The History of WPTF
By Gary Ackerman, Founding Executive Director
Scheduling Coordinators Users Group (SCUG)
The story of the Western Power Trading Forum (WPTF) began as an outgrowth of an effort under the California ISO & PX Trust. The Trust was created by AB 1890 and funded by the state’s three investor-owned utilities, which eventually expended about $240 million for the procurement of the hardware, software, and ancillary systems needed to initiate the new restructured market(s). The startup expenses would be replaced with a 10-year loan assumed by both the CAISO and the CalPX and paid for through the grid management charge. That is, California ratepayers were charged in their utility bills for the initial uplift cost.
Around October 1996, the CPUC appointed S. David Freeman to be the Trustee of the California ISO & PX Trust. Freeman, with the aid of a group of 25 to 30 individuals representing different industry segments, referred to as the Trust Advisory Committee, engaged in full-day bi-weekly meetings with many items on the agenda, not the least of which was development of the tariffs for the CAISO and the CalPX. These meetings were sizable in that hotel ballrooms were needed to house them, including the 50 to 70 members of the public that normally attended. Of course, the buffet lunches guaranteed that participation remained steady. During the discussions, any member of the public was able to be recognized and make comments. However, one aspect of the new market that the Trustee was unwilling to undertake directly was the nurturing of a new class of entities that would be known in the new market as Scheduling Coordinators. Instead the Trustee arranged for a group of prospective Scheduling Coordinators to form and meet on a regular basis to review developing elements of the CAISO and the PX, and to provide a sounding board for the Trustee and the Advisory Committee on proposed implementation issues.
However, the story of WPTF and its beginnings would only be partially told without additional commentary. What the reader needs to appreciate is the sweep of emotions that overtook California during this period. Restructuring was a hot topic-- front and center for the CPUC and then the California legislature. For industry consultants such as myself watching the weekly developments of new policies and laws on the sidelines was a dream. The amount of information to be read and digested each week was overwhelming. By the mid-1990s, the thought of competition in the electric utility industry had been on the minds (and hearts) of every person in the industry for over two decades since the passage of PURPA during the Carter Administration. The promise of full competition was already underway in the UK and Australia. But in the U.S., California was the first attempt at a new approach.
I had a consulting client, a joint venture between Irvine, CA based Mock Energy and Spokane, WA based Washington Water & Power that was interested in participating in the new electricity future in California. I became the joint venture’s designated representative starting in August of 1996 and attended all the Trust Advisory Committee meetings on behalf of my client, despite not being a named member of the Committee.
Around December of that year, the Trust scheduled a public organizational meeting of a group of Scheduling Coordinators to appoint a leader--That is, a person who would schedule meetings for the group, develop the agendas, and bring key items to the Trust Advisory Committee.The assembly elected me as its leader among the three candidates willing to assume the workload. I was interested because I believed it would add value for my client if I had some role in the development of the new market. At its first meeting, the ad hoc group decided upon the name Scheduling Coordinators User Group, or SCUG, and unearthly sounding name when pronounced. Since it was the plan of this group to meet bi-weekly in 2017 at different locations throughout California, Duke Consulting assisted me with meeting logistics as part of its master consulting agreement with the Trust.
In August of 1997, CAISO started to bring on permanent employees in operations, planning, and customer service. S. David Freeman took leave of his position as the Trustee in the fall of 1997 to become General Manager of LADWP. In his place, Mr. Jeff Tranen was appointed as the first CEO of the newly incorporated CAISO. Among the many people hired by the new corporation were two individuals employed to manage relationships with prospective Scheduling Coordinators: Don Fuller and Byron Weortz.
Given that SCUG was intended as a short-term bridge to help the nascent market develop and prepare for startup in 1998, CAISO staffing eliminated the need for SCUG. However, around November of 1997, Dan Douglass and I hatched a plan to start a new trade association for Scheduling Coordinators. Dan, who was at the law firm of Arter & Hadden at the time, was also the representative of an informal group known as the Direct Access Alliance. Although it might seem odd that direct access parties (i.e., retail competition) and transactional parties in an organized wholesale market would both be involved in a single trade association, it was both Dan’s and my thought that the combination would work better together than separately.
An organizational meeting for the new trade association was held in San Francisco on December 9, 1997. An interim management team was selected and a kickoff meeting was planned for the group that would become the Western Power Trading Forum. (Side note, Curtis Kebler of the California PX was the person who came up with the idea of including “Forum” in the association’s name.)
The kickoff meeting was on February 12, 1998, at the Crowne Plaza Hotel in San Francisco.
In attendance were:
Bob Anderson, APS Energy Services
Peter Bray, PG&E Energy Services
Ken Lackey, Edison Source
Frank Rierson, New Energy Ventures
Robert Neustaedter, Houston Industries
Greg Blue, Electric Clearinghouse Inc.
