To the great relief of the California Independent System Operator (CAISO), the Western Area Power Administration announced that instead of becoming its own grid operator, it would pursue something akin to a metered substation with CAISO or the Sacramento Municipal Utility District. In a December 2 notice published in the <i>Federal Register</i>, WAPA announced an anxiously awaited proposed decision that it would become a contract-based subcontrol area with either CAISO or SMUD, depending on which one offers the better deal. ?To reduce business risk and uncertainty, Western plans to operate its federal transmission facilities within the boundaries of an existing control area,? said WAPA spokesperson David Christy. The grid operator was happy WAPA decided against breaking away from it at the end of 2004. Doing so would have added a layer of operational complexity and weakened reliability, said CAISO spokesperson Stephanie McCorkle. CAISO, which operates 75 percent of the state?s transmission highway, has subsystem metered contracts with a dozen entities similar to the one WAPA is considering. ?We are the best reliability option for WAPA,? McCorkle added. SMUD has not been officially contacted by WAPA, said Dace Udris, district spokesperson. ?SMUD is open to discussing the concept of adding them to our control area, but there would have to be a benefit to our customers,? Udris added. WAPA weighed creating its own control area after an analysis done by Navigant Consulting estimated the move would save the federal agency between $9 million and $24 million in 2005. The savings were associated with the elimination of grid access charges and reliability costs. CAISO took issue with those numbers and other estimates tied to options on the table, including joining CAISO as a participating transmission owner and operating as a wheeling customer. Navigant?s estimates were revised, and the cost savings estimates ranged from $1.2 million to $29 million for going it alone compared to the earlier estimate of $31 million savings by 2010. The avoided costs of a metered substation were estimated to be $1.8 million. WAPA has a trio of 30-year deals with Pacific Gas & Electric, which allow it to send power from its hydropower facilities in the Sierra Nevada over utility lines managed by CAISO. The agreements expire at the end of 2004, and after that date the agency will have to go out into the market for ancillary services or provide its own. The same day that WAPA announced it would forgo creating its own control area, it said it would also become a participating transmission owner on Path 15, making it a member of CAISO?s grid. The 84 miles of lines are between two PG&E substations and are separate from the 900 miles of wires covered by the subcontrol area deal. WAPA, following in TransElect?s footsteps, agreed to turn over its transmission rights to CAISO, and it will soon hash out agreement details with the grid operator, Christy noted.