market policies. The proposed re-evaluation after five years is reasonable.

In an EIM-only scenario, GRC recommends leaving it to the GB to propose the use of an expert. The EIM Entities support this approach given information at this time, however in light of recent events surrounding the August heat wave, the EIM Entities may soon amend this position to support the use of an independent market monitor for the EIM-only scenario

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

The GRC recognizes that there is value in greater technical expertise to support BOSR members. The GRC notes that the EIM Entities subject to the jurisdiction of their state commissions are engaging directly with the BOSR to explore alternative sources of funding. The EIM Entities support these efforts.  The EIM Entities have concerns with a funding mechanism for the BOSR that is through a CAISO and FERC-administered charge The EIM Entities support the comments of the State-Regulated Market Participants on this topic, wherein the concerns with a CAISO tariff charge are fully articulated.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

The EIM Entities agree that no changes are necessary to the mission statement and criteria for decision making and that these can easily be adapted to accommodate EDAM at a later date.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

The EIM Entities support the proposal for a re-evaluation no later than five years after the adoption of new governance policies. The review does not mandate change, but rather provides an opportunity to consider how the changes have worked in practice and make further refinements if necessary. 

The EIM Entities support the GRC’s suggestion to remain available for further evaluation prior to adoption of the EDAM market design. It is possible that experience with the revised governance program in an EIM-only environment will identify opportunities for further improvement.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

The GRC proposes to produce a Revised Straw Proposal in Q4 2020 and a Draft Final Proposal in Q1 2021, “depending on the depth and breadth of comments received on this straw proposal.” The Entities hope that the Straw Proposal is well received and that the GRC can move directly to a Draft Final Proposal in Q4 2020. Most importantly, the GRC recognizes that there will be a considerable length of time between development of a Draft Final Proposal and any go-live date for a potential EDAM. Accordingly, the GRC recommends that the BOG and the GB, “consider implementing the proposed changes to the delegation of authority contemplated for the current market structure (the “EIM-only” scenario) before EDAM is approved and implemented.” The EIM Entities strongly support proceeding with the recommendations for the EIM first and then expanding to include EDAM. In addition, the GRC should clarify that the new joint authority would apply to approving and providing direction on the EDAM market design. Simply stated, there is no reason to postpone these significant improvements.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

NRU represents the interests of 54 consumer-owned utilities that purchase all or most of their wholesale power from the Bonneville Power Administration (“BPA”) on a preferential basis pursuant to section 5(b) of the Pacific Northwest Electric Power Planning and Conservation Act. Combined, NRU members serve over 2,100 aMW of retail load and represent over 27% of BPA’s power sales. NRU members are located in BPA’s Balancing Authority Area (“BAA”) as well as other BAAs across the West, including those that have already joined the Energy Imbalance Market (“EIM”) or are in the process of joining. As such, NRU members have a substantial interest in all matters related to the EIM, including appropriate and representative governance.

NRU appreciates the diligence of the Governance Review Committee (“GRC”) in considering and incorporating the comments previously submitted by stakeholders. In particular, NRU supports the efforts to develop a governance structure that is more independent, transparent, inclusive and representative of the expanding EIM footprint.

NRU is generally supportive of the overall direction provided in the straw proposal. In particular, we support the following:

• The EIM Governing Body (“Governing Body”) should have joint authority over all real-time market issues, which should be granted when the governance review process is complete. The joint authority should be expanded to the extended day-ahead market (“EDAM”) if/when such a market is established.
• Enhancements to the durability of delegated authority to the Governing Body.
• The addition of language in the selection criteria to better establish diversity of representation, including geographic diversity, on the Governing Body.
• The addition of consumer-owned utilities and PMAs as non-voting liaisons to the Body of State Regulators. In order to obtain sufficiently diverse representation, NRU recommends four liaisons: three from geographically diverse consumer-owned utilities and one PMA.

Finally, NRU supports and echoes the detailed comments and requests for clarification expressed in the comments submitted by the Public Power Power (“PPC”).

2. Provide summary of your organization’s overall position on this proposal:

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

PG&E supports the Straw Proposal’s Joint Authority model with some continuing reservations.  There are still important questions to be resolved with regard to equitable treatment, as between voluntary market participants in EIM/EDAM and full members of the CAISO Balancing Authority Area, like PG&E, who have made a durable decision to become a Participating Transmission Owner, placing their  transmission assets under the control of the CAISO and submitting to CAISO planning of their transmission investments, interconnection rules, etc. 

It is crucially important for broad California support of EDAM that – under extreme circumstances of market failure or collective withdrawal by all or a substantial majority of the voluntary market participants -- the CAISO Board of Governors retain its full ability and authority to rescind its delegated powers and retake control of the Corporation.  PG&E understands that tying the “durability” of the delegation of authority to the 180-day withdrawal notice period, as laid out in the Straw Proposal, is a good faith effort to strike the right balance in this regard.  However, this provision would not be enough under extreme circumstances.  The proposal should allow for the possibility that under specified emergency conditions, an interim rescission of the delegated authority may need to be effectuated immediately, in order to avoid enormous financial harm or reliability impacts accruing to California customers.  At a minimum, further work is needed to satisfy the concerns of all California parties.

PG&E is not yet fully supportive of the proposed tiebreaker model for resolving disputes, following a split vote (and up to two retries).  This approach merely “kicks the can” and entrusts to FERC to find a resolution of contested issues when regional parties are unable to do so themselves.  Moreover, as a practical matter, the proposed dual filings will require separate preparation and support for each of two competing proposals.  How will this be accomplished?  Will separate CAISO Staff and lawyers be designated to support each of the proposals throughout the hearing process at FERC?  Will CAISO Staff be empowered to enter settlement negotiations and negotiate against each other on behalf of the competing proposals?  Or would the EIM Governing Body select and empower a different representative to argue for its preferred version against CAISO Staff (representing the Board of Governors’ version)?

Regardless of the solution to such practical challenges, any use of a dual filing mechanism should be extremely rare, as its exercise is likely to increase tensions and reduce stakeholder trust in the viability of shared governance institutions.

PG&E supports the use of a “bright line” test for decisional classification, which needs to be more clearly spelled out in the next Straw Proposal iteration (it is alluded to but not clearly stated that the GRC favors a so-called “bright line” method of classifying the decisional authority for each initiative[1]).  PG&E believes the bright line test should streamline and simplify the process of assigning initiatives to either the exclusive authority of the Board of Governors, or to the new Joint Authority regime, according only to the CAISO tariff section that a given initiative seeks to change, without recourse to the current method in EIM of divining the intent or primary driver for a particular policy proposal. 

As to the question of how such a bright line test would work in practice and exactly which tariff sections would be mapped to exclusive or Joint Authority, further work is needed.  As noted in the Straw Proposal (see footnote 21 on p. 9), there are clearly areas of the current tariff that relate exclusively to CAISO Balancing Area functions, such as Transmission Planning, Interconnection rules, and RMR and CPM designations, which should remain exclusive to the Board of Governors’ sole jurisdiction.  However, depending on how certain EDAM mechanisms may be implemented within the CAISO tariff, other sections that impact the California Balancing Area today may expand to include new tariff language implementing equivalent or parallel EDAM mechanisms.  For example, the tariff sections which today address California’s unique Resource Adequacy requirements, Congestion Revenue Rights (CRR), and Transmission Access Charges (relevant to participants in the current CAISO Day-Ahead Market) will need to remain in the tariff, alongside new sections detailing the EDAM Resource Sufficiency Test, Intertie Congestion Charges, and other EDAM transmission provisions.  Thus, it will only be possible to segregate and fully “map” the tariff between the two governing authority regimes once all of the new EDAM-related tariff language is drafted and available for stakeholder review.  Only at such a time will stakeholders be able to clearly identify which sections of the post-EDAM tariff remain strictly BA-related (and therefore CAISO Board jurisdictional) and which are now EDAM-related (and therefore within the Joint Authority).

PG&E recommends the GRC designate a working group or sub-committee of stakeholders that would carefully go through the entire tariff and propose a definitive mapping for the bright line test.  PG&E recommends this group be convened immediately upon the issuance of draft EDAM tariff language and that its findings be incorporated by reference, as part of the final GRC report and recommendations.

[1] See GRC Straw proposal at p. 11, “Moving to a hybrid model also would eliminate a key benefit of the bright line rule we have proposed…”  This one phrase appears to be the sole reference to the GRC endorsing the bright line method of decisional classification.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

PG&E has no comments in this section and fully supports the GRC proposals.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

PG&E remains of the view that the existing CAISO stakeholder processes and EIM engagement via the Regional Issues Forum (RIF) are working well and do not require significant adjustment to accommodate EIM expansion and potential EDAM implementation. 

PG&E is neutral on allowing the RIF to address issues in active CAISO initiatives.  PG&E believes that the current RIF works well and can navigate these challenges, but we remain wary of the potential for a “slippery slope”.  RIF discussions will have to be managed carefully to avoid providing a platform for stakeholder advocacy and to ensure that the RIF does not become a surrogate or replacement for the formal stakeholder process.  PG&E opposes having the RIF become a “super-stakeholder” that would attempt to impose or express a consensus to the governing bodies, at the expense of a full airing of dissenting minority views. 

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

No comment

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

No comment

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

PG&E supports the proposed evolution of the DMM and MSC to support the broader multi-state market under EDAM, and the role of the Joint Authority in selection of new MSC members. 

PG&E opposes the proposal for an additional Outside Market Expert (OME) to support only the EIM community.  There appears to be an assumption that the existing MSC, in either its structure or membership, embodies a “California” viewpoint that is somehow not extensible or not amenable to the multi-state EIM and EDAM perspectives.  PG&E rejects this view.  In point of fact, the current membership of the MSC includes academic and consulting experts, who routinely work across multiple North American RTO/ISO regions and often benchmark market mechanics and policies outside of California with proposed changes to the CAISO market design (including EIM/EDAM). 

PG&E understands that wholesale energy markets are extraordinarily complex and require a high degree of experience and expertise.  We believe that it is incumbent on all new market entrants, as it is on existing CAISO and EIM market participants, to acquire this expertise themselves – ideally through in-house staff, but supplemented, where necessary, with trusted outside experts.  Development of such expertise should be considered part of the “table stakes,” the price of entry for any stakeholder that wishes to meaningfully participate in and make serious contributions to the CAISO stakeholder process. 

PG&E notes that there is often no one right answer to questions of market design, but rather a number of potential approaches to solve a given design problem, each with its own pros and cons (whose weighting will vary depending upon the unique circumstances of each market participant).  PG&E rejects the notion that an additional independent outside expert, paid for jointly by all market participants to provide an “objective” perspective, can ever substitute for the vigorous clash of ideas among interested stakeholder parties that takes place through the public stakeholder policy development process. 

PG&E believes a better approach to addressing the analytical support needs of the expanded, multi-state footprint would be to incorporate broader geographic diversity criteria in the selection of new MSC members and, if desired, to expand the membership of the existing MSC, rather than to create a new and separate market expert exclusively for EIM/EDAM.  At a minimum, any such expert position should be funded on a voluntary basis by the EIM parties and not charged to all load.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

With regard to BOSR funding, PG&E is sympathetic to the limited need for additional support for state regulators, for whom participation in the wholesale energy market is “not their day job,” but who need to follow developments in this important space in service of their state regulatory role.  PG&E has signed on with the State Regulated Market Participants (SRMP) proposal for a limited non-tariff funding mechanism that could be established through voluntary contractual arrangements (akin to membership association dues), provided such funding is equitably shared among the participating EDAM states and is structured in a way that is acceptable to the BOSR members.  In order to move forward, more detail will be needed on the mechanics of how exactly such voluntary funding would be invoiced by the CAISO, in order to support rate recovery by each of the participating entities within their respective state regulatory jurisdictions.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

No comment

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

No comment

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

PGP commends the Governance Review Committee (GRC) for developing a well-balanced proposal with ample rationale, detail and legal analysis supporting its recommendations. We believe the proposed governance framework largely meets the needs and concerns of the different stakeholders in the regional footprint and, if implemented, could provide confidence that the governance structure represents the market as a whole.

PGP’s support for the joint authority proposal is based on the full complement of recommendations; specifically, the individual voting of each board, the joint decision meetings, the availability of the outside market expert for the EIM Governing Body, the unanimous CAISO Board vote required and notice provision provided to effectuate a governance change.

That said, a delegated authority model still has risks. PGP finds there could be circumstances or conditions in which the durability of this robust and balanced model could be challenged. PGP believes durability is key to ensuring that the governance structure is resilient under a wide range of conditions and is essential to achieving an acceptable approach to delegated authority.  To further enhance the durability of the governance we offer comments and recommendations to assure adequate funding for the EIM Governing Body to fully execute its responsibilities and additional protections against governance changes.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

• PGP supports the GRC recommendation that the EIM Governing Body be granted joint authority over all real-time market rules and this authority should be granted when the governance review process is complete, which may be prior to EDAM market design approval and implementation and EDAM governance changes.
• PGP supports the GRC’s recommendation to formalize the EIM Governing Body’s joint authority over EDAM Market design for the same reason.
• PGP supports the GRC recommendation that the EIM Governing Body (or other future naming convention) be granted joint authority over all real-time and day-ahead market rules and implementation of this governance change would be triggered with FERC approval of the EDAM market tariff.

PGP supports the joint authority model because it achieves our interest of ensuring the EIM Governing Body has authority over day-ahead and real-time market design. PGP believes this joint authority proposal works because of the full complement of recommendations; specifically, the individual voting of each board, the joint decision meetings, the availability of the outside market expert for the EIM Governing Body, the unanimous CAISO Board vote required and notice provision provided to effectuate a governance change. The loss of any one of these important elements would require PGP to reconsider its support.

We believe the GRC’s specific approach, whereby the Governing Body and CAISO Board must each vote and achieve a majority consensus as individual bodies is more appropriate than the alternative of the Governing Body and CAISO Board voting as a combined body as that approach would likely raise questions regarding the appropriate size of each body, geographic representation of members, etc.

Under the proposed approach, approval of market design would occur during joint meetings of the Governing Body and CAISO Board and these meetings would occur throughout the market footprint. This approach would provide an easier way for the CAISO Board to hear directly from stakeholders outside of California which will help ensure both bodies are equally informed about stakeholder interests and allow for increased coordination between the two bodies.

In addition, the bright-line approach of joint authority over all real-time market rules for EIM and all real-time and day-ahead market rules for EDAM is easily administered and avoids the complexities of a hybrid approach where different authority is granted to different categories of rule changes. Finally, we recognize that the joint authority approach has the greatest likelihood of achieving broad stakeholder support and, in practical terms, delegates comparable decision-making authority to the Governing Body as would be delegated under a primary delegation of authority model.
                PGP agrees with the GRC recommendation that the EIM Governing Body be granted joint authority over the real-time market prior to the time when EDAM governance changes are implemented. As the GRC points out, the GRC process is likely to conclude before the EDAM market design is complete, and instead of waiting until EDAM is complete to initiate all governance changes, it is appropriate to implement the EIM governance changes first. We believe there is merit in the changes to EIM governance on a stand-alone basis and these should be approved without delay. In addition, this approach is likely to increase stakeholder confidence that future governance changes for EDAM will reflect the broad stakeholder interests and be representative of the entire market footprint.

