BILL ANALYSIS �
AB 2516
Page 1
Date of Hearing: April 16, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2516 (Bradford) - As Amended: February 24, 2012
SUBJECT : Independent System Operator
SUMMARY : This bill expands California Independent System
Operator (CAISO) management requirements. Specifically, this
bill : adds to existing law governing CAISO operations:
1)Reducing, to the maximum extent possible, overall economic
cost to the state's consumers.
2)Conducting internal operations in a manner that maximizes
electricity reliability at the lowest cost for ratepayers.
3)Communicating, to the maximum extent possible, with all
balancing coordinators operating in California.
EXISTING LAW: Requires the CAISO to manage the transmission grid
and related energy markets in a manner consistent with:
1)Efficient use of available energy resources.
2)Reducing, to the extent possible, overall economic cost to the
state's consumers.
3)Applicable state law intended to protect the public's health
and the environment.
4)Maximizing the availability of existing electric generation
resources necessary to meet the needs of the state's
electricity consumers.
FISCAL EFFECT : Unknown
COMMENTS :
1)According to the author, "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
AB 2516
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was not clear that CAISO 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.
2)CAISO is responsible for matching California's electricity
supply with demand and maintaining frequency of the power
grid. It is the largest balancing authority in the western
interconnection managing 80% of California's power grid and an
estimated 35% of all electricity transmission in the west.
Other balancing authorities operating in California include
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.
3)While CAISO maintains a robust stakeholder process for
developing new market rules and addressing issues, there is no
mandated requirement for communication between all entities
involved in providing consistent and reliable electricity to
ratepayers.
4)Annually, the CAISO sets revenue requirements consisting of
operations and maintenance budget, outstanding debt bond
service, capital expenses, and miscellaneous revenue and
expenses. The revenue requirement is then collected from ISO
customers through the grid management charge (GMC).
5)The CAISO focuses on maintaining cost equity with other ISO
and Regional Transmission Operator (RTO) peers, the goal being
a bundled Grid Management Charge (GMC) cost per megawatt hours
(MWh) at or below median level of North American ISO/RTO GMC
rates.
a) New England ISO: $1.011
b) Independent Electricity System Operator (Ontario):
$0.834
c) ERCOT: $0.797
d) California ISO: $0.791
e) New York ISO: $0.676
f) Midwest ISO: $0.437
g) PJM: $0.347
h) Southwest Power Pool: $0.229
AB 2516
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1)CAISO is in the process of revising portions of its tariff
governing the calculation of available transfer capacity
(ATC). In certain narrowly defined circumstances the
amendment will allow the CAISO to use a transmission
reliability margin (TRM) to reduce the ATC on a particular
Intertie scheduling path. The amendment is intended to
address operational constraints that arise in the Hour Ahead
Scheduling Process (HASP) and gives market participants and
the CAISO the flexibility necessary to maintain uninterrupted
service.
2)CAISO also establishes rules and procedures for independent
energy generators to interconnect to the electricity grid. To
a great extent, California's investor owned utilities adopt
similar rules.
3)It is not clear that the CAISO process considers potential
rate impacts along with reliability and safety when developing
these rules. AB 2516 would clarify that rate impacts should be
considered in a manner that does not diminish or reduce safety
and reliability.
4)AB 2516 establishes CAISO management priorities that include
communication between all balancing operators in California as
well as a focus on internal operational cost efficiencies.
REGISTERED SUPPORT / OPPOSITION :
Support
None on File.
Opposition
None on File.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083