Scott's Latest Blog
Tribalism, Market Formation & Other Concerns
If you’ve paid attention to national politics over the last few years, you’ve probably have heard the term “tribalism.” The least judgmental use of the term would mean a “preference for one’s own people.” In the most recent political context, this preference can extend beyond a positive feeling for one’s people to an active dislike of those outside your “people.” Taken to extremes, it has come to mean a refusal to listen to, or pay attention to arguments from those outside your tribe. An example of this ugly situation: You like news from one cable network which is “telling the truth”, while the other cable news networks are lying and distorting the truth. The people watching the other cable news network think the same of you and your view of the truth.
One of the more gratifying things I’ve experienced while at WPTF applied to the efforts over the last several years to integrate the Western part of the U.S. into an efficient network market to manage reliability and to facilitate the introduction of clean resources. The collegiality was impressive. As a veteran of Eastern markets, I was impressed by the coming together of various parties – investor-owned utilities, public utilities, generators, marketers, public interest organizations, others – to grapple with how to manage the grid more efficiently. The existence of two competing platforms (CAISO, SPP) to work with stakeholders to offer a new service called the “day-ahead market” was encouraging - even to someone like me who wished for something more like an RTO.
I’ve enjoyed getting to know and working with the many hardworking and smart people in both these efforts. WPTF has participated in both the CAISO and SPP day-ahead market efforts. We are agnostic on selection as we hoped to make each offering as good a market platform as possible. But as we’ve gotten to the point of filing tariffs for both market platforms, I’ve seen evidence of “tribalism” coming to our regional efforts.
When CAISO filed its day-ahead offering at FERC, WPTF filed a protest on certain aspects of the “Day-Ahead Market Expansion” (DAME). I subsequently heard that one member of WPTF who was in the CAISO “camp”, express irritation that we were not being supportive of CASIO’s DAME filing. Feelings were running high in some places, and I tried to convey that while we were supportive of EDAM, we had an obligation to our members to file regarding issues we felt needed to be changed.
As SPP came closer to filing a tariff for its “Markets Plus” day-ahead offering, some who supported this effort became irritated with efforts to change the governance of the CAISO to make membership in the EDAM more attractive. I got a sense of this unease when it became known that a study on “market seams” that WPTF was sponsoring with the Public Generating Pool (PGP) was about to be released. Some parties felt this was arguing against two markets. The study HERE was not intended to be favorable to one day-ahead platform over the other, nor was it proposing solutions. It was merely meant to help provide a context for the broader Western stakeholder community to discuss the issue of seams. But some viewed the study as arguing against two markets. It began to feel like “my cable news channel versus your cable news channel”.
While I would love to have a single power market in the West with a single tariff to implement “security constrained economic dispatch” (SCED) over the whole of WECC, I accept this isn’t going to happen. In the absence of a single market, we can help each market be the best, most transparent and efficient market. The alternative is suboptimal. Let’s not reflect our national political scene.
While I’m commenting… FERC
I’m an enthusiastic FERC staff alum. While I did not always agree with everything the various Commissions ordered, I was always a believer that there was no more professional or fair group of staff in the regulatory universe. Just before I left, I told an incoming Commissioner that he could always count on FERC staff to give fair, sound advice based on the record before them. I noted that while staff would provide views on their decisions, they would follow the Commissioners direction unless it violated the law.
Like many institutions, the Pandemic affected FERC staff as remote work became an established fact. The change may have made it more difficult for the collegial review and drafting orders by teams on cases for the Commission to consider, which had been the hallmark of the FERC process. The changes also seemed to have hastened the departure of some senior staff, which deprived FERC of institutional knowledge. The dysfunction in our broader political environment also may be infecting the FERC processes – something that previously FERC had seemed immune.
These thoughts came to me as I reviewed some orders on issues upon which WPTF and our members filed. What was dissatisfying was less the outcome or decision, but rather the lack of answering the key arguments of all parties. The orders might reference an argument, but the dismissal of the arguments as part of the decision did not seem to provide more than superficial reasoning for the decision. Key issues pertaining to “open access” or “price formation” – issues which have been key to FERC policy for a quarter of a century -- did not seem to be answered by the orders. FERC’s role in providing unambiguous and fair guardrails for power markets seemed to be under strain.
I hope I’m wrong, because we will need a good regulatory regime as we manage the coming years.
Finally
It was a wild time in much of the West during the weekend of the 13th and 14th as well as the few days after. Cold? Oh, Hell yeah. The Pacific Northwest, British Columbia and Alberta were experiencing extreme cold after a previously mild December. To add insult to injury, the Pacific DC tie line that goes from L.A. to BPA was de-rated to “0” going South to North. The culprit? Apparently, a planned outage of this valuable tie was exacerbated by a nearby outage. As one member in the Northwest said to me, you can imagine if the line had been derated to “0” in the North-to-South direction in the summer what howls of outrage would be heard.
A couple of observations: 1) Prices at times exceeded the WECC Soft Offer cap of $1,000/MWh. FERC needs to harmonize the offer cap to the Order 831 parameters of RTO caps. 2) We must hope that the coming regional integration will help better coordination with outages in a manner that better serves the region.