Process for Resolving Potential Deadlocks

• PGP supports the GRC proposal that would allow two attempts to reach resolution on proposed rules changes where there is a disagreement between the Governing Body and CAISO Board and if agreement still cannot be reached, the two bodies could opt to develop and approve two alternative versions of the proposal which CAISO staff would then submit to FERC for its consideration.

The GRC proposes an iterative process that would involve both bodies discussing the area of difference in a public meeting, hearing from stakeholders and then sending the matter back to CAISO for further development and stakeholder process. If the two bodies continue to disagree, then they could either remand the matter back to CAISO staff for another attempt, or, after at least two attempts to reach agreement, the two bodies could opt to develop and approve two alternative versions of the proposal, which CAISO staff would then submit to FERC for its consideration.

PGP supports the proposed approach and believes it is essential to have a defined process to address such differences and such a process should ensure a third-party would settle any disputes that cannot be resolved. Third-party dispute resolution ensures that the authority of the EIM Governing Body is not limited or thwarted by the ability of the CAISO Board to repeatedly reject proposals. The GRC proposal strikes the right balance of providing a strong incentive for all parties to work together to identify a workable solution, while also ensuring there is a process for a neutral third party to decide any issue where agreement can’t be reached. We believe two attempts to reach resolution before filing separate tariff revisions is appropriate.

In a sutation where one body supports a change to the tariff, and the other does not and has no alternative recommendation, we believe the proposed process for resolving the deadlock is still workable, with some slight modifications. In this instance, we believe the burden would fall to the entity requesting the tariff change to demonstrate why conditions have have sufficiently changed and that the existing tariff is no longer equitable or just and reasonable. If after two attempts to reach agreement, one body still believes no change is needed, the body that is seeking tariff changes would develop its proposal for filing with FERC. The submittal to FERC would include both the tariff changes proposed by the one body and the position of the other body that believes no changes are required.

Short-Term Emergency Filings            

• PGP supports retaining an exigent circumstances provision that would ensure the process of assembling both the CAISO Board and EIM Governing Body quickly for a vote does not delay temporary action that is needed to prevent market manipulation or preserve reliability.
• As an alternative to alternating responsibility for approving an exigent circumstance filing, PGP suggests consideration of an option where both the chair of the Governing Body and CAISO Board must approve the filing.

With respect to the body that would authorize the CAISO to move forward with tariff changes to address exigent circumstances, PGP’s preferred approach is that some form of the joint authority construct, where both Governing Body and the CAISO Board are involved in the approval process should be retained. One suggestion would be that both the chair of the Governing Body and CAISO Board must approve the filing, without requiring the vote of the remaining members of the Governing Body and the CAISO Board.

Decisional Classification Process

• PGP recommends that the existing dispute resolution process for decisional classification be retained, with the exception of the tie-breaker rule. In that event of a dispute between the Governing Body and CAISO Board on decisional classification that results in a tie, PGP recommends the tie-breaker authority to alternate between the chairs of the two bodies.

The GRC proposes that the existing decisional classification process be retained and seeks stakeholder feedback on how disputes that result in tie about proper classification should be resolved. As the GRC notes, today, final resolution is made at a meeting of combined members of both bodies (there must be a quorum from each) and decided by a majority vote of those who participated in the meeting. However, in the event of a tie, the Chair of the CAISO Board of Governors shall make the determination. Under a joint delegated authority model where the Governing Body and CASIO Board share authority over all real-time market rules and day-ahead market rules, with limited exceptions, disputes should be rare given this bright-line delineation. However, in the event of a dispute, PGP believes the tie-breaker rule should give equal deference to the EIM Governing Body and CAISO Board as is envisioned under a joint authority construct. PGP supports the GRC suggestion option that would allow the tie-breaker authority to alternate between the chairs of the two bodies over time.

Durability

• PGP believes durability is an essential element of ensuring that the governance structure is resilient under a wide range of conditions.  PGP supports the GRC proposal that changes to delegation of authority require a unanimous vote of the CAISO Board as well as stakeholder feedback and advisory input from the Governing Body and further require a mandatory notice period for implementing any proposed change that is equal in length to any notice period that EIM or EDAM entities may have for withdrawing from the market.
• PGP recommends consideration of a dispute resolution mechanism for governance changes to augment the durability measures proposed in the Straw Proposal.
• PGP recommends commitment to EIM Governing Body funding levels to fully execute its responsibilities, including sufficient funding for the outside market expert.

PGP believes the durability of delegation is essential to achieving confidence among market participants and other stakeholders that the governance framework that is established is protected from political or market circumstances that could create an interest to change the delegation of authority. PGP’s initial recommendation was to provide the Governing Body with a decisional role in any future changes to delegation of authority. However, as the GRC explains and is detailed in the Appendix A Legal Analysis, such a provision might impair the CAISO Board’s ability to oversee the corporation as required under law.

PGP supports the GRC’s proposal, and in particular we believe the GRC’s recommendation to require a mandatory notice period for implementing any proposed changes that is, at a minimum, equal in length to any notice period for EIM or EDAM entities is a strong protection and will ensure market participants are able to avoid the consequences of any governance changes they perceive to be undesirable. We note that having the mandatory notice period exactly equal in length to any notice period for EIM or EDAM entities to exit the market may not allow time for an entity to make the decision to exit. PGP asks the GRC to consider whether additional time may be necessary to permit the decision-making process.

While PGP finds the current proposed durability proposal sound, exiting the market could be an expensive option for EIM and EDAM Entities. While we don’t believe Governance changes that are opposed by a majority of market participants would be likely, we recommend consideration of an additional safeguard that provides for another round of evaluation in the event that the CAISO Board of Governors desires a change that is contrary to the advisory input of the EIM Governing Body. This will provide an opportunity to pursue a solution that may be acceptable to both parties.

One option could be modeled off the process for resolving deadlocks on market rules. Specifically, if the EIM Governing Body does not provide a supporting advisory opinion, the process of development and review of a governance change is initiated again.  If after the second attempt, the CAISO Board of Governors still prefers a change that is contrary to the advisory input of the EIM Governing Body, the CAISO Board of Governors can, if after unanimous vote, give notice of the governance change. Additionally, the CAISO Board of Governors could be requested to get an affirmative declaration from FERC that the proposed change meets FERC’s independence standards.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

• PGP supports the GRC’s proposed enhancements to the selection of Governing Body members and supports implementing these for both EIM and EDAM.

The GRC proposes amending the selection policy so that representatives of the Public Interest Organizations (PIO) become a voting member of the nominating committee, as opposed to an advisory member as is currently is the case. The GRC further proposes enhancing the role that diversity plays in the selection criteria for the Governing Body and establishing a 60-day hold-over period for EIM Governing Body members.

In general, PGP believes the current nominating committee and selection process is well-functioning and robust. PGP supports the additional enhancements proposed by the GRC. The incremental changes of making the PIO sector a voting member of the nominating committee would not appear to change how this sector participates currently in practice and no downside is evident to formalizing this. The change to add a 60-day hold-over period for Governing Body members solves a practical concern and would enhance the functioning of the Governing Body, and finally, the addition of diversity criteria to the selection process we believe will enhance the pool of governing body candidates.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

Governing Body Meeting Process

• PGP supports the GRC proposal of no recommended changes to the Governing Body meeting process other than those that support the joint authority model.
• PGP fully supports joint session meetings in Folsom and throughout the market footprint between the Governing Body and CAISO Board that are proposed under a joint authority model.

The GRC proposes no changes to the current EIM Governing Body meeting process, but notes that under a joint authority model, there will be instances where the meetings for the EIM Governing Body and CAISO Board are co-located for joint sessions which reflects a change to the current meeting process. PGP believes the current EIM Governing Body meetings, including the schedule, structure and location of meetings is working well and we view joint session meetings as one of the benefits of a joint authority approach and are supportive of these meetings being co-located.

PGP believes the EIM Governing Body meetings and engagement with stakeholders is working well, so this should be used as a model for Governing Body meetings in a future EDAM. It may be necessary to consider increasing the number of meetings and locations as this market develops, but as a starting point, we support the model for meetings and stakeholder engagement that has worked successfully in the EIM and the joint session meetings that would be required under a joint authority model.

Modifying the Regional Issues Forum to Enhance Opportunities for Stakeholder Engagement

• PGP supports the GRC proposal to modify the Regional Issues Forum (RIF) by eliminating the limitation on the RIF to consider matters that are already part of an ongoing CAISO stakeholder process and replacing it with language that allows and encourages the RIF to discuss matters that are part of an ongoing stakeholder process and allows the RIF to offer written opinions or recommendations.
• PGP supports aligning the RIF liaison sectors to align with those used for the nominating committee.

                PGP supports the ability for market participants and stakeholders to collectively have formal input into the boards and believes this is highly beneficial to assuring an independent and informed market design. PGP supports the GRC approach of modifying the Regional Issues Forum to meet the objective of allowing stakeholders to collaborate together and engage on issues in active stakeholder process. Regarding whether the existing sector classifications should be modified, PGP believes this is appropriate. We recommend the existing sectors be aligned with the sectors used for the nominating committee which include an EIM entities sector, participating transmission owners sector, suppliers and marketers of generation and electric service providers, publicly-owned utilities and Body of State Regulators. However, we note that in a future EDAM, it may be necessary to develop an EDAM entities sector in addition to the EIM entities sector. In addition, we believe it is appropriate to drop the “neighboring BAA” sector because as the EIM has expanded the entities represented in this group have declined substantially.

Representation for Federal Power Marketing Agencies and Consumer-Owned Utilities

• PGP supports the GRC recommendation to establish a liaison role for public power and power marketing agencies on the BOSR and recommends a minimum of two public power representatives and one power marketing agency representative serve in liaison roles

PGP believes it is important that there be a specific place for the regulatory and customer perspectives of public power to be represented in the EIM and EDAM governance framework. PGP believes the GRC proposal for a liaison role for public power and power market agencies on the BOSR would provide the opportunity to understand the different perspectives of public power and state regulatory bodies. PGP supports this proposal and recommends a minimum of two public power representatives and one PMA representative serve in liaison roles. PGP believes two public power representatives are warranted, given the geographic diversity of public power within the current EIM and future EDAM and recommend that at least one of the public power representatives be from outside California.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

• PGP supports the GRC recommendation to maintain the existing CAISO process for development of the Annual Policy Initiatives Roadmap and recommends that CAISO develop decision criteria, with stakeholder input, that will be used for deciding what initiatives are included in the roadmap.

The process for determining which policy initiatives are pursued and under what timeline is very important in ensuring proper market design and function. PGP recognizes the concerns raised by the GRC that formal approval of the roadmap would negatively impact the flexibility, efficiency and productivity of the CAISO in advancing policy initiatives.  The current process provides for stakeholder input but the approach to decision making for discretionary activities is not always transparent. PGP recommends that CAISO staff develop criteria, with stakeholder input, that will be used for deciding what initiatives are included in the policy initiative roadmap.

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

• PGP believes the GRC recommendation that the EIM Governing Body be authorized to hire an outside market expert, the selection of which would be at the discretion of the Governing Body and would be re-evaluated within five years, is critical to our support of the joint authority model because it provides a level of independence for the EIM Governing Body.
• PGP recommends the outside market expert be hired no later than a year in advance of when EDAM market design is anticipated to be complete.
• PGP supports the GRC recommendation to allow the Governing Body to propose the use of an expert in the EIM if they believe that is warranted. PGP believes an outside market expert for the EIM could add value to CAISO’s market functioning, regardless of whether EDAM moves forward.
• PGP supports the GRC proposals to permit a Governing Body member to participate in meetings of the DMM oversight committee and to have joint authority over the approval of MSC members.

PGP finds the GRC’s proposal to authorize the Governing Body to obtain an outside market expert (OME) a critical element of the joint authority model. The success of EIM and EDAM rests on whether market participants have confidence in an efficient and fair market design and an outside market expert will be an essential resource to bolster confidence in the market and encourage participation. We agree with the GRC that the additional cost and complexity of retaining an outside expert is warranted, particularly given the long-term implications of EDAM for entities considering joining.

With regard to the details of this proposal, PGP supports the GRC’s recommendation that the EIM Governing Body be responsible for the selection of the outside market expert—we believe it is appropriate for the governing body to make this selection since the OME will be a resource to this body directly. In addition, we support the OME role being re-examined within five years but note that affirming a re-examination timeframe should not presume that an OME will or will not be needed in five years, rather it is the re-evaluation itself that will answer that question. With regard to the timing of when an OME should begin work, the GRC proposal suggests this could begin before any final decision on EDAM market design. PGP agrees it is important for the OME to begin work while the EDAM market design is underway and recommends specifically that the OME be hired at least one year before market design is anticipated to be complete. The role of the OME is to assist the Governing Body in navigating market design issues, choices and the expected outcomes and the initial design of the EDAM itself is a hugely impactful area of market design that warrants the input of the OME.

PGP supports the GRC’s recommendation that a Governing Body member should participate in meetings of the DMM oversight committee and that the Governing Body should have joint authority over the approval of MSC members. We agree with the GRC that the Governing Body and CAISO Board should have equal access to market data, information and analysis produced by the DMM and MSC and these incremental enhancements to the Governing Body’s oversight of the DMM and MSC are appropriate.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

• PGP is not opposed to the BOSR receiving additional technical support but recommends that any additional funding for the BOSR come only from utilities subject to state regulation.

              PGP understands the challenge faced by the BOSR in participating in CAISO’s processes and the desire for additional technical expertise. We believe the BOSR being well-informed is likely to bring value to the stakeholder process. However, we continue to believe that funding the BOSR through the CAISO tariff, when other stakeholder sectors do not receive such funding, would be unfair and inequitable. PGP is not opposed to the BOSR receiving funding for technical expertise to support BOSR members, but the source of funding should come only from utilities subject to state regulation, as this would raise the equity issues described above. 

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

• PGP recommends that the EIM Governing Body Mission Statement be re-evaluated for EDAM and this review should be conducted by the GRC after the CAISO staff has developed a draft final proposal on EDAM market design. PGP believes it is essential to retain the exit criteria in the EIM Governing Body Mission for any EDAM Mission Statement.

As stated in our comments on the Scoping Document, PGP believes a fully independent governance structure, which can only be achieved through a legislative change in California, is the ideal governance approach for any multi-state market, however, we also recognize the challenges associated with securing a legislative change at this time. Because a delegated authority approach to governance is less than ideal and includes risk for utilities outside of California, the voluntary nature of EIM/EDAM and the ability to exit without fees is an essential feature.

PGP believes the EIM Governing Body Mission can serve as a guide for any EDAM Mission Statement. PGP believes it is essential to retain the exit criteria in the EIM Governing Body Mission for EDAM. Specifically, EDAM entities, like current EIM entities, should be allowed to withdraw from the market, within a specified notice period, with no exit fees. PGP believes the GRC recommendation to reserve specific recommended changes until more is known about the proposed EDAM market design is reasonable. We suggest that this review occur by the GRC after the CAISO staff has developed a draft final proposal on EDAM market design.

Further, PGP would ask the GRC to consider and explore whether a comparable Mission Statement as currently included in the EIM Governing Body Charter should be included in the CAISO Bylaws that establish and define the scope of joint authority.  This shared Mission Statement could serve as a framework for the joint decision process.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

Governance Reevaluation

• PGP supports the GRC proposal for a stakeholder-led review of the governance structure no later than five years after any new governance structure has been implemented.

