Please provide a summary of your organization’s comments on the Washington WEIM Greenhouse Gas Enhancements issue paper/straw proposal and August 22, 2022 stakeholder call discussion:
The Bonneville Power Administration (BPA) appreciates the CAISO’s efforts to determine a method to support EIM entity reporting of greenhouse gas (GHG) emissions in accordance with the Washington Department of Ecology’s (Ecology) GHG Reporting Rules (WAC 173-441). BPA’s Balancing Authority Area (BAA) spans across multiple states, including Washington, Oregon, Idaho, Montana, and California. Over 60 percent of BPA’s firm power sales are to retail utilities located in Washington and BPA sells roughly 50 percent of the power consumed in the state.
BPA supports development of a method that provides a reasonably accurate determination of the volume of EIM imports into Washington that is consistent with 1) Ecology’s current GHG Reporting rules, 2) BPA’s participation in the EIM and the net imports it makes in the EIM as a BAA, and 3) BPA’s statutory directives as a federal power marketing administration. BPA is writing these comments with the intent of sharing them with Washington Ecology staff, as well as addressing them to CAISO.
With respect to the CAISO’s straw proposal, BPA suggests the following:
- Modeling Washington Borders and the Demand Forecast. BPA requests the CAISO not model its Washington borders and create a unique WA forecast at this time. Instead, BPA will report imports into WA resulting from its participation in the EIM as follows: BPA will use the real-time negative imbalance energy included in its EIM settlement statements and will allocate that volume on a proportionate basis to its Washington load (similar to the CAISO’s proposed reporting method for emissions year 2022).
- Updating GHG Reference Costs. BPA’s resources will not be registered with Ecology as having a GHG compliance obligation as they are not considered in-state generation under Washington’s cap-and invest-program, the Climate Commitment Act (CCA). Therefore, no GHG cost adder should be included in the reference levels for BPA’s participating resources.
Provide your organization’s comments on modeling Washington borders and the demand forecast, as discussed in section 3.1:
Determining an appropriate method for identifying imports into Washington for the EIM (or any organized market) is complicated because, unlike California, BAAs in the Pacific Northwest do not necessarily align with state borders. For Washington, BPA is one of three BAAs that have multi-state boundaries that include Washington. Additional stakeholder discussion is needed to arrive at an appropriate method for accounting for imports from an organized market into Washington or another state with a GHG pricing program where participating entities’ BAAs span across state lines.
This discussion needs to occur in close coordination with state air quality regulators such as Ecology, with reporting and compliance rules developed in sync with development of GHG accounting market design. In this way, the market design can be developed to meet the needs and intent of the state program and the rules for the state program can be developed in a way that reflect the realities and constraints of the market design. This has not occurred sufficiently to-date. BPA recognizes that Washington’s timelines for implementing its cap-and-invest program are aggressive and have not enabled sufficient time for this collaborative work to occur before the 2023 program year. Consequently, BPA recommends the CAISO not move forward with these proposed updates for reporting year 2023 and beyond until this collaborative work can be completed. Reporting of EIM imports into Washington can be achieved by BPA without the proposed updates.
Specific to Washington’s CCA and this straw proposal, Ecology’s GHG Reporting rules direct “the retail provider, marketer, or asset controlling supplier that conducts an electricity transaction through the EIM that results in EIM power being delivered to final point of delivery in Washington state” to report power imported via the EIM. (WAC 173-441-124 (2)(c)(iii)). Such power is imported as unspecified power. (WAC 713-441-124 (3)(a)(2)(iii)(F)). At the same time, the GHG reporting rules direct an Asset Controlling Supplier (ACS) to report power that comprises its system, including unspecified sources such as the EIM. (WAC 173-441-124 (3)(b)(iii)). The concept of an ACS was originally created for BPA by the California Air Resources Board to acknowledge that BPA, by federal statute, markets power from its system to its customers. The ACS concept was later adopted by Washington for the CCA.
BPA’s system includes generation from the federal hydropower system and Columbia Generating Station as well as other specified and unspecified purchases. The ACS emission factor includes all of BPA’s net imports via the EIM, not just those as calculated as assigned to Washington. Thus, imports to BPA’s system from the EIM are included in BPA’s ACS emission factor and in turn reported as imported into Washington proportionate to BPA’s sales to Washington utilities. This pro rata approach is consistent with BPA’s statutory directive to sell power from its system to its firm power customers.
