Enhanced regional efforts on transmission planning stemming from FERC’s Order 1000 is only one of the examples FERC Commissioner Cheryl LaFleur mentioned Oct. 23 as evidence of more regional market developments witnessed during her tenure at the commission.
The expansion of independent system operators, regional compliance plans with the U.S. Environmental Protection Agency’s Clean Power Plan and new members looking to join the Western energy imbalance market (EIM) are some of the other indicators of a growing “regionalism” in energy markets in various parts of the country, LaFleur said in a speech to the California ISO Stakeholder Symposium.
Praising the California ISO and other entities in the West for their implementation of Order 1000, LaFleur mentioned how the region has the only interconnection-wide coordination process after FERC accepted the plan from the California ISO, ColumbiaGrid, Northern Tier Transmission Group and WestConnect. The combination of various interests working together to overcome obstacles bodes well for more regional cooperation on transmission planning, she said.
Cooperation among the natural gas and power sectors in different regions to address operational challenges such as power plant retirements and the growth of renewable resources is another trend LaFleur addressed.
When she arrived at FERC after being appointed by President Barack Obama in 2010, LaFleur said she had a colored chart of organized markets “with a lot of white space” in areas outside ISO territories. Since then, the Midcontinent ISO nearly doubled its footprint with the addition of Entergy, Cleco and other entities, while the Southwest Power Pool recently doubled its size with the addition of the Integrated System in the Upper Midwest, she noted.
That latter expansion is important because it marked the first federal power marketing administration, the Western Area Power Administration’s Upper Great Plains Region, becoming an SPP member, LaFleur said.
Public power entities such as municipal utilities, cooperatives and federal PMAs have a prominent role in Western energy markets, and their voluntary participation in regional efforts is a good sign, LaFleur said. With 82 percent of the nation’s solar generation in the Western Interconnection, along with almost 30 percent of the wind generation, that regional cooperation will be important she said.
By enhancing access to renewable resources, the EIM is producing benefits that are attracting the attention of new potential members such as Idaho Power, Portland General Electric, Puget Sound Energy, NV Energy and Arizona Public Service, LaFleur noted.
On the generation side of the picture, LaFleur said although it is early in the compliance phase of the CPP and states figure out the best approach, she referred to studies showing that regional compliance will be less expensive than state-by-state compliance plans. She noted that 24 states combined in a lawsuit to challenge the rule, and joked that it is another form of regional cooperation, though perhaps not what the agency had in mind.
“EPA is a uniter, not a divider,” she quipped.
The advantages of regional markets include improved reliability through shared resources, enhanced dispatch of generation and lower costs due to a reduced need for operating reserves, she said. LaFleur pointed to a recent study claiming that the addition of PacifiCorp to the California ISO could produce more than $3.4 billion in shared cost reductions in the first 20 years.
LaFleur asserted that such efforts are more effective if they are “driven locally,” or grow organically among the regional participants, and not as a result of FERC directives or other rules from Washington. The California Legislature, for example, passed the law to boost the state’s renewable portfolio standard and have the California ISO prepare to become a regional grid operator, she noted.
Having overseen regional market developments in other areas of the country, LaFleur pointed to a few common themes for success, the most important of which may be “getting the balance right between maximizing state interests and thinking regionally.”
States sometimes have different policy objectives, and the West has a diverse political spectrum, but a proper organizational structure can account for different views, she said.
Another common theme is allowing for different models and the inclusion of public power entities, and the West has a step along that path with the regional transmission planning group, LaFleur said. A market design that can mature and improve upon lessons learned, as the California ISO did with a market redesign in 2008, also is helpful.
An emphasis on infrastructure also is important, LaFleur added, asserting that it is easier to think regionally when a market is “woven together with steel in the ground,” in the form of wires or pipelines in a strong network.