**Options Paper on**

**Financing an Enhanced Regional Electricity Function**

**10/1/04**

At their business meeting on June 20, Western Governors accepted CREPC's
recommendations to enhance the state/provincial regional electricity
function in the Western Interconnection and directed the Committee to
develop a plan for financing the recommended activities. Following is an
excerpt from the CREPC recommendations:

-   At this time, the West does not need the formality of an interstate
    compact, nor is there a need to transfer any state-level authority
    to a regional body. However, there is an urgent need to enhance the
    regional electricity function.

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-   This requires additional resources for states/provinces to act
    regionally to:

    -   Ensure quality analysis of the adequacy of resources to meet
        demand;

    -   Enable coordination among the states/provinces and the Federal
        Energy Regulatory Commission on monitoring Western electricity
        markets;

    -   Enable active state participation to advance regional
        transmission planning and expansion and ensure Governors' policy
        objectives are addressed.

-   To be successful, any enhanced regional electricity functions need
    the imprimatur of Western Governors.

-   Initial budget estimates range from \$800,000 to \$900,000 and
    cover: a small core staff and operating budget (\$435,000); funds to
    contract out technical work (\$250,000); and state/provincial travel
    funds (\$150,000).

-   Further support may be necessary to respond to possible federal
    energy legislation containing provisions on reliability or
    preemption of state transmission siting and permitting authority.

-   If federal energy legislation is enacted to establish mandatory
    reliability standards and grant the Federal Energy Regulatory
    Commission the power to pre-empt state electric transmission siting
    laws, then additional action is needed.

    -   Governors would need to create an interconnection-wide Regional
        Reliability Advisory Body.

    -   Additional resources would be needed to participate in the
        federal government's identification and designation of "national
        interest" transmission lines where state permitting authority
        would be pre-empted.

See Attachment A for the text of the report to Governors and
<http://www.westgov.org/wga/initiatives/energy/enhanced-electricity.pdf>
for the text and attachments.

CREPC's recommendations were based on the assumption that the major
portion of required work to enable a reliable and competitive wholesale
electricity system in the Western Interconnection would be conducted by
the Western Electricity Coordinating Council (WECC) and proposed RTOs
collaborating under the umbrella of the Seams Steering Group-Western
Interconnection (SSG-WI).[^1] This assumption may be wrong in the case
of SSG-WI. SSG-WI has been unable to secure a budget from its members
(California ISO, filing utilities for WestConnect, and filing utilities
from Grid-West) to maintain the current minimal level of activity.[^2]
It does not appear that SSG-WI or the proposed RTOs will be capable of
adequately implementing key functions such as interconnection-wide
transmission planning and market monitoring.

We are concerned that the necessary institutional infrastructure to
address the type of problems that occurred in the West in 2000-2001 is
not in place. The table below compares the institutional capabilities in
place in 2000 with those in place today.

