Roger Gray

The following is what the Northwest needs, in my best judgment, to successfully navigate from the 20th century to the 21st, while meeting the essential goals our customers have for a modern power system—that the power delivered to them is cost-effective, reliable and cleaner.

Resource adequacy standards

We need to develop and agree to a set of objective standards that transcend jurisdictions (i.e. multiple federal, state and perhaps even Canadian provincial authorities) and entities (IOUs, consumer-owned utilities, federal agencies, community choice aggregators and others).

RA should be a common set of nonpolitical technical standards we can agree upon to meet reliability objectives. The fact utilities are electrically interconnected and can cause reliability problems for each other calls for wider standards. Maybe RA standards begin as voluntary, but ultimately they should be binding on us all.

I suggest we get going because if we wait for a blackout we'll likely get government-mandated standards, which may or may not actually address the problem. This problem is already upon us and utilities, policymakers and regulators should be taking immediate steps to close this gap.

EIM and similar market tools

The Western EIM is an innovative market solution, and its expansion and success reflect the benefits participating utilities perceive. I think of the EIM as a "virtual balancing authority" because it fundamentally captures the benefit of load and resource diversity that would otherwise only be captured by a larger "wide-area" balancing authority area, without taking on the institutional and political issues BA consolidation would create. Call this "BA Light."

Regional Transmission Organization and Independent System Operator

I acknowledge that these have been "four-letter words" in the Northwest and past attempts to create a Northwest solution have failed badly, leaving many participants with long-lasting and poorly healed scars. The various Northwest RTO/ISO efforts did not fail because of technical and economic reasons. I believe they failed due to cultural and institutional reasons, including a working assumption that consensus was required while giving everyone at the table veto power.

The reality is that more coordination of transmission and power market operations are going to be essential to the future of the Northwest. Our Balkanized BAs in the West make no technical or economic sense, outside of the original context of how they came to be. Coordinating and moving massive amounts of variable renewable power around the West is going to be critical to cost-effective and reliable operations and a Balkanized grid is not going to allow that to happen. We are going to need more large interregional transmission lines to move large amounts of renewable power around the West, but also to help maintain a reliable grid.

We should not wait to see whether the California Legislature will ever be open to letting the California ISO evolve into a multistate RTO/ISO. I suspect we'll see a Republican governor again in California before we see that! In the meantime, I think if enough Northwest utilities, supported by state regulators and public-power governing boards, commit to a Northwest RTO/ISO it could happen. Three-quarters of the country is served by an RTO or ISO, including PJM dating back to the 1920s. For goodness sake, it is not that difficult.

In addition to the essential element of dealing with the increased need for transmission, I think the organized market element of an RTO/ISO is equally important. For example, many Northwest electric utilities' integrated resource plans and the Northwest Power and Conservation Council's latest regional plan show a clear need for demand response/demand management. An organized market allows DR/DM to be developed locally, while providing access to a broader market with much greater revenue potential.

As we continue to bring on more variable renewable generation, creation of and access to variable load is going to be even more important. We need to catch up on DR/DM. Two of my favorite resources from past energy-industry positions were interruptible load and pool pumps. I did not use them much, but when I did I was always happy they were available. They absolutely reduced costs and helped keep the lights on for the customers we served.

Capacity and capacity markets

As discussed above, a first step might be a resource adequacy standard, but the next step is a mutually binding commitment to RA and a market or institutional structure to deliver it.

I support more renewable power and decarbonization. However, I truly am worried we have a significant looming capacity shortfall.

Batteries are not there yet in terms of economics or scale. Pumped hydro storage is technically viable, but it is not cheap, and it is not deployed quickly either. However, two pumped-storage proposals totaling about 800 MW in the Northwest could be on line by 2025.

Solar and wind are great resources, but we still need dependable and dispatchable capacity with energy that ideally is carbon-free. Advanced nuclear options appear to be in the range of technical and economic viability; however, if such resources are only compared on dollars per megawatt-hour, we will fail to understand and address our challenge

Many hydroelectric generation operators have decried for years the lack of compensation for the capacity they provide the region and the West. However, absent enforceable RA standards and an organized market under an RTO/ISO, there is no institutional mechanism to support capacity markets and cost-recovery of any resource that provides capacity and reliability to the region.

There is a growing and, I believe, critical need for capacity, and yet no institution and mechanism exists to build and deliver it or pay for it. Fundamentally, you can use rules (e.g. RA and capacity markets) or pure economics (i.e. let prices go to $9,000/MWh, like Texas does). Either or both can work, but we have neither here in the Northwest.

For both political and economic reasons, there is going to be little or no motivation to keep the legacy coal and gas fleet around. They are the "bête noire" of our industry in the minds of many we serve. For our future power system to be successful in terms of reliable, cost-effective and clean power, we may need these plants around for reliability reasons only.

Conceptually, they would only dispatch when the lights would otherwise go out. However, no owner of these plants is going to keep them around without the political, regulatory and economic "air cover" and ability to reasonably recover costs. We are literally on the verge of closing these plants and once they close the workers move on, the plants decay quickly, then are decommissioned, and are gone forever.

In closing, I think we are facing a serious reliability problem. The Northwest utility industry cannot allow this discussion to sound anti-renewables or anti-progress. Rather we need to embrace the wind and solar revolution and show how we can successfully incorporate them in a more reliable, cost-effective and cleaner electricity future for our customers. More renewable power is coming. That is a great thing. Now we need to put in place the operational and market tools to deliver on the promise of a 21st century power system in the Northwest.

We need to figure out real solutions quickly, though, and stop accepting near misses and continue to ruminate on studies predicting a serious loss of reliability. Real solutions are going to require different thinking, tough decisions and coordinated, joint actions. Or we can just count on unicorns and glitter.

Right now, it feels to me like we are relying on unicorns and glitter. I still own the generator I bought in California back in 1996 after electric-industry deregulation passed. I hope I don't need it again.