Timing of Implementation of GRC Recommendation

• PGP supports the GRC recommendation that the Governance Review Committee should remain available after submission of the governance proposal to further consider any EDAM-specific aspects of governance once the CAISO staff has developed a draft final proposal for EDAM market design.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

PGP supports the clarity requested by PPC on how the shared governance model works within the CAISO’s legal obligations to California consumers. PGP appreciates the work of the CAISO and the Governance Review Committee and we look forward to participating collaboratively in this process with the CAISO, GRC and other stakeholders to further refine and enhance the straw proposal.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

Western Resource Advocates, NW Energy Coalition and Western Grid Group (collectively, “Public Interest Organizations” or “PIOs”) appreciate the opportunity to submit comments on the Governance Review Committee’s Straw Proposal. Below is a summary of our positions on the various elements of the proposal:

1. Scope of Authority: PIOs support the GRC’s proposal to substantially expand the scope of authority that the EIM Governing Body currently holds for EIM and broadly define the authority for EDAM, while also moving to a joint authority model for the decisions that fall within the Governing Body’s expanded authority. Additionally, PIOs support the proposed use of the joint authority model for the final approval of the market design for EDAM.
2. Process for Resolving Potential Deadlocks: PIOs support the GRC’s proposed process for resolving potential deadlocks under the joint authority model, but caution the routine use of competing FERC filings due to the uncertainty and risk such filings can create. To reduce the need for competing FERC filings, PIOs recommend the GRC consider adding the following requirement – that in its own filing, the CAISO Board of Governors describe the EIM Governing Body’s competing proposal in adequate detail to enable a fair determination by FERC and also, sufficiently justify its reasoning for failing to adopt the Governing Body’s alternative.
3. Short-Term Emergency Filings: PIOs recommend that CAISO management only move forward with emergency filings after obtaining board approval. Where the tariff change involves a matter of joint authority, CAISO management should strive to obtain approval from both the EIM Governing Body and the CAISO Board of Governors. For tariff matters where joint authority is implicated but where both boards cannot be timely convened, PIOs support CAISO management obtaining approval from only one board – whichever board can be more readily convened.
4. Decisional Classification Process – Dispute Resolution: Where disputes arise in the decisional classification process, PIOs recommend allowing the tiebreaker authority to alternate between the chairs of both boards over time.
5. Timing and Process for Implementing Proposed Changes to the Scope and Type of Authority: PIOs support the GRC’s recommendations regarding the timing and process for implementing the proposed changes to the scope and type of authority for the EIM Governing Body – specifically:
   1. The Board of Governors and the Governing Body should consider implementing the proposed changes to the delegation of authority contemplated for the current market structure before EDAM is approved and implemented.
   2. The Board of Governors should formalize the process that CAISO management has proposed for approving the final market design for EDAM, which would involve bringing the proposed market design to both the Board and the Governing Body for their joint review and approval.
6. Enhancements to the Durability of the Delegation of Authority: PIOs support the GRC’s proposal to enhance the durability of the delegation of authority to the EIM Governing Body by doing the following:
   1. Require a unanimous vote of the Board for any changes to governance that may impact any aspect of the scope or type of the Governing Body’s authority.
   2. No changes should be adopted without first seeking stakeholder input and specifically considering and addressing any advisory input from the Governing Body, the Regional Issues Forum, or the Body of State Regulators may provide.
   3. Require a mandatory notice period for implementing any proposed change that is equal in length to any notice period that EIM or EDAM entities may have for withdrawing from the EIM or EDAM market (i.e., a 180-day notice period for EIM). The notice period would apply to all changes to the delegation of authority unless both the Board and the Governing Body unanimously agree to waive the notice period.
7. Nominating Committee: PIOs support the GRC’s recommendation to change the status of the representative of Public Interest Organizations and Consumer Advocate Groups on the EIM Nominating Committee from an advisory to a voting member.
8. Selection Criteria for EIM Governing Body Members: PIOs believe that a diverse EIM Governing Body is critical for sound, balanced decision making and therefore support the GRC’s recommendation to enhance the role that diversity plays in the selection criteria for the EIM Governing Body – to include not only geographic diversity and diversity of expertise, but also diversity of gender, ethnicity and perspective.
9. Terms of Governing Body Members – Adding a 60-Day Holdover Period: PIOs support the GRC’s recommended 60-day holdover period for EIM Governing Body members where a replacement has not yet been confirmed.
10. Governing Body Meeting Process: PIOs believe the current model, where the EIM Governing Body frequently meets in locations throughout the Western Interconnection, is an effective way to engage with regional stakeholders. This model should continue under the joint authority construct, with joint meetings of the CAISO Board of Governors and the EIM Governing Body regularly occurring outside of CAISO’s headquarters in Folsom, California.
11. Modifying the RIF to Enhance Opportunities for Stakeholder Engagement: PIOs support the GRC’s recommendation to “formalize” the RIF – i.e., by allowing the RIF to discuss matters that are part of an ongoing CAISO stakeholder process, and if warranted, to share consensus opinions with the Governing Body or with CAISO staff. PIOs also support modifying the RIF’s current stakeholder sectors, using the Nominating Committee’s stakeholder sector definitions as a model.
12. Public Power Representation on the BOSR: PIOs support an advisory role for public power – i.e., consumer-owned utilities and federal PMAs – on the EIM’s Body of State Regulators.
13. Annual Policy Initiatives Roadmap: PIOs support the GRC’s proposal to not require formal approval of the CAISO’s Annual Policy Initiatives Roadmap, as it would negatively impact the flexibility, efficiency and productivity of the CAISO in advancing policy initiatives.
14. Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert: PIOs support the GRC’s recommendation to provide both the EIM Governing Body and the CAISO Board of Governors with equal access to market data, information, and analysis produced by CAISO’s Department of Market Monitoring and the Market Surveillance Committee. And, if EDAM moves forward, the Governing Body should be provided with additional outside expertise on market issues in the form of an outside market expert.
15. Possible Funding for the Body of State Regulators: As provided in our previously submitted comments, PIOs strongly support funding for the Body of State Regulators, enabling the BOSR to more effectively participate in both EIM and EDAM stakeholder processes. While PIOs have previously supported the use of a tariff rider to provide this funding, we also support the current negotiations taking place between the BOSR and EIM Entities to provide this funding through a separate agreement (outside of a tariff charge), ensuring that market participants that are not state jurisdictional will not be required to financially support the stakeholder engagement of state regulators.
16. Governing Body Mission Statement: PIOs support amending the EIM Governing Body’s Mission Statement to reflect the Governing Body’s expanded role with regard to EDAM, but not until the market design for EDAM has been finalized and approved by stakeholders, both boards, and FERC.
17. Governance Reevaluation: PIOs support the GRC’s recommendation to conduct a stakeholder-led review of the governance structure no later than five years after any new governance structure has been implemented (as a result of the GRC process) – regardless of the timing associated with EDAM implementation.
18. Timing of Implementation of GRC Recommendations: PIOs agree that most of the GRC’s governance recommendations will apply equally to the EIM and EDAM and therefore, we support the GRC’s recommendation to submit its draft final governance proposal to both boards by Q1 2021. Additionally, PIOs recommend that the GRC remain available after submission of the draft final proposal to further consider any EDAM-specific changes that will be necessary once EDAM’s final market design is better understood.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

(1) Scope of Authority

PIOs support the GRC’s proposal to substantially expand the scope of authority that the EIM Governing Body currently holds for EIM and broadly define the authority for EDAM, while also moving to a joint authority model for the decisions that fall within the Governing Body’s expanded authority. Additionally, PIOs support the proposed use of the joint authority model for the final approval of the market design for EDAM.

Under the GRC’s joint authority model for EIM governance, the EIM Governing Body’s affirmative approval will be required for any proposed changes to the design of market rules governing the CAISO’s real-time market, including all EIM-specific rules. Additionally, it will also include any proposed changes to tariff rules that apply generally to participation in all CAISO markets and for all market participants, including rules governing credit, settlements and billing. If EDAM is implemented, under the joint authority model, the Governing Body’s authority will expand to also include any proposed changes to the design of market rules concerning the CAISO’s day-ahead market. The GRC also recommends that the joint authority model be used for the approval of EDAM’s final market design, formally recognizing CAISO management’s current proposal in the ongoing EDAM stakeholder initiative.

As provided in our prior comments, PIOs strongly support the expansion of authority for the EIM Governing Body. PIOs proposed two potential models for the GRC’s consideration – one model where governance is delineated between interstate markets and services versus California-only markets and services and another model – the joint authority model – where the CAISO Board of Governors and the EIM Governing Body have shared roles in governing the various markets. PIOs support the joint authority model because it not only simplifies board-level decision making, but it also serves to expand the oversight role of the EIM Governing Body, more accurately reflecting the reality of today’s markets where market services are becoming increasingly interdependent. For example, under this model, both boards’ approval would be required for most policy changes to the EIM since these changes would not only impact the EIM, but also the CAISO’s real-time market. Additionally, under this model, both boards’ approval should be required before finalizing and implementing the market design for EDAM.

(2) Process for Resolving Potential Deadlocks

PIOs support the GRC’s proposed process for resolving potential deadlocks under the joint authority model, but caution the routine use of competing FERC filings due to the uncertainty and risk such filings can create. Where competing FERC filings cannot be avoided, PIOs recommend the GRC consider adding the following requirement – that in its own filing, the CAISO Board of Governors describe the EIM Governing Body’s competing proposal in adequate detail to enable a fair determination by FERC and also, sufficiently justify its reasoning for failing to adopt the Governing Body’s alternative.

Currently, there is no defined process for addressing situations where the Governing Body and the Board of Governors are deadlocked on whether to approve a proposal that is subject to their joint authority. If, in the future, one board votes to approve a proposal and the other does not, the GRC proposes an iterative process to address the deadlock. This process would include the following steps:

• At the initial public meeting where the two boards consider the proposal, the Governing Body or Board members who do not support it would be asked to articulate their concerns. Both boards would then engage in a public discussion to explore their differences and consider potential ways to address concerns, taking into account stakeholder input.
• Following the joint board meeting, CAISO staff would be charged with commencing another round of the public stakeholder process, designed specifically to explore ways to address the identified concerns and to establish a revised proposal for both boards to consider. Stakeholders would have an opportunity to provide comment on the revised proposal.
• The revised proposal would once again be considered by both boards at a joint meeting. If the matter is approved by both boards, CAISO staff would be able to move forward with a filing at FERC. If the two boards instead continue to disagree, two options would become available: (1) the two boards could decide to remand the matter to CAISO staff for another revised proposal or (2) as a last resort, the two boards could opt to develop and approve two alternative versions of the proposal, which CAISO would submit to FERC for consideration.

While PIOs acknowledge the need for a process to resolve deadlocks within the joint authority model, we also have concerns with two alternative versions of a proposal being submitted to FERC. With two proposals to choose from, it is not infeasible that FERC could approve what it views as the best proposal or, potentially, could “pick and choose” elements of the competing filings, ultimately approving an entirely different proposal.

ISO New England (“ISO-NE”) provides an example of how competing FERC filings work in practice. In its Participants Agreement, ISO-NE allows for competing, or “jump ball” filings at FERC.[1] Within the ISO-NE stakeholder process, if stakeholders obtain at least a 60% vote in favor of their own market rule proposal, this jump ball provision requires ISO-NE to file it on equal footing with ISO-NE’s own proposal. FERC may adopt any or all of ISO-NE’s proposal or the stakeholders’ alternative proposal. Additionally, pursuant to the Participants Agreement, ISO-NE “shall, as part of any required Section 205 filing,” describe the alternative market rule proposal in sufficient detail to permit reasonable review by FERC and also explain its reasoning for not adopting the alternative and why it believes its own proposal is superior.[2]

Up until fairly recently, FERC has had a great degree of flexibility in terms of how it treated ISO-NE’s jump ball filings. FERC could approve the ISO-NE version of the proposal or it could instead approve the stakeholders’ version of the proposal. If FERC found neither proposal to be just and reasonable, it could create its own version of the proposal by “mixing and matching” various elements of the two competing filings. Given a recent appellate court decision, however, it is less clear just how much flexibility FERC has to “mix and match” competing filings. In that case, the D.C. Circuit Court of Appeals held that under the Federal Power Act, FERC may make minor changes to a utility’s Section 205 rate proposal, but cannot make material changes resulting in “an entirely different rate design.”[3]

Thus, given the inherent risk and uncertainty associated with competing FERC filings, PIOs recommend that they be avoided and only used in very limited circumstances – i.e., when both boards have truly come to an impasse. Additionally, where competing filings are used, PIOs recommend that in its FERC filing (as in the case of ISO-NE), the CAISO Board of Governors be required to describe the EIM Governing Body’s competing proposal in adequate detail to enable a fair determination by FERC and also, sufficiently justify its reasoning for failing to adopt the Governing Body’s alternative.

 (3) Short-Term Emergency Filings

PIOs recommend that CAISO management only move forward with emergency filings after obtaining board approval. Where the tariff change involves a matter of joint authority, CAISO management should strive to obtain approval from both the EIM Governing Body and the CAISO Board of Governors. For tariff matters where joint authority is implicated but where both boards cannot be timely convened, PIOs support CAISO management obtaining approval from only one board – whichever board can be more readily convened.

Under the existing EIM governance model, there is an “exigent circumstances” provision that allows CAISO management to secure the approval of only one of the two boards when a temporary tariff amendment is urgently needed to prevent market manipulation or to address an “imminent threat” to grid reliability. While this provision has not yet been used, it allows CAISO management to obtain approval from the Governing Body only when the tariff change addresses a matter within that board’s primary authority – or, it allows CAISO management to obtain approval from the Board of Governors only where the tariff change addresses a matter within that board’s primary authority. Tariff filings due to exigent circumstances are in effect for no longer than 90 days.

Within the joint authority construct, the exigent circumstances provision will require modification as the “primary” and “advisory” authority construct would no longer exist. The GRC proposes a number of options for stakeholders to consider:

• CAISO management obtains approval from either board – depending on which board can be more readily convened.
• The designated approval body alternatives back and forth between both boards over time.
• CAISO staff moves forward with the emergency filing without obtaining either board’s prior approval, provided that the tariff amendment is temporary in nature.

PIOs recommend that CAISO management proceed with an emergency filing only after receiving board approval. For tariff matters where joint authority is implicated, PIOs recommend that CAISO management seek approval from both boards. For tariff matters where joint authority is implicated, but where both boards cannot be timely convened, PIOs support CAISO management obtaining approval from whichever board can be more readily convened. While PIOs recognize the need for CAISO to move quickly on emergency filings, we do not believe it is appropriate for tariff filings to proceed without some form of board approval. Additionally, CAISO management should always debrief both boards following an emergency filing.

(4) Decisional Classification Process – Dispute Resolution

Where disputes arise in the decisional classification process, PIOs recommend allowing the tiebreaker authority to alternate between the chairs of both boards over time.

Within the current EIM governance model, where both boards are unable to reach agreement on the appropriate decisional classification for a particular stakeholder initiative (i.e., primary, advisory or hybrid), the CAISO Board of Governors’ Chair is permitted to break a tie in order to determine the proper classification. While disputes regarding the decisional classification process are likely to be far less common under the joint authority construct, disputes could still arise. The GRC proposes a number of options for stakeholders to consider:

• Allow the decisional classification proposed by CAISO staff to stand if there is an even division between both boards.
• Continue allowing the tiebreaker authority to rest with the Board of Governors’ Chair.
• Allow the tiebreaker authority to alternate between the chairs of both boards over time.
• Randomly select an odd-numbered subset of the members of both boards, who would then decide the proper classification by a majority vote.

