The Sacramento Municipal Utility District board this week voted to renegotiate long-term power purchase contracts in order to make way for the California Independent System Operator\u2019s Market Redesign and Technology Upgrade. The muni divorced the state\u2019s grid operator in 2002. SMUD is one of the biggest non-CASIO operations in the state. At the time it did not want to have anything connected to the grid operator. However, the transmission system of munis like SMUD and the Los Angeles Department of Water & Power are fundamentally interconnected with the rest of the state\u2019s grid, which is run by CAISO and stretches from San Diego to the Oregon border. \u201cSMUD is an island within the CAISO,\u201d said Gregg Fishman, CAISO spokesperson. The issue is \u201cinternal balancing area authority,\u201d according to the grid operator. That is how the municipal transmission lines and the state grid operator-run transmission lines can communicate. The SMUD board action authorizes the muni chief executive officer John DiStasio to negotiate and execute contract amendments, and settle energy transactions with long-term power suppliers that have resources located in the CAISO\u2019s balancing authority that are used to meet contractual power delivery commitments. The grid operator\u2019s new wholesale market is supposed to begin April 1. SMUD staff is in negotiations with parties for the necessary contract amendments. This delegation allows DiStasio to execute the amendments as soon as SMUD and the parties have agreed on terms. The scope of the delegation is limited, however, to amendments that are needed for preserving the bargained for balance of burdens and benefits under the contracts upon implementation of the new wholesale grid. Once CAISO starts its wholesale market, it will be involved in transactions between counter parties that terminate in, originate from, or pass through the grid operator. Sellers who operate generation that they\u2019ve sold to SMUD under long term contracts for delivery through CAISO\u2019s separate transmission system will have to bid their generation into the wholesale market. The market mechanism means that SMUD has to schedule transactions differently than in the current market. Changes to the contracts are needed to, among other things, account for the payments made to or received from the CAISO so that counter parties only get paid once and so that SMUD only pays once for each transaction. The vote was 6-0. Director Genevieve Shiroma was absent.