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CA Joint Legislative Audit of ISO/PX Begins

CA Joint Legislative Audit of ISO/PX Begins

California's State Auditor General formally began contacting the state's nonprofit electric grid operator (Cal-ISO) and wholesale spot power market (Cal-PX) Wednesday in a state legislature-ordered investigation that could lead to the merger of the two entities. The state's electricity price spikes and supply shortfall this summer prompted legislative action in August ordering the probe.

"We will begin cooperation with the auditors," a spokesperson for the power exchange (Cal-PX) said. There is no specific indication on the time frame for the investigation, although the spokesperson said. "I think they were going to turn that around quickly (by Dec. 1)."

State Sen. Steve Peace, the outgoing lawmaker who was the chief legislative author of the state's 1996 electric industry restructuring law, requested the joint legislative investigation, saying that the summer's electricity problems "raised serious concerns about the operation of the Cal-ISO and Cal-PX."

He specifically asked that the audit look into seven areas:

  • Cal-PX and ISO structures to determine how their interactions affect the state's wholesale power market.
  • Determine how effective the two nonprofit organizations' own market surveillance activities are.
  • Determine if the two entities' market activities contribute to creating competitive markets.
  • Assess the level and effectiveness of the ISO/PX coordination and how it impacts the wholesale power market.
  • Review the auction or bid methodologies used in the ISO and PX markets.
  • Review the ISO's effectiveness in assuring reliability and minimizing the cost of doing so.

"Recommend changes to the institutional structures or activities of the ISO and PX, including, but not limited to, addressing whether the organizations should continue as separate institutions and the potential value, if any, of merging the two institutions or insuring that their operations are more closely coordinated."

"Given that everyone is targeting other studies to the end of November, I imagine that is the time frame because the legislature comes back for a week at that time," the Cal-PX spokesperson said.

Richard Nemec, Los Angeles

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