Imperial Irrigation District files antitrust lawsuit against California ISO

imperial irrigation district elp

The Imperial Irrigation District (IID) on July 17 filed with the United States District Court, Southern District of California a lawsuit claiming that the California ISO has gained monopoly power in the transmission service market and transmission operations services market in violation of the Sherman Antitrust Act, thereby harming IID and competition in California.

The California ISO said in a July 20 statement to TransmissionHub that it has not yet been served with the lawsuit, but that when it is served, it will “take all legal avenues to vigorously defend” its use of the electricity grid. In addition, California ISO said that it has worked closely with IID to help the utility develop and integrate renewable resources to serve demand, and the California ISO is “disappointed” in IID’s announcement about the lawsuit, and believes any claims made are “without merit.”

IID, which operates as a balancing authority, is the third largest public power utility in California, with 145,000 customers in Imperial County and parts of Riverside and San Diego counties. The company’s electric system is interconnected with the California ISO system, accounting for about 1 percent of the transmission service and transmission operations services market in California, according to the lawsuit. The California ISO, by contrast, provides about 80 percent of California’s electric transmission service, and holds about 80 percent of the market share of the electric transmission operations services.

“IID takes no pleasure in turning to the courts to obtain relief from [the California ISO’s] anticompetitive practices toward the district in doling out access — and deliverability — to its transmission grid, but we have been left with no other recourse,” IID General Manager Kevin Kelley said in a July 16 statement.

The lawsuit alleges that the California ISO has engaged in unlawful conduct that prevents the transmission of electricity from within IID’s balancing authority area (BAA) into and across the California ISO BAA.

 “[The California ISO’s] actions have prevented renewable energy projects located in the IID BAA from being selected resources by the load serving entities in the [California ISO] system,” the lawsuit claimed. “[The California ISO’s] actions thus exclude IID from providing transmission service to renewable energy projects in the Imperial [competitive renewable energy zones (CREZs)], which instead must interconnect directly to the [California ISO] system in order to obtain adequate transmission service from [the California ISO] to reach end customers located outside of the IID.”

The California Renewable Energy Transmission Initiative identified about 30 California CREZs with strong renewable resource potential, including three CREZs in Imperial County — Imperial North, Imperial South and Imperial East.

As a result of the California ISO’s actions, the lawsuit claimed, renewable energy projects in the Imperial CREZs that can invest in direct interconnection with the California ISO system are obtaining transmission service from the California ISO by bypassing the IID system, despite the inefficiencies associated with the interconnection.

As part of the lawsuit, IID also claimed that the California ISO is in breach of an implied contract after “inducing” IID to construct the about $35 million Path 42 upgrade project to allow the import of renewable energy from Imperial County to the California ISO grid, and withdrawing a promise to allow IID to export additional renewable energy from the IID system. Path 42 is a 230-kV transmission line that runs from the Coachella Valley substation to the Devers substation. The upgrade was completed in 2014.

The California ISO approved the Path 42 project under its 2010/2011 transmission plan as a policy-driven project that would increase IID’s maximum import capacity from 462 MW to 1,400 MW, and provide access to renewable resources. According to the lawsuit, the California ISO, following the closure of the San Onofre nuclear generating station in 2014, reduced to zero its forecast for additional deliverability from the Imperial Valley above the existing 462 MW maximum import capacity.

As a result, the lawsuit claimed, IID cannot recover the cost of the Path 42 upgrade from the sale of transmission services on the IID system to wholesale purchasers of electricity from generation resources located in the IID BAA for delivery to customers on the California ISO system.

IID also claimed that, instead of allowing IID to export additional energy, the California ISO used the IID grid to import energy from coal-fired and natural gas-fired plants in Arizona without IID’s permission and without providing compensation for the use of IID’s transmission system.

In the lawsuit, IID is seeking monetary damages for its federal law claims, as determined by trial, and relief from anticompetitive conduct. In addition IID said that it is seeking monetary damages for its state law claims, as determined by trial, and punitive damages in an amount “necessary to deter and punish” the California ISO for the actions outlined in the lawsuit.

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