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California moving forward with plans for regional power grid, but questions, debate far from over

First Published      Last Updated Jun 06 2016 10:43 pm


Energy plan » Eleven Western states, including Utah, say they have serious doubts, and the debate is far from over.

Two California entities are forging ahead with a plan to create a regional grid involving Utah and 10 other western states.

The California Independent System Operator — or CAISO, the nonprofit most assume will manage electrical distribution on behalf of the utilities that opt into the regional grid — recently released the preliminary results of its research into the impact a regional grid would have on the environment, the economy, vulnerable populations and California electrical customers.

And the state's Energy Commission is drawing up a vision for what the governing body of a regional grid might look like — a sticking point for Utah leaders, who are wary of giving California power over its energy decisions.




The groups have a state-mandated deadline in mind as they pursue their parallel tracks: California legislation passed last year requires that a formal proposal for grid integration be ready for lawmakers by the end of 2017.

But many unanswered questions about the details of the proposal remain, and debate about the broader plan is far from over.

CAISO's environmental study has drawn the attention of the Sierra Club, which points to predictions that electrical sector carbon emissions would increase from 64.2 million tons per year to 64.3 million tons per year by 2020, before dropping off to something in the range of 48.2 million-54.1 million tons per year by 2030.

"The report that came out shows that there is an immediate and significant increase in coal dispatch," said Shane Levy, spokesman for the Sierra Club. "That is something we're really concerned about."

Levy said the Sierra Club objects not so much to the idea of a regional grid as to the players involved in the current proposal. PacifiCorp, which operates as Rocky Mountain Power in Utah, is on track to become the first participating utility, Levy said, and it tends to be a very coal-intensive company.

But other environmental groups, such as Western Resource Advocates, are supporting the proposal, arguing a regional grid could boost generation from renewable resources.

Solar power generation, for example, peaks in the middle of the day, but demand for electricity peaks in the evening. In the absence of technological means to store electricity on a large scale, energy must be used more or less the moment it's generated.

In California, solar generation during the day already exceeds concurrent demand, occasionally forcing some solar arrays to shut down at peak generation.

A regional grid could allow California to send this surplus solar power to states such as Utah, where the sun is setting and electrical demand increasing at roughly the same time that solar generation is at its peak on the coast.

"From Western Resource Advocates' perspective, we're here to ensure our power is as clean as possible," and a regional grid would make clean energy more feasible, said staff attorney Jennifer Gardner.

Environmental advocates aren't the only ones arguing this line. A study released in January and funded by the National Oceanic Atmospheric Administration concluded that a nationwide grid had the potential to cut U.S. electrical sector emissions of carbon dioxide, a greenhouse gas thought to contribute to global warming, by 80 percent relative to 1990 levels, without decreasing the amount of electricity generated.

Gardner said CAISO's research indicated that the use of coal generation, and therefore carbon emissions, likely would increase in the years immediately following grid integration. But, she said, the Sierra Club's position didn't consider the increased feasibility renewable energy would gain in the long run.

"Everyone has to look at long-term benefits here," she said. "Sometimes you have to make short-term sacrifices for long-term gains."

The Sierra Club is looking at the long term, Levy said — if demand for coal power spikes, even in the short term, it could prolong the life of coal generation in the West.

A regional grid could affect PacifiCorp's current plan to retire many of its coal plants and replace them with natural gas generation units in light of market dynamics, Levy said.

"If a regional market would increase the dispatch of some of PacifiCorp's coal units in Wyoming or Utah, it could extend the lifespan of those plants versus retiring them or converting them," he said. "There are both immediate consequences and long-term impacts related to this decision."

The preliminary results of CAISO's study, and the data that support them, are being released in batches on the CAISO website. Public comment will be accepted through June 15. A form with directions for commenting on the studies can be downloaded at the CAISO website.

Others are questioning the long-term economic benefits of regional integration, and who will actually receive them.

Full grid integration is expected to greatly increase utility companies' savings, as the buying and selling of power would be more efficiently handled by a central authority.

At a conference of the Utah Association of Energy Users last month, Abby Briggerman, an attorney who represents industrial consumer groups in Wyoming, Colorado, Idaho and Montana, pointed to a recent rate case in Wyoming where, she said, ratepayers had to fight to have their rates adjusted to reflect PacifiCorp's savings from participating in the Energy Imbalance Market (EIM).

The EIM allows CAISO, PacifiCorp, and other participants to buy and sell power in real time, which saved $21 million for PacifiCorp customers, according to a joint study commissioned by PacifiCorp and CAISO.

But PacifiCorp "made the case that these benefits were not intended for ratepayers and couldn't be applied to rates," Briggerman said.

That's not exactly how it played out, said Christopher Leger, an attorney for the Wyoming Office of Consumer Advocate.

"It wasn't an attempt to hide the EIM benefits and prevent them from flowing through to the customers," he said. "It was just coming to an understanding of how to calculate them."

According to documentation of the hearing, on March 2, 2015, PacifiCorp submitted a request to increase rates 4.5 percent in Wyoming, where the utility also operates as Rocky Mountain Power. The application included an accounting of expenses and cost savings related to the EIM.

Over the course of the next six months, various parties filed petitions to intervene, arguing that they had reason to believe Rocky Mountain Power had actually saved more money by participating in the energy market than it had reported.

In September, Rocky Mountain Power conceded that the initial numbers were inaccurate, saying the situation had changed while the case proceeded. Because more utilities had joined the energy market, Rocky Mountain Power said, it had accumulated an additional $273,000 in savings.

After those savings were taken into account, Wyoming's Public Service Commission permitted Rocky Mountain Power to charge its customers an additional $16 million — an amount Leger estimated raised power rates by about 2.25 percent.

The energy market benefit was not the sole reason Rocky Mountain Power did not get the higher rate it originally requested, Leger said.

Meanwhile, the California Energy Commission is looking at another key issue in the debate — transforming the CAISO into a governing body capable of managing a regional grid.

CAISO is run by a board appointed by the California Legislature and governor, and some California lawmakers insist that converting the CAISO into a regional body must not give other states a say in California's energy policies. But officials from Utah and other states argue they would need to be convinced their interests would be represented adequately.

While this issue alone has the potential to bring negotiations to a halt, Gardner said recent meetings in California have convinced her there is hope that a workable arrangement could come to fruition.

The California Energy Commission, which was charged by the state of California with devising a new form of government for the CAISO, is taking suggestions from stakeholders and from the public regarding topics to be discussed at upcoming workshops regarding the governance structure. These meetings will be held on June 16 in California and June 20 in Denver. Comments pertaining to the meetings are due by July 7 and can be submitted on the commission's website.

epenrod@sltrib.com

Twitter: @EmaPen

 

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