California ISO Growing Up and Out

California's experimental nonprofit electric transmission grid and wholesale spot power market operations - the Independent System Operator (ISO) and Power Exchange (PX), respectively - are clearly working toward becoming larger, multi-state regional operations, according to officials who marked the one-year anniversaries of both organizations March 31. A proposed new California law (SB 96) would make it easier for the state to enter compacts with other western states to begin to form the regional power operations.

"We are emphasizing getting more participants to join the ISO because now that we have the infrastructure in place, every new participant we can bring on board helps to reduce the grid management charge for everyone," said Terry Winter, ISO CEO.

The PX has increased to 59 participants from its original 32 a year earlier, with average daily volumes growing to 517,000 MWh; the ISO handled 167 billion KWh in its first nine months of operation, with 42 certified scheduling coordinators, 27 of which are currently active. Future growth is anticipated with more than 10,000 MW of merchant power capacity currently before the state energy commission for development.

ISO officials indicated that new transmission planning, development and construction has continued unabated, following five- and ten-year plans in place by the three investor-owned electric utilities when the ISO assumed responsibility for the grid.

"There seems be this perception that there are no electric transmission facilities being added or planned right now (in California)," Winter said. "The utilities had five- and ten-year plans and those have continued on. We have reviewed their plans and have approved many, many lines to be built, and those are being built at this time. So because we are looking at the process for the future, people should not think that nothing in happening in the transmission area. It is happening."

Ultimately, the ISO, working closely with the three investor-owned utilities, will determine long-term plans for new transmission and how the cost of that transmission will be allocated to the various grid users, the ISO officials said. In looking ahead to possible regional, multi-state operations the ISO board chairman, Jan Smutny-Jones, head of the state's independent power producers, noted the ISO is trying to send a message out-of-state with its first year's operations:

"We're trying to demonstrate to our neighbors here that we have a product that has some value, but a large part depends on the direction other states surrounding California want to go," Smutny-Jones said. "In large part regional development has to be driven by decisions in the other states."

Richard Nemec, Los Angeles

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