Cal-ISO Chair Warms to Schwarzenegger

By Published On: October 18, 2003

Michael Kahn was Governor Gray Davis?s chief counsel during the failed anti-recall election. But politics march on, and late last week, Kahn?on behalf of California Independent System Operator’s (CAISO) staff and board of governors, on which he serves as chair?sent a letter of support to Governor-elect Arnold Schwarzenegger. ?I?m seeking the governor?s help? with the Federal Energy Regulatory Commission, Kahn noted. In addition to sparring with state legislators who want to abolish the CAISO, Kahn has been locked in a very public, long-running spat with federal regulators. After pledging his support to Schwarzenegger, Kahn pointed out that the grid operator is not the problem; the issue is that the agency is stuck in the middle of a conflict between the state and federal governments. ?The governor could decide he wants the law to be changed,? he said. The contention arises from the configuration of CAISO?s board. FERC ordered that it be independent of the state, and the state ordered that the governor appoint board members. If the new governor orders modification of the CAISO, it would be the third board change for the agency. During the energy crisis, the 26-member board included many representatives from generators. With the exception of Mike Florio, a consumer representative, the governor wiped out that board and replaced it with his appointees, who are considered less accommodating to electricity business interests. Kahn not only must try to build a working relationship with Schwarzenegger but also has to placate angry legislators. Many lawmakers, particularly Senator Joe Dunn (D-Santa Ana), want to abolish or reconstitute the CAISO. Kahn promised Dunn and others that a change would be made after the recall election?either to recreate CAISO as a creature under legislative control or to mend the rift with FERC. CAISO?s attempts to rein in the wholesale market have been met with what its board considers inadequate responses by FERC. CAISO supports the state?s pursuit of $9 billion in refunds from energy generators it considers to have ?gamed? the system during the energy crisis. Kahn said he is confident that CAISO will persevere. ?Somebody?s going to have to run the transmission system,? he said. If the new governor does not want CAISO as it is, Kahn promised to cooperate in any new configuration.

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