Dian Grueneich, Grueneich Resource Advocates
Phil Muller, SCD Energy Solutions
Phone In: Sheryl Lambertson, MP Energy
Phone In: Curtis Kebler, PX
Fruitful discussions yielded recommendations around advocacy priorities, membership classes and dues, and provisions to be included in the association bylaws.
Arter & Hadden helped me incorporate the new trade association as a California Non-Profit Mutual Benefit Corporation. The Western Power Trading Forum (WPTF) filed its Articles of Incorporation with the Secretary of State on March 18, 1998 – two weeks before the CAISO’s went live on March 31st.
The following companies served as initial Board members:
New Energy Ventures
PG&E Energy Services
Electric Clearinghouse Inc.
APS Energy Services
Montana Power Trading & Marketing Co.
Greg Blue was the first Chair and Peter Bray was the first Treasurer. I was appointed as the Executive Director.
By the end of 1999, WPTF had gained 11 General Members in addition to the Board members:
Avista Energy (formerly Washington Water & Power)
Green Mountain Energy
Hafslund Energy Trading
LG&E Energy Marketing
Unified Information Inc.
The Friday Burrito
In October 1998, I began experimenting with food titles for the weekly email blast. This was intended to be more tongue-in-cheek rather than a serious attempt at branding the information source. For example, one week I titled the email the Friday Taco; another week I called it the Friday Gyro, and another time I used the Friday Burrito. I continued to try different names, but in my mind the name “Burrito” really fit the bill … a weekly wrap-up of items and events with a dab of salsa. With that, the name “Friday Burrito” was christened because it simply felt right.
I recall a WPTF Board meeting in late 1998 when the Friday Burrito was first discussed as a membership benefit. I was interested in sending the copy to more than just members, but I’m not sure what began the conversation. However, Peter Bray cautioned the Board that the Burrito had value and should be considered as an important reason to join the association. I can recall this discussion clearly because I was shocked by Peter’s comment. To me, the weekly emails were primarily an attempt to rid myself of all the new information accumulated in a week’s time. I never considered that the communication could be of value to anyone else. Suddenly I had a following of readers and, yet, I had no experience in journalism or even writing of any sort outside of a classroom. This was a new career dimension that fit the mold of all things new in 1998. It found me. I didn’t go looking for it.
As the months and years progressed, the Friday Burrito evolved in many different ways. For example, a masthead picture was included in each edition. Eventually, I started to add titles, humorous in most cases, to spruce up the copy. The inclusion of stories probably first occurred in 1999, as did recipes of something that I cooked during the week. Why? Because when people would meet me at a conference or a CPUC meeting they would remember with clarity passages of personal vignettes, recipes, and blue stories whereas few could recount the technical material about which I wrote. The thought occurred to me that if that was what attracted readers, then I should continue to include the soft stuff because it opened the opportunity for wider and deeper discussions about the harder material … that is, the items that affected everyone’s business.
Another thing that surprised me was the growth in readership. My distribution list had increased, but I also noticed, based on informal chatter that readers at companies that were not WPTF members were regulars. There was an underground distribution that developed organically and amassed a hidden readership into the thousands. I had no idea who these people were. Also, members of the media began to take interest in the Friday Burrito. The first reporter to ask to be on my distribution list was at the San Francisco Chronicle before she moved to the Wall Street Journal, Rebecca Smith. I of course obliged her request and requested of her any guidance for an amateur writer such as I. She said, “Just keep doing what you are doing.” And that was the limit of her advice then and since. After Rebecca was added to the distribution of the Friday Burrito, about 30 other reporters have requested to be added, mostly because of the California Energy Crisis.
WPTF and the Energy Crisis
The Energy Crisis was big news not just in California, but across the country and internationally. Reporters and TV news media wanted reactions from marketers and market participants about the latest element of the crisis. The WPTF website led many reporters, radio station producers, and TV interviewers to me as a spokesperson for our outcast and highly maligned sector of the industry. My role was to provide a balanced reply that avoided the incriminating standard, “No Response.” This was truly an exercise in learning by doing.
The Burrito helped a lot, but it also caused problems. For example, some WPTF members didn’t like what I was writing about the market participants. One in particular, Duke Energy, complained to the WPTF Board. The Board Chair, Curtis Kebler, who had left the CalPX and joined Reliant Energy, called a special Board teleconference to discuss whether the Friday Burrito should cease or continue. The representative from Duke argued that it was time for the Burrito to cease publication. I proposed to include a disclaimer at the top of each edition so that it would be understood that the publication was mine and the opinions expressed do not necessarily represent the opinions of WPTF members. No one objected to this proposal, and that practice continues today.
