CAISO Tackles State’s Climate Change Agenda

By Published On: June 1, 2007

CAISO Tackles State’s Climate Change Agenda The California Independent System Operator entered the greenhouse gas reduction fray with a May 30 forum to assess its role in implementing the state’s mandate to reduce greenhouse gas emissions while safeguarding the reliability of the power grid. “Our main role is keeping the grid stable and keeping the lights on. But that is not necessarily incompatible with reducing greenhouse gas emissions,” said CAISO spokesman Gregg Fishman. “It was a way for us to get everyone in the same room and figure out whose doing what, what is the CAISO’s role, and how can we help others,” Fishman said. “The questions we’re asking are ‘How do we fulfill our core functions of maintaining grid reliability and running energy markets and foster compliance with laws to reduce greenhouse gas emissions?’” A number of state agencies participated–the California Environmental Protection Agency, California Public Utilities Commission, and the California Energy Commission–as well as utilities, renewable energy companies, independent generators, national climate change experts, and environmental groups. The electric power sector accounts for 22 percent of California’s total greenhouse gas emissions, and nearly one-third of the electricity consumed in the state is imported power. CAISO is collaborating with the CPUC and the Energy Commission to assess the impact of the state’s greenhouse gas reduction measures on electric system reliability and define the grid operator’s role in helping the state reach its greenhouse gas reduction targets. AB 32, California’s landmark climate change law, has confronted the CAISO with some critical challenges. These include: -Coordinating CAISO’s market reform efforts with the state’s greenhouse gas reduction program; -Incorporating greenhouse gas reduction policies into the CAISO’s power purchases and system reliability functions; -Helping to design the AB 32 electric sector program by sharing data and technical expertise; and -Providing technical advice on integrating the CAISO’s activities and policies into the AB 32 program. AB 32 requires the California Air Resources Board to establish a statewide cap on all major sources of greenhouse gas emissions, including the electricity and natural gas sectors. However, the law requires the Air Board to consider the impacts on system reliability. Along with “command and control” regulations, market-based mechanisms, such as cap-and- trade of carbon credits, are expected to be a key in reaching AB 32’s mandate of a 25 percent reduction in greenhouse gas emissions by 2020, Air Board officials said. Meanwhile grid operator is drafting tariff language to implement a new hybrid method for financing transmission trunk lines to connect remote renewable energy resources to the power grid. “We’re saying what else can we do to foster new renewables, demand response, shaving the peak?” Fishman said. “What can we do to encourage retirement of old power plants and building new more combined cycle efficient ones?”

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