Dive Brief:
- The West-Wide Governance Pathways Initiative on Tuesday asked the California Independent System Operator to help cover the startup costs of the Regional Organization for Western Energy. ROWE incorporated last month, bringing the new Western á la carte energy market closer to fruition.
- The cost of implementing ROWE this year and next will be about $8 million, according to a letter the Pathways Initiative’s launch committee sent to CAISO. It asked CAISO to facilitate the development of a proposal to create a funding mechanism for those costs, which market participants would repay.
- ROWE “will be a sea change in electricity market development in the western interconnect,” said Suzanne Stradling, an electricity markets economist, in a LinkedIn post. “After the 2000-2001 California energy crisis, western appetite for organized markets effectively collapsed. By the time market participants were willing to reconsider, CAISO was the only game in town.”
Dive Insight:
On Thursday, CAISO posted a straw proposal regarding financial planning initiatives, including ROWE funding, and suggested that ROWE “would enter into a loan or commercial line of credit with a commercial bank” with CAISO serving as guarantor.
“This is necessary because the ROWE at that point would not be able to obtain credit,” CAISO said. “The loan or line of credit would be structured so that the ROWE’s repayment obligations would not commence until 2028, after the ROWE is expected to assume its governance responsibilities.”
Stradling said that CAISO has tried “for years” to expand in the Western Electricity Coordinating Council, “first through the WEIM real-time market and now through their Extended Day-Ahead Market (EDAM), which goes live in May. The market’s economic argument is unbeatable. The problem has always been governance.”
ROWE is a “completely unique, new to the world, structure that we've put forward,” said Brian Turner, a director with Advanced Energy United and member of the launch committee, in a November episode of NewsData’s People In Power podcast. “Nowhere else do we have a real-time and day ahead market operating without all the other aspects of the RTO.”
The Pathways Initiative put out a proposal for additional services that could be added over time, Turner said, including ancillary services, transmission planning, and interconnection planning — all of which would be offered as “incremental and voluntary services.”
The incremental and voluntary aspect is “both unique within the world and unique to Western interests,” Turner said. “Westerners have a certain rugged individualism, skepticism of broad cooperative structure. And they want to be able to investigate it and make their own decision, and leave if it no longer suits them.”
Stradling’s post described ROWE as “CAISO in a suit and tie. CAISO created it, and ROWE is intended to use the CAISO market engine and frameworks.”
“But in an environment when market participants are foregoing CAISO’s substantial cost-benefit advantages because its governance issues have been so serious ... ROWE may finally change the calculus in favor of a unified western market,” she said.
CAISO will host a public stakeholder call to discuss financial planning initiatives, including start-up funding for ROWE, on Feb. 12.