Where disputes arise in the decisional classification process, PIOs do not support allowing the classification proposed by CAISO staff to stand. Rather, some type of board-level decision should be made. PIOs support allowing the tiebreaker authority to alternate between the chairs of both boards over time. This alternative strikes us as a fair compromise that appropriately recognizes the joint authority construct (where continuing to allow the tiebreaker authority to rest only with the Board of Governors’ Chair does not seem appropriate under this model). Also, it avoids the administrative burden of randomly selecting an odd-numbered subset of both boards to determine the appropriate classification by majority vote.

(5) Timing and Process for Implementing Proposed Changes to the Scope and Type of Authority

PIOs support the GRC’s recommendations regarding the timing and process for implementing the proposed changes to the scope and type of authority for the EIM Governing Body – specifically:

• The Board of Governors and the Governing Body should consider implementing the proposed changes to the delegation of authority contemplated for the current market structure before EDAM is approved and implemented.
• The Board of Governors should formalize the process that CAISO management has proposed for approving the final market design for EDAM, which would involve bringing the proposed market design to both the Board and the Governing Body for their joint review and approval.

(6) Enhancements to the Durability of the Delegation of Authority

PIOs support the GRC’s proposal to enhance the durability of the delegation of authority to the EIM Governing Body.

Enhancing the durability of the delegation of authority essentially means making it more difficult to change those provisions in the CAISO’s governing documents that establish the scope and type of delegation the Board has made to the Governing Body. The scope of authority is established in the Charter for EIM Governance and can be modified by a majority vote of the Board of Governors after obtaining advisory input from the Governing Body. The type of authority is established in CAISO’s Bylaws and can be changed either by a vote of at least 2/3 of the members of the CAISO Board or by a majority vote of both the Governing Body and the Board.

PIOs support the GRC’s proposal to enhance the durability of the delegation of authority to the EIM Governing Body by doing the following:

• Require a unanimous vote of the Board for any changes to governance that may impact any aspect of the scope or type of the Governing Body’s authority.
• No changes should be adopted without first seeking stakeholder input and specifically considering and addressing any advisory input from the Governing Body, the Regional Issues Forum, or the Body of State Regulators may provide.
• Require a mandatory notice period for implementing any proposed change that is equal in length to any notice period that EIM or EDAM entities may have for withdrawing from the EIM or EDAM market (i.e., there is a 180-day notice period for EIM). The notice period would apply to all changes to the delegation of authority unless both the Board and the Governing Body unanimously agree to waive the notice period.

[1] For background on ISO-NE’s “jump ball” provision and the related FERC filing process, see: https://nicholasinstitute.duke.edu/sites/default/files/publications/state_participation_in_resource_adequacy_decisions_web.pdf.

[2] ISO-NE and NEPOOL, “Participants Agreement,” Apr. 10, 2009, at section 11.1.5., www.iso-ne.com.

[3] Specifically, the D.C. Circuit found that under Section 205, where a utility or market operator submits a proposed rate for FERC approval, FERC is in a reactive role, authorizing FERC to either accept or reject the applicant’s submission. In contrast, Section 206 permits FERC to be more proactive in finding an existing rate unjust and unreasonable and to set an appropriate rate. NRG Power Marketing, LLC et al. v. FERC, (D.C. Cir. 2017), ferc.gov.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

(1) Nominating Committee

PIOs support changing the status of the representative of Public Interest Organizations and Consumer Advocate Groups on the EIM Nominating Committee from an advisory to a voting member.

As noted in our previously submitted comments, the Selection Policy for the EIM Governing Body makes a distinction between voting and non-voting members on the Nominating Committee and presently, only three sectors are currently relegated to non-voting roles: (1) EIM Governing Body; (2) CAISO Board of Governors; and (3) Public Interest and Consumer Advocate Groups. No justification or rationale is provided in the Selection Policy for why some sectors are afforded voting rights and why other sectors are not. However, in practice – as noted by the GRC in its Straw Proposal – the representative from the Governing Body does not need a vote because the Governing Body has a final say on who is ultimately appointed to that board. Similarly, the representative from the Board of Governors does not have a vote in an effort to ensure the independence of the Governing Body from the Board.

In contrast to the situation involving the representatives from the CAISO Board of Governors and EIM Governing Body sectors, no reasoning is available to explain why the representative of the Public Interest and Consumer Advocates Groups sector cannot vote on the Nominating Committee. As noted by the GRC in its Straw Proposal, this sector has been heavily engaged in market issues – both informally through the CAISO stakeholder process and formally as members of the Nominating Committee, the Governance Review Committee, and the Regional Issues Forum. Because this sector plays an important role not only in the EIM, but also in the future EDAM, it should be able to participate on an equal basis with the other voting sectors on the Nominating Committee.

(2) Selection Criteria

PIOs believe that a diverse EIM Governing Body is critical for sound, balanced decision making and therefore support the GRC’s recommendation to enhance the role that diversity plays in the selection criteria for the EIM Governing Body – to include not only geographic diversity and diversity of expertise, but also diversity of gender, ethnicity and perspective.

(3) Terms of Governing Body Members: Adding a 60-Day Holdover Period

PIOs support the GRC’s recommended 60-day holdover period for EIM Governing Body members where a replacement has not yet been confirmed.

To date, the EIM Nominating Committee has been able to reach timely decisions regarding nominating candidates for appointment to the Governing Body. The 60-day holdover period would permit additional flexibility in the Nominating Committee’s process of identifying and interviewing qualified candidates and would occur only if: (1) requested by the Nominating Committee, (2) approved by the Governing Body, and (3) agreed to by the sitting member of the Governing Body. PIOs support adding this additional flexibility to the Nominating Committee’s existing process so that the Nominating Committee’s vetting of candidates is not unnecessarily rushed, helping to ensure that only the most qualified candidates are nominated for appointment to the Governing Body.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

(1) Governing Body Meeting Process

PIOs believe the current model, where the EIM Governing Body frequently meets in locations throughout the Western Interconnection, is an effective way to engage with regional stakeholders. This model should continue under the joint authority construct, with joint meetings of the CAISO Board of Governors and the EIM Governing Body regularly occurring outside of CAISO’s headquarters in Folsom, California.

As provided in our earlier comments, PIOs believe the current model, where the EIM Governing Body holds seven public session meetings a year, with roughly half of those meetings occurring in locations throughout the Western Interconnection (rather than exclusively in Folsom, California) has worked very well. The EIM Governing Body’s willingness to meet publicly throughout the region not only symbolizes the regional footprint of the market itself, but also provides an opportunity for the EIM Governing Body to meaningfully engage with a larger pool of regional stakeholders – particularly those stakeholders that might otherwise face travel restrictions. Furthermore, it serves to at least partially assuage concerns regarding the independence of the EIM Governing Body by emphasizing the regional (rather than California-centric) nature of this board’s work. Going forward, under the joint authority model, PIOs encourage the EIM Governing Body and the CAISO Board of Governors to jointly meet in a similar fashion – with at least half of these joint meetings occurring in regional locations outside of the CAISO’s headquarters.

(2) Modifying the RIF to Enhance Opportunities for Stakeholder Engagement

PIOs support the GRC’s recommendation to “formalize” the RIF – i.e., by allowing the RIF to discuss matters that are part of an ongoing CAISO stakeholder process, and if warranted, to share consensus opinions with the Governing Body or with CAISO staff. PIOs also support modifying the RIF’s current stakeholder sectors, using the Nominating Committee’s stakeholder sector definitions as a model.

Today, the RIF is limited to addressing broader issues of EIM operations and, “should not take up for consideration individual policy issues that are currently part of an ongoing stakeholder process[.]”[1] PIOs support the GRC’s recommendation to enable the RIF to discuss matters that are part of an ongoing CAISO stakeholder process, and if warranted, to share consensus opinions with the Governing Body or with CAISO staff. While the RIF should be empowered to advise the EIM Governing Body on issues currently under consideration by the Governing Body, PIOs recommend that the RIF’s input be considered advisory and not supplant the existing CAISO stakeholder process. The value added through enabling the RIF to provide formal recommendations is through the additional stakeholder input available to the Governing Body as it considers market rule changes to ensure the success of the EIM and larger real-time market.

PIOs further believe that the current RIF stakeholder sectors should be reconsidered. As noted in the Straw Proposal, as the EIM has grown, certain sectors are becoming increasingly small – particularly the “Neighboring Balancing Authority Areas” sector. PIOs recommend the GRC consider using the EIM Nominating Committee’s sector definitions as a starting point for modifying the RIF’s stakeholder sectors:

• EIM Entities: Includes EIM Entities and any entity that has executed an EIM Implementation Agreement.
• Participating Transmission Owners: Includes participating transmission owners; same meaning as in the CAISO Tariff.
• Energy Suppliers and Marketers of Generation: Includes every entity that is party to a Scheduling Coordinator Agreement or a Participating Generator Agreement with the CAISO, provided that it does not qualify for the EIM Entities sector, the Participating Transmission Owners sector, or the Publicly Owned Utilities sector.
• Publicly-Owned Utilities: Includes every publicly-owned utility located within the balancing authority area of either the CAISO or an EIM Entity. This includes municipally-owned utilities, power cooperatives and federal power marketing agencies. A publicly-owned utility that is either an EIM Entity or a Participating Transmission Owner should participate in those sectors. Note that this definition could be changed to enable POUs to elect to participate in this sector rather than joining the EIM Entity or PTO sectors, given their unique interests. Pursuant to the RIF Operating Guidelines, “an entity can nominate and/or be nominated as a Sector Liaison within one sector only.”[2]
• Public Interest and Consumer Advocate Groups: Includes all public interest or consumer advocate groups that are actively involved in energy issues within the balancing authority area of the CAISO or an EIM Entity.

(3) Public Power Representation on the BOSR

PIOs support an advisory role for public power – i.e., consumer-owned utilities and federal PMAs – on the EIM’s Body of State Regulators.

While PIOs recognize that public power is uniquely situated due to their roles as market participants and governmental entities that also perform regulatory functions, PIOs agree with the GRC that creating an entirely new advisory body for public power is not necessary at this time. Instead, PIOs support public power’s participation on the BOSR as ex officio members of that body. In this way, public power can formally participate as non-voting members in BOSR meetings and offer opinions and positions without unduly interfering with the existing structure of the BOSR.

[1] Transitional Committee Final Proposal, pp. 18-19.

[2] Regional Issues Forum Operating Guidelines, pp. 2-3.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

PIOs’ comments are provided below.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

PIOs support the GRC’s proposal to not require formal approval of the CAISO’s Annual Policy Initiatives Roadmap, as it would negatively impact the flexibility, efficiency and productivity of the CAISO in advancing policy initiatives.

PIOs believe the current Annual Policy Initiatives Roadmap (“Roadmap”) process is working well. This process involves multiple rounds of stakeholder input, after which CAISO management reviews the three-year vision and the annual Roadmap with both the EIM Governing Body and the CAISO Board of Governors to obtain their input, but without seeking formal approval. PIOs agree with the GRC that requiring formal approval of the Roadmap risks negatively impacting the flexibility that CAISO staff and management currently have in advancing policy initiatives for stakeholder input.

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

PIOs support the GRC’s recommendation to provide both the EIM Governing Body and the CAISO Board of Governors with equal access to market data, information, and analysis produced by CAISO’s Department of Market Monitoring and the Market Surveillance Committee. And, if EDAM moves forward, the Governing Body should be provided with additional outside expertise on market issues in the form of an outside market expert.

Under the joint authority model, PIOs believe that it is appropriate for both the CAISO Board of Governors and the EIM Governing Body to have equal access to market data, information, and analysis produced by CAISO’s Department of Market Monitoring (“DMM”) and the Market Surveillance Committee (“MSC”). In practice, this means the following:

• A member of the Governing Body will participate in the meetings of the DMM Oversight Committee.
• The Governing Body will have joint authority over appointments to the MSC.

If EDAM moves forward, PIOs agree with the GRC that the Governing Body should be given access to additional outside expertise on market issues, in the form of an outside market expert, or “OME”. Costs for the OME should be included in the Governing Body’s budget. The OME would not be involved in market monitoring, but would instead analyze EDAM implementation and the impact of future market policies on EDAM. The OME contract would be no longer than five years so that the need for the OME can be reconsidered on a timely basis.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

As provided in our previously submitted comments, PIOs strongly support funding for the Body of State Regulators, enabling the BOSR to more effectively participate in both EIM and EDAM stakeholder processes. While PIOs have previously supported the use of a tariff rider to provide this funding, we also support the current negotiations taking place between the BOSR and EIM Entities to provide this funding through a separate agreement (outside of a tariff charge), ensuring that market participants that are not state jurisdictional will not be required to financially support the stakeholder engagement of state regulators.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

PIOs support amending the EIM Governing Body’s Mission Statement to reflect the Governing Body’s expanded role with regard to EDAM, but not until the market design for EDAM has been finalized and approved by stakeholders, both boards, and FERC.

Upon final approval of EDAM, both the name of the Governing Body and the Governing Body’s Mission Statement should be amended to reflect the Governing Body’s expanded oversight role with regard to EDAM. At this time, PIOs do not offer specific recommendations regarding the appropriate future name for the Governing Body or specific language to be added to the Mission Statement – only that the Mission Statement should include references to not only EIM, but to EDAM as well.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

(1) Governance Reevaluation

PIOs support the GRC’s recommendation to conduct a stakeholder-led review of the governance structure no later than five years after any new governance structure has been implemented (as a result of the GRC process) – regardless of the timing associated with EDAM implementation.[1]

 (2) Timing of Implementation of GRC Recommendations

PIOs agree that most of the GRC’s governance recommendations will apply equally to the EIM and EDAM and therefore, we support the GRC’s recommendation to submit its draft final governance proposal to both boards by Q1 2021. Additionally, PIOs recommend that the GRC remain available after submission of its draft final proposal to further consider any EDAM-specific changes that will be necessary once EDAM’s final market design is better known.[2]

[1] Therefore, if certain governance changes are established for EIM before the EDAM is implemented, then the five-year period would run from the time that those initial “EIM-only” changes are implemented.

[2] As noted by the GRC in its Straw Proposal, this could occur immediately prior to the submission of the EDAM market design draft final proposal to the EIM Governing Body and the CAISO Board of Governors. The Governing Body and Board could also request that the GRC review or re-evaluate any element of governance prior to their adoption of EDAM’s final market design.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

PIOs have no additional comments at this time.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

PPC represents the interests of nearly 100 publicly owned utilties in the Northwest.  Our members are impacted by the EIM and are interested in the potential development of an EDAM from several different perspectives:

• • as load serving entities in the potential EDAM footprint (as well as being in the current or planned EIM footprint);
  • as current, planned or potential EIM participants;
  • as possible EDAM participants – either as EDAM Entities, owners of participating generation, or both;
  • as active participants (both as buyers and sellers) in Western bilateral markets which will be impacted by an EDAM; and
  • and as purchasers of preference power and transmission services from BPA (whose transmission use and generation revenues stand to be impacted by EDAM whether or not BPA becomes an EDAM participant and will be impacted by BPA’s planned EIM participation).

