WAPA May Secede from the California ISO

The Western Area Power Administration may create a separate grid control area, and a preliminary decision as to whether it will split from the California Independent System Operator is expected next month. WAPA?s is exploring alternatives to replace the 30-year transmission contracts with Pacific Gas & Electric, which direct the flow of power to and from the federal government?s hydropower facilities and PG&E?s high voltage wires. The long-term deals expire at the end of 2004 and a few options are on the table. In addition to WAPA going it alone, other operational alternatives being considered include operating within the California grid operator?s control area as a metered subsystem, or joining CAISO as a participating transmission owner, both of which would require it to comply with the ISO?s tariffs and protocols. According to a WAPA study conducted by Navigant Consulting, splitting from CAISO would save it between $9 million and $24 million in 2005, and up to $31 million five years later. The bulk of savings to WAPA, according to the study, would arise from the elimination of the ISO?s transmission-access charge and reliability costs. Becoming a metered substation is estimated to save the federal government $9 million in 2005 and $13 million in 2010, while becoming a participating owner would cost $83 million in 2005. Another possible move is operating as a wheeling customer of PG&E and CAISO, estimated to save about $11 million in 2005 and $14 million in 2010. CAISO, which is closely following the matter, came up with different estimates, claiming a split would be costly. If WAPA were to create its own control area, there would be ?significant cost shifting,? said CAISO spokesperson Gregg Fishman. Users left on the ISO system, he added, would be hit with increased costs of between $8 million and $10 million. In addition, a WAPA split would double the number of connections CAISO would have to manage. According to WAPA spokesperson David Christy, the agency is reviewing CAISO?s numbers. He added the financial cost of an operational change is only one of a handful factors being considered. Others include flexibility, certainty, durability of operating protocols, and transparency. California Public Utilities Commission president Mike Peevey jumped into the fray and objected to a WAPA secession. ?It is antithetical to the [Federal Energy Regulatory Commission?s] longstanding objective of fostering a seamless grid, and inconsistent with California?s goal of reducing ?scams? between control areas in the Western Interconnection by creating consistent rules and operations to induce greater efficiency and increased flexibility,? Peevey stated in a letter last month to CAISO head Terry Winter.

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WAPA May Secede from the California ISO

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