BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2516 - Bradford Hearing Date:
June 11, 2012 A
As Amended: May 14, 2012 FISCAL B
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DESCRIPTION
Current law establishes the California Independent System
Operator (ISO) to ensure the efficient and reliable operation of
the transmission grid. The ISO is a non-profit public benefit
corporation with a five-member board of directors appointed by
the Governor and confirmed by the Senate.
Current law requires the ISO to consult and coordinate with
appropriate state and local agencies to ensure the ISO operates
in furtherance of state law regarding consumer and environmental
protection.
Current law requires the ISO to perform a review to address the
causes following a major electric outage that affects at least
10% of the customers of the entity providing the local
distribution service.
This bill requires the ISO to conduct internal operations in a
manner that minimizes cost impacts on ratepayers and to
communicate with all balancing area authorities in the state in
a manner that supports electrical reliability.
BACKGROUND
The ISO was created by AB 1890 (Brulte, 1996) in an attempt to
ensure fair access and open electrical transmission to
electricity providers. The investor-owned utilities (IOUs) and
participating publicly owned utilities (POUs) own and maintain
the electrical transmission grid but it is operated by the ISO.
Participation in the ISO is voluntary for local POUs.
The ISO is a nonprofit, public benefit corporation responsible
for matching California's electricity supply with demand and
maintaining frequency of 80% of the state's transmission grid.
Other balancing authorities operating in California are
PacifiCorp, Sacramento Municipal Utility District, Sierra
Pacific Power, Turlock Irrigation District, Nevada Energy, Los
Angeles Department of Water and Power, Western Area Lower
Colorado and Imperial Irrigation District.
The ISO is regulated by the Federal Energy Regulatory Commission
(FERC), an independent federal agency that regulates the
interstate transmission of electricity, natural gas, and oil.
The ISO operates under the terms and conditions of its
FERC-approved tariff, which is modified, amended, supplemented
or restated as needed. If a provision of an existing ISO
contract, business practice manual or operating procedure
conflicts with it, the tariff will prevail to the extent of the
inconsistency. These tariffs dictate the prices charged for
transmission and as a consequence the state has little direct
impact on electric ratepayers and access to the grid.
The ISO opened its northern and southern California control
centers in 1998 when the state restructured its wholesale
electricity industry. While utilities still own transmission
assets, the ISO acts as a traffic controller by routing
electrons, maximizing the use of the transmission system and its
generation resources, and supervising maintenance of the lines.
As the nerve center for the California power grid, the ISO
matches buyers and sellers of electricity, facilitating nearly
30,000 market transactions every day to ensure enough power is
on hand to meet demand.
In addition to operating the transmission grid, the ISO also
operates a "spot-market" and ancillary services market to
balance and maintain electricity supply and demand stability.
These balancing markets procure 3% to 5% of the electricity
scheduled through the ISO.
Southern California Went Dark - In September of 2011 blackout
occurred in Southern California that left 2.7 million customers
without electricity. It also extended to Arizona and Baja
California. The blackout started in Arizona with the loss of
Arizona Public Service's (APS) Hassayampa-North Gila 500 kV
transmission line. That line loss itself did not cause the
blackout, but it did initiate a sequence of events that led to
the blackout, exposing multiple grid operators' lack of adequate
real-time situational awareness of conditions throughout the
Western Interconnection.
The blackout was investigated by the staff of the FERC and North
American Electric Reliability Corporation (NERC) which
recommended that bulk power system operators improve their
situational awareness through improved communication, data
sharing and the use of real-time tools system operators plan and
account for phase angle differences in order to be able to
re-energize transmission lines following outages.
COMMENTS
1. Author's Purpose . The author reports that following a
widespread power outage that occurred in September 2011 in
the San Diego region, the Assembly Utilities and Commerce
Committee held a hearing to investigate the outage. Based
on testimony at the hearing, it was not clear that ISO and
other balancing authorities in the region were regularly
communicating with each other before the outage. This bill
recognizes the need for all entities involved with
providing or enabling the safe, reliable supply of
electricity to ensure that electricity rates remain
affordable to Californians.
ISO would be required to communicate with other balancing
areas regarding reliability. To the extent that FERC has
recognized that communication problems contributed to the
Pacific Southwest outage in 2011, ISO may already be
implementing procedures to improve communication with other
balancing areas.
2. Bill Impact . The mandates of this bill are consistent
with those of the FERC which has primary jurisdiction over
the ISO. It is not clear that ISO process considers
potential rate impacts along with reliability and safety
when developing these rules. This bill would clarify that
rate impacts should be considered in a manner that does not
diminish or reduce safety and reliability.
This bill establishes ISO management priorities that
include communication between all balancing operators in
California as well as a focus on internal operational cost
efficiencies.
ASSEMBLY VOTES
Assembly Floor (73-0)
Assembly Appropriations Committee (15-0)
Assembly Utilities and Commerce Committee
(12-0)
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Kellie Smith
AB 2516 Analysis
Hearing Date: June 11, 2012