PPC appreciates the Governance Review Committee’s (GRC) consideration of the diverse perspectives set forth in response to the GRC’s scoping document to develop this straw proposal.  There are several areas where we seek clarification, but generally PPC is supportive of this proposal and believes that the GRC has put forth a strong foundation that the stakeholders can continue to build on and refine in order to develop a “delegated authority” governance structure that provides a high level of certainty and protection to all market participants.  This will be critical for EDAM to move forward.  

PPC will assess the final proposal for EDAM governance as part of an EDAM package, which includes governance, market design and existing market dynamics that could impact the potential benefits and risks for those choosing to participate in EDAM.  We look forward to continued discussions on EDAM market design and fully support the proposal that the EDAM governance should not be finalized until after the EDAM market design proposal is complete.  In addition, in light of recent events in regional energy markets, PPC looks forward to working with other stakeholders to better understand the existing dynamics that led to those events, including any relevant CAISO policies, especially those related to Resource Adequacy.  These dynamics, and any role of the existing governance structure, will be important to understand to ensure that the governance structure provides sufficient protections for all potential participants.  

PPC also seeks additional clarification on the current statutory context surrounding the EDAM and how that statutory context may influence the durability of the GRC’s proposal.  The clarifications we are seeking are described in more detail below.

We appreciate the hard work of the GRC and CAISO staff throughout this process and look forward to continuing to work with them and other stakeholders to refine the governance structure set forth in the Straw Proposal.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

 Delegation of Authority to Governing Body

PPC supports expanding the delegated authority for the Governing Body to include all real-time and day-ahead issues as well as issues that impact all CAISO market participants (such as settlements and billing).  We also support the extension of this expanded delegated authority to the Governing Body for all EDAM market design issues being discussed as part of the EDAM stakeholder initiative.  The current decisional classification rules, which identify a narrow set of issues for “primary” authority of the Governing Body, are restrictive and confusing.  It is more appropriate for the Governing Body to have an expanded role in all decisions impacting EIM and EDAM participants, which include all real-time and day-ahead rules.

While PPC recommended primary authority for the Governing Body over all real-time and day-ahead market issues in response to the GRC’s scoping paper, we acknowledge several benefits from the proposed “Joint Authority” approach as defined by the GRC.  First, changes to real-time and day-ahead rules will have impacts to both EDAM/EIM Entities and entities in CAISO’s BAA.  Providing a primary role for bodies representing the interests of both of those groups is appropriate.  Second, holding joint meetings of the Board of Governors and the Governing Body will allow both boards to benefit from each other’s perspective and to hear from diverse stakeholders to inform their decisions.  Lastly, the proposal to have joint authority over all real-time and day-ahead issues will significantly reduce the complexity of identifying decision-making roles compared to current decisional classification rules.  The shared authority for both bodies on a wide range of issues will also reduce the likelihood for disagreements on the decisional classification.

For these reasons, PPC conceptually supports the “Joint Authority” model proposed by the GRC.   However, we believe the Joint Authority model raises questions around the composition and mission of the Governing Body.  We understand the intent behind the GRC’s proposal for Joint Authority is to achieve a balanced perspective between those market participants inside the CAISO BAA and those outside of the CAISO BAA and we support that objective.  PPC seeks a discussion with other stakeholders on whether any revisions to the Governing Body composition or mission are necessary to achieve a balance of regional perspectives given the statutory directives and composition of the CAISO Board of Governors.  In particular, this discussion should include how the interests of entities within the CAISO BAA should be reflected in the regional diversity represented on the Governing Body.

Other Misc. Delegation of Authority Issues

PPC supports the GRC’s proposed resolution process in the case of decision deadlocks.  Allowing for additional discussion among stakeholders as a first step to explore alternative solutions is appropriate.  Absent the ability to come to resolution through that process, review from FERC on debated proposals is one acceptable approach for coming to resolution.  Allowing for at least two rounds of stakeholder review prior to submission to FERC as proposed by the GRC seems reasonable.

As noted by the GRC, the proposed dispute resolution does not work if one entity is seeking a change from the proposal while another seeks to maintain the status quo.  It will be important that an alternative solution is developed to address these instances, and PPC looks forward to additional discussion on potential solutions.

For exigent circumstances, the CAISO should, to the extent possible, seek the approval of both decision-making bodies.  This should be made easier by increased joint meetings of the decision-making bodies.  If joint review is not possible, then decision-making responsibilities in the case of exigent circumstances should alternate back and forth over time between the Board of Governors and the Governing Body.  A decision-making body should not decide to extend its own decision made under exigent circumstances.  That decision should be made by the other body.

PPC agrees that it is less likely to have disputes on decisional classification under the new proposal, but in the case of such a dispute, it is not appropriate for the Board Chair to make the sole determination.  The potential to alternate the tie breaker between the Chairs of the decision-making bodies is an imperfect, but acceptable solution.  We look forward to other stakeholder proposals that may offer improved solutions.

Durability of Delegated Authority

PPC strongly supports the GRC’s proposed changes to the durability of delegated authority to the Governing Body as an improvement to the status quo.  Requiring unanimous agreement among the Board of Governors to revise this delegation is an important improvement towards ensuring confidence in the governance structure.  We also support inclusion of a notice period for any changes in the delegation of authority as an important protection for market participants who chose to participate in the market given the revocable delegation of authority that underlies the EIM and EDAM governance.  The current proposal to align this notice period with the required withdrawal notice from the market may not provide sufficient time for entities to consider withdrawal and give notice in a timely manner.  We recommend extending the notice period by at least 30 days to provide additional time for entities to consider the impacts of the governance change and determine whether to trigger their withdrawal notice.

As described in the straw proposal, we understand that there are some limitations to the durability that can be achieved under this “delegated” model, given CAISO’s obligations under its organic and enabling statutes.  PPC would like to better understand the CAISO’s perspective on how the proposed governance structure interacts with the ISO’s broader statutory obligations and, specifically, how those obligations could impact the durability of the governance structure.  PPC’s requests for additional clarification are included in the last section of these comments.  After further evaluating the broader statutory context, PPC may recommend additional changes to future iterations of the GRC’s proposal to provide additional assurances on the durability of the proposed delegation.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

PPC supports the Public Interest Organization sector becoming a voting sector on the nominating committee.

We also support the inclusion of language in the selection criteria that would seek to establish a diversity of representation on the Governing Body.  It appears that by offering these proposed revisions to the nomination criteria, the GRC is striving to ensure diverse and balanced representation among decision makers.  PPC fully supports that intent.  We also recognize that the “decision makers” are no longer limited to the Governing Body under the new Joint Authority model, but now include the CAISO Board of Governors as well.  PPC recommends that consistent with the GRC’s intent to seek geographic diversity among those serving as decision-makers, the composition of the Board of Governors be considered when nominating Governing Body members.  We seek additional discussion with stakeholders on how the new Joint Authority model may impact future Governing Body appointments to ensure sufficient diversity, particularly geographic diversity among the decision-making bodies.

PPC has no objections to the proposed hold-over period for outgoing Governing Body members.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

PPC continues to support the current Governing Body meeting process, particularly the efforts to host meetings across the market footprint.  Including additional joint meetings with the Board of Governors is a potential benefit of “Joint Authority” as described above in response to Issue 1.

We support the GRC’s proposal to modify the existing Regional Issues Forum and allow the RIF to operate much like a stakeholder advisory committee.  The RIF has worked well as a forum for diverse stakeholders to explore ideas and this proposed change is a simple way to enhance opportunities for stakeholder engagement.  We agree that the changing market composition makes a review of current stakeholder segments on the RIF appropriate.  We look forward to discussing options with stakeholders and believe that any alternative should ensure that the interests of public power entities with different roles within the market (EIM/EDAM Entities, Load Serving Entities with Participating Resources, Load Serving Entities without Participating Resources) are sufficiently represented.  We also note that it is likely appropriate that the sectors represented on the nominating committee should also be reviewed in light of market changes.

In concept, PPC supports establishing public power and PMA liaisons to the Body of State Regulators.  The issue of how to provide public power, which is self-governing, an expanded role in governance is a long-standing question and we appreciate the creative approach that the GRC has taken to develop a solution.  We offer these considerations to ensure this liaison role provides an expanded role for public power:

• More than one liaison is necessary to represent the diverse interests of public power in the EDAM footprint.  Three geographically diverse representatives and one PMA would be a good balance to gain diverse representation, while also keeping participation manageable.
• These liaisons should not be voting members of the BOSR, but to the extent that they disagree with positions taken by the BOSR the liaisons should be provided the opportunity to offer those opinions directly to the Governing Body for consideration.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

See comments below.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

PPC continues to believe that the ability to direct CAISO’s work is an important aspect of shaping the market design and operations of CAISO’s markets.  We appreciate some of the concerns raised by the GRC in declining to require formal oversight and agree that it is important that CAISO management be afforded flexibility to adjust workload as priorities change.  One potential solution is to allow the Governing Body and Board of Governors to add priority issues to the roadmap if necessary, to ensure they are addressed in a timely manner.  This would balance the needs of enabling the decision-makers to direct work, while allowing CAISO management important flexibility in adjusting planned workload.

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

PPC strongly supports the proposal to make an outside market expert available to the Governing Body.  This is an important improvement that will enhance both governance and market design related to EDAM.  We also support the GRC’s proposal to put the OME in place prior to final review of the proposed EDAM market design to help inform the Governing Body’s assessment of the proposal.  Having the OME in place in advance of finalizing the EDAM market design would truly allow the “Joint Authority” proposal to work as envisioned, by providing the Governing Body access to a market expert to inform their decision on market design.  As it might be time-consuming to put an OME in place, the selection process for the OME should begin well in advance of the conclusion of the EDAM market design process.

We support the Governing Body making the selection of the OME and recommend that stakeholders develop through the GRC process criteria for the Governing Body to use in this selection. 

The OME is specifically needed in the case of an EDAM, but there would also be significant benefits from having an OME in the case of an EIM only market.  We would like to explore with other stakeholders the potential benefits from having an OME even in an EIM only scenario.  The OME could be a useful resource in assessing ongoing policy discussions and to help market participants identify potential improvements for the existing market.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

No comments.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

PPC supports the existing mission statement for the Governing Body regarding its role governing the EIM.  We agree with the GRC that updates are likely needed if EDAM moves forward, but that those updates should be informed by the market design set forth in EDAM.  We request an additional discussion with the GRC and other stakeholders to review the Governing Body mission statement at the conclusion of the EDAM market design process and prior to finalizing the EDAM governance structure.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

PPC strongly supports the GRC proposal to implement EIM governance changes on the timeline proposed and EDAM governance changes once the EDAM market proposal is finalized.  It will also be critical that the proposal for “Joint Authority” over EDAM market design is confirmed as soon as possible to clarify the decision-making roles of the Board of Governors and Governing Body in for that initiative process.

PPC proposes a stakeholder workshop and comment period to review the GRC proposal for EDAM governance after EDAM market design is approved, including but not limited to, the mission statement for the EDAM Governing Body.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

In many respects, the CAISO is a unique market operator.  It is a nonprofit public benefit corporation created by statute as part of the State’s efforts to restructure the electric industry.  Specifically, as Appendix A of the straw proposal aptly describes, the CAISO is a “supporting organization” and this particular tax-exempt status depends on the CAISO’s ongoing ability to carry out its corporate purposes and comply with applicable state laws.  As a creature of statute, the CAISO is granted powers to act, but only subject to the authorities, obligations, and limitations provided in its organic and enabling laws.  

Among those laws is Pub. Util. Code Sec. 345.5.  It provides that as a nonprofit public benefit corporation, the ISO “shall conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state.”[1]  It further provides that the ISO “shall” manage the transmission grid and related energy markets in a manner that is consistent with “[r]educing, to the extent possible, overall economic cost to the state’s consumers”[2] and “[c]onducting internal operations in a manner that minimizes cost impact on ratepayers to the extent practicable and consistent with the provisions of this chapter.”[3]

These statutory obligations give rise to a variety of questions that need to be addressed before PPC and its members can fully evaluate the durability of the proposed governance structure.  First, PPC would like to understand the CAISO’s perspective on how the proposed governance structure interacts with the ISO’s statute-driven obligations to the State’s consumers set out in Pub. Util. Code Sec. 345.5 and, specifically, how those obligations could impact the durability of the governance structure.  Although the CAISO’s perspective is not necessarily dispositive, it may offer important insight to market participants seeking to understand and evaluate the benefits and risks of participating in the EDAM.  

Because the CAISO cannot irrevocably delegate authority to the Governing Body and must maintain ultimate authority over any and all delegated functions, PPC would like to better understand whether the Board of Governors’ obligations to California consumers could induce the Board to revoke its delegations to the Governing Body.  For example, what assurance can the CAISO offer that, when confronted with a statutory duty to California consumers, the ISO will not be required to act upon that duty to the detriment of the other market participants or move to unilaterally change the EDAM governance structure?  

A robust governance structure can certainly obviate concerns about unduly preferential treatment of certain market participants.  But when that governance structure can be displaced after participation commitments have been made, additional protections may need to be included to manage the potential risk of unfair advantage.  Therefore, after better understanding and further evaluating the CAISO’s broader statutory context, PPC may recommend additional changes to the GRC’s straw proposal to provide additional assurances for the durability of the proposed delegation.

Aside from the obligations arising from its organic and enabling statutes, the CAISO is regulated by FERC as a “public utility” under the Federal Power Act.  The Federal Power Act provides that all rates and charges made, demanded, or received by any public utility for, or in connection with, the transmission or sale of electric energy subject to Commission’s jurisdiction, and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable, and any such rate or charge that is not just and reasonable is unlawful.[4]  The Federal Power Act further precludes public utilities, in any transmission or power sale subject to the Commission's jurisdiction, from making or granting any undue preference or advantage to any person or subjecting any person to any undue prejudice or disadvantage.[5]

Considering the totality of the CAISO’s statutory obligations under state and federal laws, a natural question arises about what happens when those obligations conflict.  Specifically, PPC would like to understand the CAISO’s perspective on how its statutory obligations in Pub. Util. Code Sec. 345.5 to reduce and minimize economic impacts to California consumers square with the CAISO’s obligations under the Federal Power Act to offer just and reasonable rates, rules, and regulations and non-discriminatory treatment to all market participants.  Again, while the courts may be the ultimate adjudicators of that conflict, the CAISO’s perspective on how it would seek to reconcile that conflict may be enlightening.  And where the circumstances do not rise to a clear-cut statutory conflict, what assurance can the CAISO offer that its actions will be motivated by a wholistic approach to create the widest benefits for all market participants, and not a statutory duty to a specific segment of those participants?

PPC offers these questions in a constructive spirit and believes that recent events highlight the importance of the need for potential market participants to consider the benefits, but also to understand and manage possible risks.  The risks of participation are different under an EDAM than they are in an EIM, and potential participants require a better understanding of the statutory context surrounding the market in order to inform their assessment of those risks.  PPC firmly believes that a well-designed, well-structured market that is supported by strong governance principles will deliver long-term value for all market participants.  We appreciate and understand the unique interests of each party and are committed to developing a governance structure that adequately considers those interests while supporting a market design that will create the most benefits for the West and equitably distribute those benefits among market participants.

[1] Pub. Util. Code Sec. 345.5(a).  (Emphasis added.)

