Please provide your organizations comments on enabling approvals for major long lead time transmission projects needed beyond the current 10 year planning horizon.
LSA strongly supports the CAISO’s proposal to allow approvals for major transmission projects needed beyond the current 10-year transmission horizon. LSA still supports the two-part structure it proposed earlier, where lower-cost efforts for upgrades where need is not completely certain could be approved on a preliminary basis to shorten the development timeline, and final approval coming later when the need is more certain and heavier expenditures start to be needed.
LSA understands the CAISO’s concern with applying this concept where approved transmission projects are subject to competition, since this early work is usually part of the competitive package. However, this concept would not confound that competitive process; the CAISO could hold that competitive solicitation as usual.
The preliminary work would be performed by the eventual winner, with the understanding that the winner would construct the project later after final CAISO approval.
This is really the case in practice anyway. Today, the CAISO can always review the need for a project, and cancel if it is not found to be needed later even after the competitive award is made. LSA’s proposal would simply make that process explicit, with the final approval given first for the preliminary work, and later for the project procurement and construction.
Please provide your organizations comments on retaining policy-driven transmission upgrade capacity for the specific policy purpose for which it was developed.
LSA understands the reason why the CAISO is proposing this new policy for what we have called here “Applicable Resources.” However, we have concerns about both the concept and the implementation feasibility.
Issues with the concept
Any new policy like the one proposed should only apply under strong state direction. One model might be the new emergency generator-interconnection process, which relies on specific declarations by the Governor and approvals from state agencies.
LSA is concerned that it is inconsistent with FERC open-access principles, and it would provide Applicable Resources privileges not afforded any prior technology. In addition, it is not entirely clear which resources would qualify for this preferential treatment. The discussion has focused so far on off-shore wind and imported geothermal and wind energy, but would other resources – e.g., pumped storage or large compressed-air storage, also longer-lead-time technologies – also qualify?
Moreover, more consideration should be given to alternative approaches for achieving these policy goals, such as CPUC directions to jurisdictional LSEs to contract for Applicable Resources earlier.
If those resources have PPAs, they can qualify for high-priority positions in the CAISO’s TPD Allocation process under current rules in the areas where the additional capacity enables additional deliverability, without any special treatment (perhaps beyond a 1-year lag to allow the contracting to occur).
It is not that unusual in other regions (and has occasionally occurred in the CAISO area) for off-takers to contract with resources even before formal studies are available, with specified Network Upgrade limits. If the later studies find that upgrades exceed the specified limits, the developer or off-taker can agree to absorb the additional amount, or the contract can be canceled. This type of structure can be used to enable earlier LSE contracting with Applicable Resources, so preferences in the TPD Allocation or Interconnection Studies processes are not needed.
If a preferential policy is implemented, LSA supports use by other resources of capacity approved for Applicable Resources:
- To the extent that it exceeds capacity needed for the Applicable Resources. Transmission projects are “lumpy” and/or can enable capability elsewhere in the system from Applicable Resource location. That additional capability should be made available to other resources.
- On a temporary basis, until the Applicable Resources are constructed and operating – e.g., to enable Interim Deliverability, or earlier interconnection than would otherwise be accommodated. This temporary use can be especially helpful in the early years, when solar and wind resources will still retain significant RA value under ELCC, exceedance, or other counting methodologies that may be adopted.
Finally, this policy should apply only to new approved CAISO system capacity. Capacity enabled by previously approved transmission projects was not approved only for Applicable Resources, and projects already in the queue are depending on it to acquire or retain their deliverability. It would be highly inequitable for the CAISO to effectively change that purpose after the fact.
Generally, as explained further below, LSA is concerned that some of the new capacity may be set aside for Applicable Resources that may not eventually materialize, or may not materialize in the locations where the CAISO has assumed (and has planned transmission to accommodate them). There should be a process for ongoing review of approved transmission projects that would allow for “release” of this capacity to use by other technologies, using transparent criteria and timing.
With respect to CAISO-area Applicable Resources, LSA requests that the CAISO more fully consider and describe how this policy would be applied. Policy-Driven Upgrades approved in the TPP could enable interconnection and/or deliverability of Applicable Resources. However, most of the discussion at the stakeholder meeting concerned only the TPD Allocation process, where the process could differentiate between the capacity available for the Applicable Resources that available for others.
More details are needed about how this policy would be applied in the TPD Allocation process, but it seems like the policy could have to be applied also in Interconnection Studies, to the extent transmission was approved in a given area to enable interconnection of Applicable Resources, and not just deliverability. The CAISO should explain whether the new policy will apply to Interconnection Studies and, of so, how the current study process would be affected.
With respect to imported Applicable Resources, there are several areas of significant uncertainty. It seems like the new policy would enable additional imports of Applicable Resources through:
- Approving additional Maximum Import Capability (MIC) along transmission paths connecting to the expected intertie points for these imported resources; and
- Reserving the additional MIC only for CAISO-area LSEs having PPAs with those resources.
As with the TPD Allocation and other internal processes, LSA requests that the CAISO better describe the mechanics of this process for imports.
Fundamentally, the CAISO may approve MIC to accommodate wind or geothermal imports, but the capacity in the transmission lines expected to carry that energy may not be built, or may be used to deliver energy elsewhere or from other technologies.
The eventual construction of transmission resources elsewhere to transmit electricity to the CAISO is still very much an open question. Several sponsors are vying to build projects, and it’s unclear whether the capacity the CPUC and CAISO are forecasting will be built. Moreover, most of that capacity goes through other areas with renewable-energy requirements, so even if these projects are built, some of the energy may be “dropped off” on the way and not reach the CAISO.
In addition, the CAISO cannot control the resources that use any transmission lines that are eventually built. For example, many of the areas with high wind-energy potential – one resource cited as an Applicable Resource – also have significant solar potential.
This means that, as noted above, it will be important for the CAISO to continually monitor how resources are contracted and developed, and the progress of out-of-area transmission projects, to release the expanded MIC for use by others if it turns out not to be needed in the amount or on the transmission path for which it was approved.