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California vs. Oregon

An expiring 40-year-old contract rocks the Pacific AC Intertie.

Fortnightly Magazine - August 2007

director of transmission for PacifiCorp, in which the ISO laid out its concerns with operations and reliability, and PacifiCorp answered in terms of market imperatives.

Writing on March 29, ISO Vice President Detmers identified three key concerns.

First, removal of the line from the ISO’s “controlled grid,” without shifting the control area boundary, would complicate reliable operation of the larger COI path.

Second, the new pancaked wheeling charge (paid under PacifiCorp’s tariff) would make PACI more costly to use and push traffic onto the WAPA line (PACI-W). This uneven pricing could generate congestion charges and result in what the ISO called “a minimum standing usage charge” (a congestion charge) on PACI-W.

Third, switching service and tariff responsibility to PacifiCorp on its 47-mile line segment would force the ISO to redesign its network model. That means the topology that maps buses, nodes, and switches, and interfaces on the grid. The ISO might need to create a new locational pricing node at the Indian Springs demarcation point between PacifiCorp and PG&E line segments (the latter falling under ISO control).

This step would prove difficult because Indian Springs is not a substation, bus, or node, but actually is nothing more than a transmission tower, like any other. When PacifiCorp and PG&E combined efforts to build the 94-mile PACI-P line during the 1960s, that is the point they chose to delineate ownership of their respective projects. Now, however, to accommodate scheduling at that point, with the calculation of locational marginal prices and allocation of congestion revenue rights, it seems that the ISO either would need to create what it calls a “P-Node” at the Indian Springs tower, or else redraw its boundary lines with Bonneville Power, so that the Cal-ISO would end at Indian Springs, Calif., instead of Malin, Ore. Either way, this additional software programming would cause problems, especially with the MRTU startup date looming nearer. Detmers explains:

“In 2007, the California ISO currently plans to make necessary changes to the network model in two scheduled ‘builds,’ one in May and one in September. Each ‘build’ typically requires a 2- to 3-month process. Planning for the May build has already concluded.

“Network model changes require full system and software testing and a market simulation. … Our ability to make the network model and system changes necessary to accommodate PacifiCorp’s request prior to expiration of the contract is challenged.”

Kenneth Houston then answered each charge in turn, emphasizing that PacifiCorp would gladly participate in a re-negotiation and signing of the various operating agreements then in force to govern control and operation of the COI. That would include a restated OCOA, the Owners Coordinated Operating Agreement, which had been approved by settlement at FERC in 2004.

Note, however, that Houston offered an intriguing argument to counter the ISO’s concerns over rate pancaking, congestion, and line loading on PACI-W.

Houston claimed that while PacifiCorp’s proposal indeed would create an additional pancaked charge, market participants might prefer that to unknown risks of the Cal-ISO’s looming market redesign. Thus, PacifiCorp’s pullout might not distort flows as much as the ISO