The reason for sharing this story is to illustrate that the mood of the membership was jittery. Their business interests were on the line and federal prosecution for any number of alleged illegal actions was slowly becoming a reality. It was a difficult reality to comprehend for a market that was barely three years old and heading for an early grave. Further, what seemed to be a legitimate function in terms of managing procurement risk and stabilizing price volatility was being threatened by the public perception of greed by market participants. Heightening this growing unease, Enron waived attorney client privilege in the spring 2002 regarding the names applied to the trading strategies used by Enron traders. The infamous trading strategies were written in the Steve Hall memo that was written in December 2000. The tapes became public in 2004 because the Department of Justice (DOJ) released them to Snohomish PUD, a load-serving entity in Washington State that was trying to avoid a contract termination payment to Enron. Snohomish released the tapes as part of a public relations campaign associated with the civil litigation. DOJ was supposed to get Snohomish to sign a protective order to keep the tapes and its contents confidential, however an inattentive attorney in the DOJ’s San Francisco office forgot to do paperwork, and, thus Snohomish had no restrictions on what it could do. DOJ was unhappy that the tapes were released because it was “their” evidence in an active investigation.
If the bankruptcy of PG&E in 2001 caused a huge media uproar, and the bankruptcy of Enron in November of 2001 caused an even a greater reaction, then the publicly released Enron trader tapes blew the lid off this story in 2004.
Throughout 2001 and for several years thereafter, the DOJ became increasingly involved in the California Energy Crisis. At the direction of the DOJ, the FBI was sweeping into trade floors and seizing computers and documents for evidence of collusion to manipulate California’s energy markets. Lawsuits were flying in every direction. Senator Joe Dunn’s committee asked WPTF to voluntarily surrender copies of all of its communications and written materials, including Board minutes and all Friday Burritos so that the Legislature could examine whether energy market competitors were exchanging confidential information with the intent to manipulate prices. And of course, FERC was scrambling from Congressional members of the Western States keen to find a culpable party for California’s wholesale market meltdown.
Personally, I wasn’t sure if WPTF would survive the continued battering by the public given all the negative attention showered on the association and its members. By yearend 2002 I wrote in the Burrito: “So what was there to toast in 2002? It was a year of bitter refund litigation, aimless market redesign, and stinging publicly disclosed internal memos. It was a year of political maneuvering, low energy prices, and decreased investment. It was a year of technical workshops (a.k.a. FERC love ins), white papers, and dark news. It was a year of Justice Department guilty pleas, financial decline, and corporate embarrassment. It was a year of lost leadership, lost confidence, and lost jobs. The fact that we are standing at all is testament to something … most likely, our lack of job opportunities in other industries.
“The optimists among us, including me, will not give up. We are determined to make the Luddites espousing the good old days eat every word. We shall forge ahead and make progress even if (more likely when) it kills us. I always think about the quote of an industry expert who once said, ‘Some people think Regulators are 800-pound gorillas. Others think Boards of Directors are 2,000-pound gorillas. I’m here to tell you that markets are 200,000 pound gorillas.’ You gotta believe, baby, you gotta believe.”
Rebirth and Growth
I first observed the movement of commodity traders into the wholesale electricity space at a Western Systems Power Pool (WSPP) meeting in New York City in the autumn of 2005. There were over 200 attendees from the local area plus many Western utility representatives who were responsible for procuring electricity. This opened my eyes to the possibility of holding a New York City Chapter meeting. The first such was held in March of 2006. Over 70 people attended at the Manhattan offices of the law firm of Stroock, Stroock & Lavan. As I stated in the Burrito: “I commented that this meeting was the start of WPTF. Although we have been around for 8 years, young by trade-association standards, we have only made small steps to bridge the wide gap between regulators and traders. However, the presentations of the three guest speakers and the frank dialogue amongst our participants closed that gap as much or more than anything else we have attempted. The meeting set the right tone for future development of the new Chapter, and I am excited about the possibilities these relationships will provide to those of us pleading the case for competitive markets in California and the West.”
The success of the NYC Chapter meeting launched other chapters in Houston and the Pacific Northwest. It simply was easier to bring the key California people to those locations as speakers rather than expect the mass of energy traders, originators, and compliance officers to fly to California.
Both the infusion of new interest in wholesale electricity and WPTF outreach to the other regions helped boost membership. By 2005, WPTF had 42 members, by 2010 we had grown to 52, and by 2015, the association had expanded to 82 members. Membership has held steady since then.
The WPTF Committees
On the heels of the CAISO Committee, several Board members believed that Greenhouse Gas policies would be an important item for WPTF members to track in California. National policy development discussions and state-level discussions on proposals to tax GHG emissions were also expected. WPTF agreed to form a second committee under the direction of Clare Breidenich, a consultant with extensive experience in the GHG trading arena, but no experience in electric energy. Her diligence in learning about the power industry in depth gave her committee a substantial advantage in understanding how the nascent California cap-and-trade program might best evolve.
Four other committees were added over the years: Legislative (CA), WECC, Mexico, and Project Development Operations. In each committee, a recognized industry leader took the helm as lead consultant and furthered the appeal of the organization.