[2] Pub. Util. Code Sec. 345.5(b)(2).  (Emphasis added.)

[3] Pub. Util. Code Sec. 345.5(b)(5).  (Emphasis added.)

[4] 16 U.S.C. Sec. 824d(a).

[5] 16 U.S.C. Sec. 824d(b)(1).

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

The Six Cities generally support the recommendations in the Governance Review Committee’s (“GRC”) Straw Proposal.  On an overall basis, the recommendations in the Straw Proposal appear balanced and likely to foster constructive and collaborative policy development processes for the benefit of all participants in the CAISO’s Real-Time Markets (and potentially the Day-Ahead Market as well).

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

The Six Cities specifically support the GRC’s proposal for joint decisional authority for the EIM Governing Body and the CAISO Board of Governors for changes to market design or market rules that affect the Real-Time Markets and, if the Extended Day-Ahead Market (“EDAM”) is implemented, the Day-Ahead Market as well.  The proposed joint decisional authority model respects both the interests of EIM Entities in the fair and efficient functioning of markets in which they may choose to participate and the interests of market participants within the CAISO who must depend entirely on the CAISO’s markets. 

That participation in the CAISO’s markets is voluntary for EIM Entities and market participants located in their Balancing Authority Areas (“BAAs”) but compulsory and unavoidable for market participants located in the CAISO BAA is a critical distinction.  While EIM Entities are able to reduce or avoid the impact of market rules they consider disadvantageous, market participants in the CAISO BAA have no such option.  Under these circumstances, preservation of the decisional authority of the CAISO Board of Governors, as recommended under the GRC Straw Proposal, is necessary and appropriate.

The distinction between voluntary participation available to EIM Entities and compulsory participation for market participants located in the CAISO BAA also should inform the process for addressing deadlocks between the EIM Governing Body and the CAISO Board of Governors.  The Six Cities do not object to the concept of submitting alternative proposals to the Federal Energy Regulatory Commission (“FERC”), as described at page 13 of the GRC Straw Proposal.  If, however, the CAISO Board of Governors determines that a revision of market rules is necessary, but the EIM Governing Body desires to preserve the status quo, the CAISO Board of Governors must retain authority to submit the revision it proposes pursuant to Section 205 of the Federal Power Act and applicable rules and principles thereunder, with the EIM Governing Body retaining authority to protest the proposed revision.  

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

The Six Cities generally support the recommended revisions to the nomination and selection process for EIM Governing Body Members as described in the GRC’s Straw Proposal.  With respect to the proposed addition of diversity in “perspective” as a criterion for evaluating diversity, it is not clear what qualities the term is intended to capture that are not already covered by the other measures of diversity, i.e., ethnicity, gender, and work experience.  Without more substantive definition, the criterion for diversity of “perspective” does not seem to add meaningful guidance for the Nominating Committee.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

The Six Cities have no detailed comments on this topic at this time.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

The Six Cities have no detailed comments on this topic at this time.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

The Six Cities have no detailed comments on this topic at this time.

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

The Six Cities have no detailed comments on this topic at this time.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

The Six Cities do not oppose the concept of funding for the activities of the Board of State Regulators (“BOSR”) to facilitate informed review of Real-Time market rules by that group.  However, any such funding should be provided exclusively by entities regulated by voting members of the Board of State Regulators and should be proportional to voting rights rather than based on load or level of market participation.  The Six Cities would oppose any funding mechanism for the BOSR that would involve charges collected by the CAISO based on load or market participation.  Such a CAISO-based funding mechanism would be fundamentally unfair to market participants in California generally, who would pay for BOSR funding far out of proportion to the voting rights of California regulators, and would be especially inequitable with respect to entities (such as the Six Cities) that are not within the jurisdiction of any BOSR members and would have no voting representation at all.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

The Six Cities have no detailed comments on this topic at this time.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

The Six Cities have no detailed comments on this topic at this time.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

The Six Cities have no detailed comments on this topic at this time.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

SCE does not support the joint authority model for the CAISO Board of Governors (Board) and the EIM Governing Body (GB). SCE is committed to expansive and efficient markets that support California’s clean energy objectives. This commitment requires a governance framework within the western Energy Imbalance Market (EIM) that mitigates risks to the achievement of California’s clean energy goals. There are aspects of the proposal that SCE supports - the selection of EIM Governing Body members, the CAISO's Policy Roadmap process and the EIM Governing Body's participation on the Department of Market Monitoring Committee and Market Surveillance Committee. The comments presented herein reinforce SCE’s commitment to that outlook. 

2. Provide summary of your organization’s overall position on this proposal:

SCE is committed to expansive and efficient markets that support California’s clean energy objectives. This commitment requires a governance framework within the western Energy Imbalance Market (EIM) that mitigates risks to the achievement of California’s clean energy goals. The comments presented herein reinforce SCE’s commitment to that outlook. There are aspects of the proposal that SCE supports - the selection of EIM Governing Body members, the CAISO's Policy Roadmap process and the EIM Governing Body's participation on the Department of Market Monitoring Committee and Market Surveillance Committee.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

Delegation of Authority

SCE does not support the joint authority model for the CAISO Board of Governors (Board) and the EIM Governing Body (GB).  Such a sharing of authority fails to account for the fundamental difference between CAISO market participants and EIM members; as such, shared authority is inappropriate.  For example, all aspects of market participation are mandatory for CAISO participants like the California investor-owned utilities whereas it is voluntary and partial for the EIM entities.  This core difference between groups presents different risk profiles for the market participants which the proposal fails to address.  Since participation in the day-ahead and real-time markets (DAM and RTM) is not voluntary for California market participants, the CAISO Board should continue to have primary, not shared, authority for the day-ahead market (DAM), including the expanded day-ahead market to the extent the elements impact the processes and mechanisms involved in the DAM in California, and real-time market (RTM) matters which apply to California.  SCE continues to propose a test to determine if the CAISO Board should have primary authority over a given market rule: “If all the EIM participants exit, will the rule still apply to the California ISO members?”.  If yes, the rules should be under the primary authority of the CAISO Board.  Of course, it is important to have all impacted market stakeholders, including EIM members, participate in such market rule development and to provide input to the CAISO Board on such rules.  

Considering the preceding representations, SCE would like to understand how the Governance Review Committee plans to resolve the following excerpt from the legal analysis provided: “... by irrevocably preventing the Board from changing any delegation or sharing of authority, [it] could jeopardize the CAISO’s ability to maintain its exempt status”1 since the joint authority model does not conform with the CAISO’s business operations. 

Moreover, SCEs anticipates that maintaining this level of primary authority at the CAISO Board will best support California in meeting its clean energy objectives in a cost-effective and risk-reducing manner.  

Resolving Potential Voting Deadlocks  

SCE does not support the dispute resolution proposal for submission of dual proposals at the Federal Regulatory Commission (FERC) when a deadlock in voting occurs between the Board and EIM GB. If the deadlock remains after failed discussions among stakeholders on the material issues that contributed to the disagreement between the CAISO Board and EIM GB, the proposal presented by the CAISO’s staff should be filed with the FERC.  Stakeholders with objections to the proposal can intervene at the FERC. SCE believes that the role of the FERC is to determine whether a proposed tariff change is just and reasonable.  The FERC has not historically been asked to determine which of the competing tariff revisions is more just and reasonable.  As such, SCE does not support a formal CAISO process that files multiple competing tariff revisions with the FERC. 

SCE is committed to open and transparent discussions within the stakeholder process with the expectation of concerted efforts of all stakeholders to build consensus within the stakeholder process to develop proposals that gain approval from the CAISO Board and/or the EIM GB. Any unresolved matters can be filed by individual parties at the FERC. If the EIM has a different perspective, its GB should reflect those differences in a filing with the FERC.  

In the specific case of deadlock in the decisional classification process, SCE supports the approach applied to the delegation of authority with the Chair of the Board making the decision for all matters except those specific to or originating within the EIM. This approach can be extended to EDAM as well. 

Exigent Circumstances and Emergency Filings 

SCE supports the current provision for exigent circumstances that permits CAISO staff to seek approval from one of the bodies, the Board or EIM GB, prior to filing the emergency change to the CAISO tariff. That provision aligns with the decision-making process that governs primary authority for either governing body; and, has a duration of 90 days for the effective change.  

Timing and Process for Changes to the Delegation of Authority 

SCE supports the recommendation to implement any approved governance changes specific to the EIM-only rather than delay implementation until approval of the EDAM market design.   

Durability of the Delegation of Authority 

SCE supports retention of the current provisions for the scope and type of delegation as governed by the EIM Charter and supported by the corporate bylaws of the CAISO, respectively.   

SCE has no objection to a unanimous vote requirement for changes to the scope and type of authority; and supports the proposal for stakeholder input on the type of delegation. However, SCE does not support similar actions for changes to the scope of delegation if those changes undermine the CAISO’s bylaws. 

SCE supports a mandatory notice period of 180 days for EIM-only governance changes which is consistent with the required period for withdrawal from the EIM. Also, SCE reiterates that any changes to the scope and type of delegation applicable to the existence of EDAM must be revoked immediately if EDAM does not materialize or ceases to exist after implementation.  

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

Selection of EIM GB Members and Expiration of Their Terms 

SCE supports enhancement of the current diversity criteria to include gender, ethnicity and perspective within the selection process for EIM GB members. Further, SCE offers support for the Nominating Committee to include language on diversity criteria to guide the search firm’s candidate selection process for shortlisting of an inclusive pool of potential appointees to the EIM GB. The language amendments are supported as proposed for inclusion of additional diversity criteria within the clauses that direct the Nominating Committee’s responsibilities under the Selection Policy within the EIM Charter. Also, SCE supports the request for a 60-day holdover period on expiration of the term for an EIM GB member. 

Voting Sector and Nominating Committee 

SCE supports the appointment of a representative with a voting role to the Nominating Committee for the public interest organizations/ consumer advocates rather than the current advisory role. 

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

Stakeholder Engagement and Governing Body Meetings 

SCE supports the current formation and responsibilities of the Regional Issues Forum (RIF) and has no objection to an expanded role in the discussion of CAISO initiatives among its members for presentation as an advisory opinion to the EIM GB. That opinion can also be shared within the CAISO stakeholder process.  The CAISO stakeholder process has been established on the premise that all entities may have a voice at the CAISO both in the development of proposals as well as at the CAISO Board of Governors.  In addition, if stakeholders share similar views, there is nothing preventing them from jointly supporting or objecting to process and tariff changes.  Because of this existing structure, SCE opposes any “formal voting process” as both unneeded and counterproductive. In addition, SCE is supportive of transparent and collaborative discussions that develop consensus and respect stakeholders’ differences wherever those arise.  

SCE sees no reason for change to the sector classifications used for the selection of stakeholder liaisons for the RIF. As membership grows within the EIM and EDAM if it materializes, this matter should be revisited if the sectors or a subset of sectors no longer reflect the RIF membership. The sector for non-EIM BAAs not represented by any voting sector should remain unless the sector becomes empty and there is no further subscription. As the EIM footprint expands, there may be other neighboring balancing authority areas that become neighbors who may wish to participate in that sector. 

At a minimum, SCE represents that the RIF sectors should replicate the voting sectors on the Nominating Committee to achieve alignment of representation throughout the governance structure for the EIM and EDAM.  

SCE is supportive of the federal power marketing agencies (PMA) being combined with the Body of State Regulators (BOSR) though it remains indifferent whether their participation within the BOSR is within an ex officio liaison capacity. SCE supports the proposal that the PMA be excluded from voting on matters exclusive to the BOSR though the PMA is allowed to participate in BOSR meetings and contribute a PMA/consumer-owned utility perspective to BOSR meetings.  

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

Other Potential Areas for Governing Body Involvement 

SCE remains empathetic to the request for access to and the hiring of an outside market expert (OME) to conduct market analyses and render technical advice and opinions to the EIM GB if the CAISO proceeds with EDAM.  SCE objects to the CAISO providing funding for this request if accompanied by the billing of all market participants. The principle of beneficiary pays, or cost causation must be considered. In addition, SCE agrees that the OME, if hired, should not have a role that interfaces with the DMM’s discharge of its responsibilities. 

Instead, SCE counteroffers that all entities excluding members of the CAISO BAA not classified as EIM entities shoulder this expense. SCE welcomes varying viewpoints on market design and rules, and market performance of the CAISO markets from stakeholders and market experts within the CAISO stakeholder process, at Board and EIM GB meetings and at FERC.  

Further, SCE does not support the proposal to offer the OME an initial five-year contract given SCE’s requirement that the principle of cost causation or beneficiary pays must apply.  SCE can support that the selection of the OME will be under exclusive direction of the EIM GB only if it is fully funded by non-CAISO market participants.   

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

SCE agrees with the Governance Review Committee’s decision to support the current Policy Roadmap process that involves multiple rounds of stakeholder input prior to finalization of the selection of initiatives reflected within the annual Policy Initiatives Roadmap. The GRC’s call for representative reasoning from CAISO’s management is echoed by SCE for the relative priority of the included initiatives in the Roadmap in relation to the CAISO’s three-year vision for the market.  

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

SCE concurs with the proposed participation of an EIM GB member (or more than one member) at meetings of the Department of Market Monitoring (DMM) Oversight Committee and Market Surveillance Oversight Committee. Such participation can potentially enhance the expertise of EIM GB members and their insights into market surveillance activities and the development of opinions by these committees about the CAISO markets.  

Also, SCE supports the participation of EIM GB members in the appointment of members to the DMM Oversight Committee and the MSC Oversight Committee since the work of these committees are intended to benefit all stakeholders in the CAISO markets inclusive of the EIM/EDAM footprint. 

SCE disagrees with the opinion expressed by some stakeholders that the DMM is only an internal market monitor and does not perform any duties consistent with an external market monitor. In actuality, the DMM provides frequently participates in market design matters where the MSC often plays a leading role.  The DMM discharges all other responsibilities performed by all other internal and external market monitors present in the other RTO/ISOs. 

SCE remains empathetic to the request for access to and the hiring of an outside market expert (OME) to conduct market analyses and render technical advice and opinions to the EIM GB if the CAISO proceeds with EDAM.  SCE objects to the CAISO providing funding for this request if accompanied by the billing of all market participants. The principle of beneficiary pays, or cost causation must be considered. In addition, SCE agrees that the OME, if hired, should not have a role that interfaces with the DMM’s discharge of its responsibilities. 

Instead, SCE counteroffers that all entities excluding members of the CAISO BAA not classified as EIM entities shoulder this expense. SCE welcomes varying viewpoints on market design and rules, and market performance of the CAISO markets from stakeholders and market experts within the CAISO stakeholder process, at Board and EIM GB meetings and at FERC.  

Further, SCE does not support the proposal to offer the OME an initial five-year contract given SCE’s requirement that the principle of cost causation or beneficiary pays must apply.  SCE can support that the selection of the OME will be under exclusive direction of the EIM GB only if it is fully funded by non-CAISO market participants.   

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

Body of State Regulators Funding 

SCE supports funding of the BOSR and continues to participate in discussions on finding an appropriate mechanism for the BOSR’s funding. SCE also acknowledges and appreciates the GRC’s support for entities to find an appropriate funding mechanism to accomplish a successful outcome to this funding request. 