The CAISO’s proposed approach presents several problems. First, it would result in a different calculated volume of EIM imports into Washington than the ACS pro rata approach described above. The CAISO’s proposed approach is counter to BPA’s understanding of Ecology’s GHG reporting rules as applied to an ACS. The CAISO’s proposed approach also appears inconsistent with BPA’s governing statutes. Finally, the proposed approach lacks any correlation between the BAA’s participation in the EIM and its total net imports to the volume of EIM imports attributed to its Washington load.
BPA’s understanding of the CAISO’s proposed approach is that the CAISO would create aggregation points for the Washington load in BPA’s BAA, essentially attempting to create a Washington area of BPA’s BAA. The CAISO would not assign generation to the Washington area of BPA’s BAA because under Washington’s program “[e]lectricity from a system that is marketed by a federal power marketing administration [such as BPA] shall be construed as ’imported electricity,’ not electricity generated in the state of Washington.” (RCW 70A.65.010 (42)(c)). Therefore, the proposed CAISO calculation would determine that the entire EIM demand for the WA area of BPA’s BAA was met with EIM imports. BPA’s understanding is this would be the outcome even if BPA as a whole was a net exporter in the EIM in the same time period. This outcome is inconsistent with BPA’s governing statutes and physics given the magnitude of federal generation physically located in Washington.
It is not clear to BPA how the CAISO’s proposed update impacts or relates to the power balance constraint and BPA requests the CAISO provide examples to demonstrate how the calculation would work in practice. BPA is concerned the proposed update would have additional implications for BPA’s participation in the EIM and GHG accounting. For example, BPA would like to understand whether the proposed update would result in BPA (or the non-Washington portion of BPA’s BAA) becoming largely a net exporter because the majority of BPA’s load is in Washington but BPA’s participating generation would not be modeled as in Washington. If this is the result, would it impact the volume of BPA’s resources that are eligible to be deemed delivered to California at BPA’s low-carbon ACS emissions factor? If so, it could negatively impact BPA’s ACS emissions factor in future years while at the same time BPA’s Washington load would be calculated to be imported power via the EIM at an unspecified emission factor. This outcome does not make sense and would be inequitable to BPA’s Washington load.
The CAISO’s proposed calculation is not just skewed in BPA’s situation. It would also be inaccurate if, to use an extreme example, all of BPA’s resources were considered in-state and modeled as such, resulting in essentially no EIM imports ever being calculated as assigned to WA load. Extreme examples like this help demonstrate that the CAISO’s proposed approach does not provide for a more accurate accounting as the CAISO stated in its August 22, 2022 workshop. In a less extreme scenario where BPA’s resources were assigned to non-Washington and Washington areas of its BAA based on actual physical location of the generation, the CAISO’s proposed approach would still over or underestimate the volume of EIM imports resulting from BPA’s participation in the EIM that are then assigned to BPA’s Washington load. This is because the calculation is dependent on the load to generation ratio in the Washington versus non-Washington area of a BAA. The proposed calculation fails to consider that the dispatch of BPA’s resources and BPA’s participation in the EIM is for the benefit of its entire footprint irrespective of what state the load and generation is located in.
Therefore, BPA requests that at this time the CAISO not model BPA’s Washington borders and create a unique WA forecast. Instead, BPA will report imports into Washington resulting from its participation in the EIM by using the real-time negative imbalance energy included in its EIM settlement statements and allocating that volume on a proportionate basis to its Washington load. BPA understands this approach to be similar to the CAISO’s proposed reporting method for emissions year 2022. This reporting will be provided by BPA to Ecology consistent with Ecology’s GHG Reporting Requirements, including requirements for ACS reporting.
Finally, while BPA’s suggested method for calculating EIM imports to Washington will work for BPA for the near-term future, further discussion will be needed on this topic in the event Ecology develops a more robust accounting and compliance mechanism for the EIM. Likewise, BPA notes the need for additional discussion for the EDAM, where the CAISO is proposing the same method for determining EIM imports for states with GHG pricing programs such as Washington. BPA looks forward to exploring with the CAISO how the approach can be refined and tailored to reflect the portion of BPA’s EIM imports that should be appropriately assigned to WA load.
 BPA caveats that the unspecified sources included in the calculation of the ACS emission factor should be consistent with emissions that are covered under the program. If Ecology does not include EIM imports as covered emissions under the cap-and-invest program, then in calculating BPA’s ACS emission factor Ecology should not include emissions from EIM imports to BPA’s system. BPA would still expect to report EIM emissions to Ecology consistent with the GHG Reporting Rules regarding ACS reporting.