California ISO Board approves plan calling for avoidance of $2.6 billion in costs

The California Independent System Operator (ISO) Board of Governors may have saved billions of dollars with the approval of the 2017-2018 Transmission Plan.

That plan lays out the proposed design and construction of transmission networks over the next decade. Over those 10 years, they hope to engage 17 new transmission projects for a cost of approximately $271.3 million. The plan also recommends the cancellation of 18 transmission projects as well as the revision of 21 other projects, which will save an estimated $2.6 billion in future costs. That figure could go up still further since an additional seven Pacific Gas & Electric projects are now either on hold, recommended to be delayed or pending further review.

The focus of the new plan is primarily two-fold: supporting reliability in the system while also improving the ISO’s congestion revenue rights auction design. The aforementioned congestion revenue rights auction — a path for market participants to limit their congestion cost risks — will be altered to more closely align auction prices to ISOs’ payouts to congestion revenue rights purchased in those auctions. Purchase options will be reduced and the estimate transmission capacity of these purchases will be more accurately estimated once a deadline to report transmission outages is set.

The plan also calls for a series of special studies on the impact of a 50 percent renewable resources policy, the risks of early retirement of the gas fleet and the benefits of large-scale storage. Alongside these, more flexibility is to be supplied in energy suppliers’ recovery of natural gas costs.

All of these changes come from coordination with the California Energy Commission, California Public Utilities Commission, and the ISO’s stakeholders.