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

Governing Body Mission Statement  

SCE agrees that the current EIM GB mission statement within the Charter for EIM Governance is adequate and concurs with the GRC’s decision to reserve recommendation for change until the market design for EDAM becomes advanced. If the GRC wishes to consider inclusion of a clause within the Charter that its provisions shall be amended when the market design for EDAM is approved and commences implementation, SCE can offer its support. Any changes to the mission statement should be addressed within the GRC process when proposal for governance changes to facilitate EDAM are under consideration. 

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

Should stakeholders and the GRC decide to present the EIM-only governance changes due to the lengthy development process for EDAM, SCE offers its support for the GRC to remain available for later development of governance proposals to facilitate EDAM and to develop amendments to the EIM GB mission statement.  

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

The below comments are submitted on behalf of the “State-Regulated Market Participants” or SRMPs which are a subset of EIM Entities who are subject to the jurisdiction of state commissions with representation on the Body of State Regulators (BOSR).

2. Provide summary of your organization’s overall position on this proposal:

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

The SRMPs agree with the GRC and other commenters that there is value in greater engagement by the BOSR in policy initiatives. State engagement and participation is a critical component of the ultimate success of market expansion and the full participation of state-regulated entities. The SRMPs further agree with the GRC that the issue of the appropriate funding mechanism for state engagement and participation is a thornier issue. While the SRMPs are not opposed to providing funding for BOSR support, for a number of reasons, the SRMPs have a concern with the institution of a funding mechanism via the FERC-administered CAISO tariff to secure that support.

First, the SRMPs believe that an alternative to a CAISO tariff charge will be a faster and more efficient way for the BOSR to get the support that it needs. The institution of a CAISO tariff charge will likely involve a full CAISO stakeholder process and subsequent filing at FERC for approval. Given the direct and targeted nature of BOSR’s request for support, the SRMPs believe that, at least at this time, such a process would be cumbersome to implement and difficult to modify in the future as the market evolves. Further, such a stakeholder process is likely to lead to some form of CAISO or stakeholder engagement on individual funding requests made by BOSR. The SRMPs believe that this level of process is not warranted at this time.

Second, the SRMPs believe that it is premature to put a formal tariff funding mechanism in place, similar to that of other Regional Transmission Organization (RTO) Regional States’ Committees (RSCs), in advance of the implementation of a market structure more similar to that of an RTO in the West. Rather, the SRMPs propose an interim arrangement that better reflects the voluntary nature of the EIM and the subset of entities whose customers are currently represented by the BOSR. Such a contractual arrangement can potentially be put in place and re-evaluated over time as the market also matures and develops. It also provides time for the state commissions themselves to staff additional market expertise as they are able. Such an approach can and should provide certainty of funding for an agreed-upon term?it does not mean that individual SRMPs may elect to opt in and out of providing funding.

Third, the SRMPs are concerned that a formal CAISO-tariff funding mechanism for one subset of stakeholders may set an ultimately untenable precedent for the provision of intervenor funding via the CAISO tariff. While the SRMPs believe that the BOSR represents unique interests and, as noted above, has a singular role to play in the context of market development in the West, it is not necessarily obvious that the case for funding BOSR does not apply to other interested stakeholders. Without a more formal RTO-like stakeholder structure in place, the SRMPs believe that setting a precedent for funding one stakeholder will result in a lack of formality from other similar requests from other stakeholders. 

In light of these concerns, the SRMPs have been exploring contractual arrangements for providing the necessary funding to BOSR. The SRMPs believe that this could provide the certainty needed to the BOSR to enable the effective engagement of its members while avoiding the potential drawbacks for a more formal FERC-approved tariff charge. The SRMPs are confident that this arrangement as merit with the full support of each SRMP as well as support from members of BOSR. Accordingly, the SRMPs recommend that the GRC continue to support BOSR funding but should not go so far as to recommend a CAISO-tariff funding mechanism.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

The Public Power Utilities[1] (herein referred to as Public Power) submit these comments in support of the EIM Governance Review Committee’s Draft Straw Proposal (“Straw Proposal”).

Public Power in the West has had an ongoing interest in market governance issues harkening back to the efforts to shape a governing proposal and expand participation in the California Independent System Operator’s Day Two Regional Transmission Organization market.[2]  We support the formation and work of the EIM Governance Review Committee (“GRC”). As stated in the comments, Public Power agrees with the recommendations contained in the Straw Proposal, as well as the principles adopted to guide those recommendations. In addition to the broad statement of support, these comments focus primarily on two proposals of importance to public power: modifications to the Regional Issues Forum (RIF) to enhance opportunities for stakeholder engagement; and representation of consumer-owned utilities and federal Power Marketing Agencies (PMAs) on the Body of State Regulators (BOSR). Brief comments are provided at the end on several other items.

[1] These comments were drafted by a broadly representative group of Western Public Power utilities.

[2] See Public Power Response to the California ISO’s Proposed Principles for Governance of a Regional ISO, June 15, 2016; Public Power Comments on the California ISO’s July 15, 2016 Revised Proposed Principles for Governance of a Regional ISO; and Public Power Comments on the California ISO’s October 7, 2016 Second Revised Proposed Principles for Governance of a Regional ISO, filed under California Energy Commission, Docket 16-RGO-01.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

Modifying the RIF

In comments on the GRC Scoping Paper, Public Power expressed support for the establishment of a Stakeholders Advisory Committee (SAC) that “would not have decisional authority but would be a formal advisory channel to provide opinions and recommendations to the Board and Governing Body on behalf of the market participants and other stakeholders in a public forum.”[1] Those comments acknowledged that “the development of a SAC would not need to involve the formation of a new committee, but rather an evolution of the RIF.”[2] Given this recognition, Public Power agrees with the GRC’s finding in the Straw Proposal that “the best way to increase opportunities for stakeholder engagement is to modify, and enhance, the RIF.”[3]

Public Power stated that a primary benefit of a SAC or similar structure would be “to incent stakeholders to work among themselves to understand the issues, synthesize multiple interests, consider alternative options and reach a consensus position.”[4] This is analogous to the statement in the Straw Proposal regarding the enhanced RIF that the “overarching goal is to establish a transparent means for stakeholders to come together to share and debate perspectives on market issues in order to advance understanding, identify new or emerging issues, develop alternatives, and collaborate on potential solutions.”[5] Promoting such collaboration and consensus building would provide a greater likelihood of a resolution of any disagreements among stakeholders prior to the submission of a proposal to the Federal Energy Regulatory Commission.

Public Power specifically supports the GRC’s proposal to enhance the RIF by both allowing and encouraging discussion of matters that are part of the ISO stakeholder process, which would enable the RIF to function as a SAC and provide the benefits described above.

Representation of Consumer-Owned Utilities and PMAs on the BOSR

Public Power has long supported representation of consumer-owned utilities and PMAs on the BOSR in a non-voting capacity and is therefore in agreement with and appreciates the GRC’s recommendation for ex officio liaison positions on the BOSR for PMAs and consumer-owned utilities who participate in the EIM.

Consumer-owned utilities in this case include both Public Power and electric cooperative utilities participating in the EIM.[6] Together, these consumer-owned utilities account for a significant portion (about 30 percent) of both retail power sales and customers in the Western Interconnection. These utilities are not just market participants, but also regulators who are acting in the interest of their customers and governing boards or bodies and therefore have similar perspectives to the BOSR members.

Given the number and diversity of the consumer-owned utilities in terms of geography, resource mix, and the demographics of their service territories, Public Power recommends a sufficient number of liaison positions on the BOSR to capture that diversity, plus one PMA liaison position. The consumer-owned liaison positions could be established to ensure representation from different geographic (and therefore also resource diverse) locations in the Western Interconnection

While the consumer-owned utility and PMA liaisons would be purely advisory, they would still provide significant value by providing an additional and different perspective to the BOSR in their deliberations. As such, they would enhance but not add complexity to the BOSR’s decision-making.

[1] Public Power Comments on the EIM Governance Review Committee Scoping Paper, February 21, 2020, at 1.

[2] Id.

[3] Id. at 2.

[4] Id. at 1.

[5] Straw Proposal at 28.

[6] Other than any cooperative that is regulated by the state commission in the same manner as an investor-owned utility.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

Additional Comments

BOSR/WIEB Memorandum Funding. Public Power agrees that technical support from the Western Interstate Energy Board would be beneficial by enhancing BOSR members’ engagement in policy initiatives. Funding for BOSR support, either provided by WIEB or in whatever means is ultimately chosen by the BOSR, should be from a charge that only applies those entities who are subject to state commission jurisdiction, and not through administration by the CAISO. The Straw Proposal notes the GRC’s understanding “that the utilities subject to the jurisdiction of their state commissions are engaging directly with the BOSR to explore alternative sources of funding. The GRC encourages these efforts.”[1] Public Power also encourages those discussions with the goal of identifying such a funding source in the near future.

Governing Body Access to Market Data, Information and Analysis. Public Power agrees that under the proposed Joint Authority, the Governing Body should be able to ensure that their EIM data and analytical needs are met by the Department of Market Monitoring (DMM) and Market Surveillance Committee (MSC). Therefore, Public Power supports the proposed Governing Body participation in the DMM Oversight Committee meetings and joint authority over appointments to MSC.  Public Power also agrees that the Governing Body should have the ability to commission an outside expert to address the additional complexity inherent in EDAM.

Timing of the Implementation of GRC Recommendations. Public Power agrees with the GRC’s recommendation to maintain the schedule to submit a draft final proposal to the Board by the first quarter of 2021, rather than waiting for a determination of additional details of the EDAM market design. Many of the recommendations would apply to both the EIM with or without EDAM and implementing in the near term would clearly benefit the EIM governance.

Conclusion

Public Power greatly appreciates the work of the GRC in developing these recommendations and the opportunity to submit these comments.

[1] Straw Proposal at 39.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

2. Provide summary of your organization’s overall position on this proposal:

While the joint authority governance model is a step in the right direction, WAPA advocates for a more independent role for the EIM Governing Body. The EIM Governing Body should be able to make independent decisions without having to obtain joint approval from CAISO Board. WAPA believes the CAISO Board, as appointed by the Governor of California and subject to the authority of the Governor-appointed California Public Utilities Commission and the California Public Utilities Code, does not have sufficient independence to have joint authority over a market that spans the Western Interconnection.

WAPA strongly believes that it is critical to develop substantive roles for PMAs and public power in the EIM governance. WAPA provides electricity to a service territory that includes 15 states, owns and operates over 17,000 miles of high-voltage transmission, provides close to 40% of the hydropower in the western and central U.S., and serves nearly 700 wholesale customers who, in turn, provide electricity to over 40 million end-use customers. BPA provides 27% of the electric power in the Northwest, owns over 15,000 miles of high-voltage transmission, and operates approximately 75% of the transmission in its service territory. BPA’s 300,000-mile service territory includes Idaho, Oregon, Washington, western Montana and small parts of eastern Montana, California, Nevada, Utah and Wyoming.

Yet there is currently no formal role for the PMAs in the EIM governance. This is an issue WAPA believes needs to be addressed.

The BOSR, an EIM-Chartered entity that fundamentally represents the interest of state-regulated load serving entities, i.e., investor-owned utilities, provides substantive direction to the EIM Governing Body. Voting roles for the PMAs and public power in general should be incorporated into the BOSR and/or a parallel entity such as a stakeholder advisory committee.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

Delegation of Authority and Decisional Classification Process

While the joint authority model is a step in the right direction, WAPA advocates a more independent role for the EIM Governing Body. The EIM Governing Body should be able to make independent decisions without having to obtain joint approval from the CAISO Board. CAISO acknowledges in the proposal that the joint authority model could lead to disputes between the CAISO Board and the EIM Governing Body. One of CAISO’s proposed elements is that in the event a dispute cannot be resolved, CAISO would submit two proposals to FERC: one on behalf of the CAISO Board and one on behalf of the EIM Governing Body. Submitting two competing proposals to FERC for resolution creates uncertainty, delays, and extra expenses.

In addition, CAISO representing both the CAISO Board and the EIM Governing Body could lead to potential or actual conflicts of interests. The EIM Governing Body should not be restricted by approvals from the CAISO Board, which is appointed by the Governor of California and required by the California Public Utilities Code to “conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state.” (Section 345.5) The EIM Governing Body must be able to make decisions and implement such decisions in the interests of the region.

Durability

WAPA proposes the following modification to the durability provisions.

Remove:

“First, we would require a unanimous vote of the Board for any changes to governance that may impact any aspect of the scope or type of the Governing Body’s delegated authority.”

Replace with:

Any changes to the EIM governance must be approved by a vote of at least 75% of both the CAISO Board and the EIM Governing Body. In the event of a tie, WAPA supports the alternative of randomly selecting the largest potential odd numbered subset of the members of the two bodies who would then decide by a super-majority vote.

WAPA supports the remainder of the GRC’s measures to promote durability. Specifically, WAPA supports:

“In addition, no such changes could be adopted without first seeking stakeholder input and specifically considering and addressing any advisory input the Governing Body, RIF, or the BOSR may provide. Finally, we propose a mandatory notice period for implementing any proposed change that is equal in length to any notice period that EIM or EDAM entities may have for withdrawing from the EIM/EDAM market. Thus, for example, since the EIM market design currently includes a 180-day withdrawal notice period for EIM Entities, in the EIM-only context, a 180-day notice period likewise would apply before any potential changes to the delegation of authority could take effect. This notice period would not begin to run until after the Board has formally approved the proposed modification. This notice period would apply to all changes to the delegation of authority, unless both the Board and the Governing Body unanimously agree to waive the notice period. We propose this waiver exception in case there is a change that all parties agree would be an enhancement that should be adopted without any delay beyond what is necessary for the Board and the Governing Body to obtain advisory input from stakeholders, the RIF, and the BOSR. Footnote: This would apply to all provisions in governing documents that address the delegation of authority, including the bylaws, the Charter or any other document. Thus, the provisions discussed above that are currently set forth in the bylaws and the Charter would be amended to be consistent with this proposal.”

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

WAPA supports the Straw Proposal recommendations for selection of Governing Body members.

However, WAPA believes there is an opportunity for more transparency and stakeholder involvement related to the Nominating Committee. To this end, WAPA seeks clarity and review of the selection, terms, and processes for the Nominating Committee.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

As noted previously, WAPA strongly believes that it is critical to develop substantive roles for PMAs and public power in the EIM governance. WAPA provides electricity to a service territory that includes 15 states, owns and operates over 17,000 miles of high-voltage transmission, provides close to 40% of the hydropower in the western and central U.S., and serves nearly 700 wholesale customers who, in turn, provide electricity to over 40 million end use customers. BPA provides 27% of the electric power in the Northwest, owns over 15,000 miles of high-voltage transmission, and operates about 75% of the transmission in its service territory. BPA’s 300,000-mile service territory includes Idaho, Oregon, Washington, western Montana and small parts of eastern Montana, California, Nevada, Utah and Wyoming.

Yet there is currently no formal role for the PMAs in the EIM governance. This is an issue WAPA believes needs to be addressed.

The BOSR, an EIM-Chartered entity that fundamentally represents the interest of state regulated load serving entities, i.e., investor-owned utilities, provides substantive direction to the EIM Governing Body.

WAPA agrees with previous comments that voting roles for the PMAs and public power in general should be incorporated into the BOSR and/or a parallel entity such as a stakeholder advisory committee. WAPA does not agree that non-voting liaison roles on the BOSR as proposed by the GRC would be sufficient.

Additionally, WAPA believes there is an opportunity to increase the transparency of the EIM Governing Body and Governance Review Committee activities in greater alignment with CAISO’s open meeting policies. 

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

WAPA does not have a position on this topic at this time.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

WAPA does not have a position on this topic at this time.

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

WAPA does not have a position on this topic at this time.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

WAPA does not have a position on this topic at this time.

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

WAPA does not have a position on this topic at this time.

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

WAPA does not have a position on this topic at this time.

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

None.

1. Please provide your organization’s overall position on the EIM Governance Review Straw Proposal:

Comments of the

Western Energy Imbalance Market Body of State Regulators to the

 EIM Governance Review Committee’s Draft Straw Proposal

 August 27, 2020 

            The Western Energy Imbalance Market (EIM) Body of State Regulators (BOSR) appreciates the opportunity to submit consensus comments on the EIM Governance Review Committee’s (GRC’s) Draft Straw Proposal dated July 31, 2020 (“Draft Straw Proposal”).[1] The EIM BOSR was created by the Transitional Committee when a governance structure for the EIM was initially contemplated.  The BOSR is a self-governing, independent body composed of one commissioner from each state public utilities commission in which load-serving regulated utilities participate in the EIM, including the ISO real-time market.[2]   This currently includes the states of Arizona, California, Idaho, Nevada, Oregon, Utah, Washington and Wyoming. [3]  One of the BOSR’s responsibilities is to express a common position, where possible, in the CAISO stakeholder processes or to the EIM Governing Body on EIM issues.[4]

1. Background on EIM Governance Review

            The GRC’s role is to develop, through an open stakeholder process, recommendations for changes in the EIM governance structure, including adjustments to the EIM governance as necessary to account for significant growth of the EIM and to facilitate possible further expansion through the Extended Day-Ahead Market (EDAM) Initiative. Based on the comments, submitted by numerous stakeholders, to the GRC’s Scoping Paper (issued in February 2020), the GRC developed initial recommendations for potential improvements to the governance structure (Draft Straw Proposal).  The GRC will use comments to the Draft Straw Proposal to refine its recommendations. The GRC expects at least two rounds of refinements before formally submitting recommendations to the EIM Governing Body and CAISO Board of Governors (“CAISO Board”) in the first quarter of 2021.[5]

[1] The Draft Straw Proposal is available at: http://www.caiso.com/InitiativeDocuments/DraftStrawProposal-EIMGovernanceReviewCommittee.pdf.

[2] Charter, Energy Imbalance Market Body of State Regulators at 1 (March 1, 2016) (“BOSR Charter”). See also, Charter for Energy Imbalance Market Governance, V.1.1 (revised May 1, 2017), § 5.2.

[3] Load-serving regulated utilities from the states of Montana, New Mexico and Colorado have recently stated their intent to join the Western EIM. Commissioners from these states and the Province of British Columbia have been invited to participate in the BOSR.

[4] BOSR Charter, Purposes and Responsibilities at 1.

[5] The GRC Charter states that GRC’s recommendations for changes to EIM governance will be considered jointly by the Board and the Governing Body. GRC Charter, § A. While not formally defined in any of the governing documents, this means that the proposal must be fully considered and approved by both bodies in order to be adopted. GRC Scoping Paper at 15.

2. Provide summary of your organization’s overall position on this proposal:

       II.  The BOSR’s Comments on the Draft Straw Proposal

            The previous comments of the BOSR on the EIM Governing Body’s EIM Governance Review dated January 18, 2019, and February 21, 2020, continue to represent the BOSR’s views on the governance issues contained therein.[1]   We note at the outset that many of the recommendations in the Draft Straw Proposal are largely consistent with the BOSR’s views as expressed in previous comments.  The BOSR adds the following comments to those positions.

[1] The Comments are available at: https://westernenergyboard.org/library/eim-bosr/.

3. Provide detailed comments including examples on Issue 1: The Delegation of Authority for Market Rules to the Governing Body, the Decisional Classification Process, and Durability:

Issue 1: Delegation of Authority

            Consistent with previous comments, the BOSR supports the GRC’s recommendation for joint authority between the EIM Governing Body and CAISO Board over: all proposed changes to the realtime market design or market rules; all aspects of the EDAM Initiative; and, if EDAM is implemented, all proposed changes to the day-ahead market design or market rules.[1] As proposed, joint authority would require an affirmative vote, after discussion, of a majority of both the EIM Governing Body and the CAISO Board before CAISO could file new tariff rules for approval at the Federal Energy Regulatory Commission (FERC). Further, the GRC recommends the EIM Governing Body and CAISO Board meet in a joint session whenever possible to consider these proposals. This is a significant improvement over the current process, as it substantially simplifies the process, is more transparent, and equitably and appropriately shares authority between the two governing bodies. 

            Further, the BOSR generally supports the dispute resolution mechanism recommended if only one body approves a proposal, i.e., there is a deadlock. This includes sending the proposal back to CAISO staff, who would commence another round of the public stakeholder process culminating in another vote of the two bodies on the new proposal.  If the two bodies still do not agree, there can be another round of public stakeholder process, or the two bodies can develop two alternative versions of the proposal, which CAISO would submit to the FERC for the Commission’s approval. The BOSR supports the GRC’s recommendation for two attempts to reach agreement before filing two options with the FERC. A compromise reached by Western stakeholders is more desirable as it would likely be more positively received by stakeholders across the region than an option selected by a federal regulatory body. Therefore, the BOSR agrees with the GRC that a second attempt should be made to address a disagreement and resulting deadlock.

            The delegation of authority model recommended by the GRC is likely to provide additional confidence to participants in the market, thereby adding durability to the governance structure.

[1] This excludes various matters that are specific to California and subject to approval by the CAISO Board alone, for example, transmission planning, Reliability Must Run contracts and the Capacity Procurement Mechanism. Draft Straw Proposal, at 9, N.21.

4. Provide detailed comments including examples on Issue 2: Selection of Governing Body Members:

Issue 2: Selection of Governing Body Members

            The GRC recommends three changes to the process for selecting EIM Governing Body members. First, the GRC recommends amending the Selection Policy so that the representative of the Public Interest Organizations (PIOs) becomes a voting member of the Nominating Committee as opposed to serving in an advisory role, as is currently the case. Second, the GRC recommends enhancing the role of diversity in the nomination process. Third, the GRC recommends establishing a 60-day “holdover period” for Governing Body members when a replacement has not yet been confirmed. The BOSR generally supports all three recommendations and notes that providing voting status to the PIO sector representative on the Nominating Committee is a specific recommendation in the BOSR’s prior comments to the GRC’s Scoping Paper.

5. Provide detailed comments including examples on Issue 3: Governing Body Meetings and Engagement with Stakeholders:

Issue 3:  Stakeholder Engagement 

            Modify EIM Regional Issues Forum (RIF). The GRC recommends modifying the RIF to enhance opportunities for stakeholder engagement. Two key modifications include removing limitations, and encouraging engagement on, issues that are in active CAISO stakeholder processes, and allowing the RIF to provide written opinions on market issues to the EIM Governing Body and CAISO Board. The BOSR strongly supports this recommendation, as it establishes an advisory committee that provides an avenue for market stakeholders to effectively engage with the CAISO and EIM governing bodies.

            Public Power Liaisons to the BOSR.  The GRC asks the BOSR to consider establishing a limited number of liaison positions for public power entities that participate in the EIM.  Public power used here is intended to include both federal power marketing administrations (PMAs) and publicly owned, or consumer-owned, utilities (POUs).  The BOSR notes that this recommendation differs from the others in the Draft Straw Proposal, as it would require an amendment to the BOSR Charter, which can only be accomplished by the BOSR.  Therefore, it is not a recommendation to be acted upon by the EIM Governing Body or the CAISO Board.

            The BOSR recognizes the value of the public power perspective and is conducting discussions about the potential for two liaison positions and the Charter amendments necessary to provide for this change. The BOSR supports the following:  (1) Each liaison would be from an entity participating in the Western EIM; (2) One liaison would be from a power marketing administration and one would be from a publicly owned utility; and (3) The liaison would be a non-voting position. The liaisons would be invited to participate actively in BOSR meetings. The liaisons would not only be able to inform public power of BOSR positions and reasoning, but also provide the BOSR membership with public power’s perspective. The BOSR will collaborate with public power representatives and other stakeholders on the details of the selection process and other aspects of the liaison positions. The BOSR welcomes comments through the Governance Review process on the details of integrating the potential liaison positions in the BOSR governance model.

6. Provide detailed comments including examples on Issue 4: Other Potential Areas for Governing Body Involvement:

Issue 4:  Other Potential Areas

See subsections below.

7. Please detailed comments including examples on Issue 4.1: Annual Policy Initiatives Roadmap:

8. Please detailed comments including examples on Issue 4.2: Governing Body Role with Department of Market Monitoring, Market Surveillance Committee and Outside Market Expert:

            Governing Body Support.  The BOSR generally supports making additional resources available to provide technical advice on market design and performance issues to the EIM Governing Body. The support should be provided in a manner and in an amount that ensures the Governing Body can effectively carry out its role. As such, the BOSR supports the GRC’s recommendation that if EDAM goes forward, the Governing Body should be able to contract for and select an outside market expert to provide expertise about the development and implementation of EDAM. Further, the BOSR also supports the GRC’s recommendation that the EIM Governing Body’s role in the CAISO Market Surveillance Committee (MSC) and Department of Market Monitoring (DMM) should be expanded to be more equal to that of the CAISO Board regardless of whether EDAM goes forward. Given the proposal for joint decision authority, it is necessary for the Governing Body and Board to have equal access to market data, information and analysis produced by the DMM and MSC and ensure the work  of the DMM and MSC will benefit the entire market footprint.

9. Please detailed comments including examples on Issue 4.3: Possible Funding for the Body of State Regulators:

            Possible Funding for the BOSR.  The BOSR notes that commenters are largely in alignment that there would be an overall benefit to the long-term stability of the market associated with active engagement by the BOSR in policy initiatives, and thus of providing financial support to the BOSR. Accordingly, the GRC supports BOSR funding and is seeking comments on an appropriate mechanism.

            The BOSR has studied the 20-year history of other multi-state electricity markets in the United States. After exhaustive discussions with our peers who have grappled with regional market development in other areas of the country, it is clear that early, educated and sustained engagement by state regulators in market policy initiatives benefits all market participants. When engaged and informed, regulators can more effectively and proactively identify germane issues in market design for their states, inform state policy designs impacting both publicly-owned and investor-owned utilities (IOUs) so that they complement rather than disrupt the market, and identify ways to protect customer interests within their state regulatory framework that enhance the efficiency of the market rather than add transaction costs. Working together, state regulators can identify common interests and concerns and better understand the nuances of divergences, often defusing competing state interests that pressure market policy decisions. Finally, effective, sustained engagement by state regulators can, in some cases, raise the confidence state legislators have that the market will provide long-run benefits to their constituents. The BOSR finds that all market participants benefit from this stability in the policy environment and decision-making that surrounds the market. In all other markets, delivering that outcome for the market has required that a states committee (SC) has a small, centralized, independent facilitation staff to complement the significant human resources state commissions invest in participating in market policy processes. Predictable travel support, including for staff, to participate in critical meetings has also proven crucial for other SC members to sustain consistent engagement in multi-year processes.

            The BOSR recommends that funding to support this important role should be allocated among all state jurisdictional utilities participating in the EIM, including California IOUs.[1] The allocation between these participants should be equitable and rational. The BOSR is evaluating several options including, but not limited to, allocating the funding equally among all participating IOUs, reflecting the consensus-based approach to decision making in the BOSR[2]. Under this option, each IOU’s allocation would be equal to: the total annual BOSR budget ÷ number of EIM IOUs. Collecting the funds through a component of the grid management charge (GMC) charged to specific entities through the CAISO tariff is an option that is administratively efficient, durable, stable and preserves the BOSR’s independence. The BOSR remains open to proposals from other stakeholders on both the funding allocation and the collection mechanism. The BOSR continues to believe that the current governance review process is the appropriate time and place for consideration of this BOSR funding issue. Failure to address funding through the current stakeholder process will undermine the ability of this broad group of stakeholders from participating and cause an unnecessary additional stakeholder process to be initiated.

            The BOSR notes that, as a self-governing and independent body, the organizational structure and source of expertise is solely the BOSR’s decision. Prior to entering the Memorandum of Understanding between the BOSR and the Western Interstate Energy Board (WIEB),[3] the BOSR formally considered other options, including commission staffing alone, CAISO staffing, and forming a new entity. Applying the guiding principles of competence, cost-effectiveness and preservation of independence, the BOSR determined that WIEB, operating under its longstanding interstate compact, was the best choice.[4] Notwithstanding the above, the BOSR will consider comments submitted through this GRC stakeholder process addressing support for the BOSR.

[1] California’s IOUs participate in the EIM, California, including its ratepayers and IOUs, benefit from the EIM, and California has a representative on the BOSR with full voting rights and the opportunity to participate in leadership roles.

[2] When the BOSR Charter was developed, [No – this was in reference to the possibility of a formal states committee when PacifiCorp sought to join CAISO and form a regional market.  The voting rights among BOSR members for the BOSR has always been one state, one vote a one vote per state approach was adopted, but the BOSR seeks consensus in all decisions. The results of a consensus among BOSR members brings forward public interests over regional competition and can illustrate for the CAISO decision-making authorities where state-level decision makers see common, public benefits in market policy choices and where there may be state-level issues that are insurmountable and pose long-range challenges to the market policy under discussion.

[3] Memorandum of Understanding  Between the Western Interstate Energy Board and the Western Energy Imbalance Market – Body of State Regulators (August 12, 2019), available at: https://westernenergyboard.org/wp- content/uploads/2019/11/08-12-19-wieb-eim-bosr-mou.pdf.

[4]As a minimum threshold the organization must be legally enabled to accept and contract for funds. 

10. Provide detailed comments including examples on Issue 5: Governing Body Mission Statement:

11. Provide detailed comments including examples on Issue 6: Other Potential Topics for Consideration:

12. Additional comments on the Straw Proposal or EIM Governance Review initiative:

GRC Principles:  Transparency and Inclusiveness

            As previously noted by the BOSR, transparency and inclusiveness are key principles for any healthy and constructive governance or stakeholder process. The BOSR supports the application and inclusion of these principles in the GRC’s process. The BOSR recommended in previous comments that the GRC articulate clear criteria for its use of closed executive sessions. The Draft Straw Proposal includes the following as a principle to guide the GRC:  Ensure transparency by conducting all meetings in conformance with the CAISO bylaws and Open Meeting Policy.[1] Pursuant to the bylaws and Open Meeting Policy, an executive session may be called by the Board to consider the following matters: litigation, personnel, or proprietary/confidential/ security-sensitive information.[2] The GRC should strive to limit its use of executive sessions as it limits transparency.   

[1] Draft Straw Proposal, p.3.

[2] California ISO, Open Meeting Policy, version 3.8, §10 (use of executive sessions), §10.3 (definition of  proprietary/confidential/ security-sensitive information) (effective Dec.9, 2019), available at: http://www.caiso.com/Documents/CaliforniaISOOpenMeetingPolicy.pdf; Amended & Restated Bylaws of California Independent System Operator Corporation, §9.2, available at: https://www.caiso.com/Documents/ISOCorporateBylaws_amendedandrestated_.pdf.