***Institutional Landscape***

+-----------------------+-----------------------+-----------------------+
| 2000                  | End of 2004           | Comments              |
+=======================+=======================+=======================+
| Reliability Standards |                       |                       |
+-----------------------+-----------------------+-----------------------+
| -   No mandatory      | -   No mandatory      | -   No change between |
|     standards         |     standards         |     2000 and 2004     |
|                       |                       |     except for the    |
| -   WSCC              | WSCC RMS covers all   |     inclusion of some |
|     contract-based    | but nine control      |     new standards     |
|     Reliability       | areas                 |                       |
|     Management System |                       | -   No federal legal  |
|     (RMS) covers all  |                       |     backstop to       |
|     but ten control   |                       |     enforce           |
|     areas             |                       |     reliability       |
|                       |                       |     standards         |
+-----------------------+-----------------------+-----------------------+
| Resource Adequacy     |                       |                       |
+-----------------------+-----------------------+-----------------------+
| -   WSCC peak load    | -   WECC peak load    | -   No energy         |
|     assessment        |     assessment with   |     assessment (e.g., |
|                       |     sensitivity       |     generation        |
|                       |     analysis          |     capabilities in   |
|                       |                       |     drought)          |
|                       |                       |                       |
|                       |                       | -   No extreme        |
|                       |                       |     temperature       |
|                       |                       |     assessment        |
|                       |                       |                       |
|                       |                       | -   No documentation  |
|                       |                       |     of WECC load      |
|                       |                       |     forecasts         |
|                       |                       |                       |
|                       |                       | -   No regional       |
|                       |                       |     adequacy          |
|                       |                       |     standards         |
|                       |                       |                       |
|                       |                       | -   No state adequacy |
|                       |                       |     standards yet     |
+-----------------------+-----------------------+-----------------------+
| Market Monitoring     |                       |                       |
+-----------------------+-----------------------+-----------------------+
| -   California ISO    | -   California ISO    | -   No west-wide      |
|     market monitor    |     market monitor    |     market monitor    |
|                       |                       |                       |
| -   No FERC market    | -   FERC Office of    | -   No monitoring of  |
|     monitor           |     Market Oversight  |     bi-lateral        |
|                       |     & Investigations  |     contracts (which  |
| -   No price caps     |     (but w/o          |     are the vehicle   |
|                       |     sufficient        |     for all power     |
|                       |     resources for     |     sales outside the |
|                       |     detailed          |     CA ISO day-ahead  |
|                       |     west-wide         |     and real-time     |
|                       |     monitoring)       |     markets)          |
|                       |                       |                       |
|                       | -   No price caps (?) |                       |
+-----------------------+-----------------------+-----------------------+
| Transmission Planning |                       |                       |
| and Expansion         |                       |                       |
+-----------------------+-----------------------+-----------------------+
| -   WECC planning     | -   WECC planning     | -   No integration of |
|     process activated |     process activated |     sub-regional      |
|     in response to a  |     in response to a  |     planning efforts  |
|     proposed project  |     proposed project  |                       |
|                       |                       | -   No transmission   |
|                       | -   2003 SSG-WI       |     plan based on a   |
|                       |     high-level view   |     "realistic"       |
|                       |     of transmission   |                       |
|                       |     needs under       |  interconnection-wide |
|                       |     "bookend"         |     load and          |
|                       |     generation        |     generation        |
|                       |     scenarios         |     scenario          |
|                       |                       |                       |
|                       | -   RMATS phase I     | -   No new mechanism  |
|                       |     recommendations   |     to share costs of |
|                       |                       |     new transmission  |
|                       | -   STEP review of    |                       |
|                       |     transmission      |                       |
|                       |     expansion needs   |                       |
|                       |     between Palo      |                       |
|                       |     Verde and CA      |                       |
|                       |                       |                       |
|                       | -   New sub-regional  |                       |
|                       |     planning          |                       |
|                       |     processes started |                       |
|                       |     by NTAC and SWAT  |                       |
+-----------------------+-----------------------+-----------------------+
| Regional Institutions |                       |                       |
+-----------------------+-----------------------+-----------------------+
| -   WSCC (reliability | -   WECC (reliability | -   New WECC Board    |
|     only)             |     only)             |     but no            |
|                       |                       |     significant       |
| -   CREPC (info       | -   CREPC (info       |     change in         |
|     sharing)          |     sharing)          |     functions         |
|                       |                       |                       |
|                       | -   SSG-WI            | -   No change in      |
|                       |                       |     CREPC function or |
|                       |                       |     capabilities      |
|                       |                       |                       |
|                       |                       | -   SSG-WI has no     |
|                       |                       |     staff, almost no  |
|                       |                       |     budget and is on  |
|                       |                       |     verge of collapse |
+-----------------------+-----------------------+-----------------------+
| LSE Integrated        |                       |                       |
| Resource Plans        |                       |                       |
+-----------------------+-----------------------+-----------------------+
| -   Integrated        | -   New set of IRPs   | -   No                |
|     resource planning |     by IOUs in WA,    |                       |
|     moribund in most  |     ID, MT, OR, WY,   |  interconnection-wide |
|     parts of West     |     UT, NV, CO, BC    |     examination of    |
|                       |                       |     how adequate the  |
|                       | -   CA IOUs required  |     system is if      |
|                       |     to submit plans   |     loads and         |
|                       |     and allowed to    |     resources in IRPs |
|                       |     acquire resources |     are aggregated    |
|                       |                       |                       |
|                       |                       | -   Load and resource |
|                       |                       |     plans by most     |
|                       |                       |     public power LSEs |
|                       |                       |     and LSEs in NM,   |
|                       |                       |     AZ, AB are        |
|                       |                       |     unknown           |
+-----------------------+-----------------------+-----------------------+

In Vancouver, CREPC will need to agree on a recommendation to Western
Governors on financing an enhanced state/provincial regional electricity
function. We believe that CREPC's financing recommendation should also
explain to Governors the status of industry actions to address critical
interconnection needs.

Also on October 21 in Vancouver, CREPC will host a public meeting to
solicit feedback from stakeholders on the recommendations accepted by
the Governors and a proposal to finance an enhanced regional electricity
function.

CREPC's recommendations for financing an enhanced state/provincial
regional electricity function will be presented for gubernatorial action
at the Western Governors' Association's winter meeting in early
December.

[Financing Options]{.underline}

There are at least seven possible options for financing an enhanced
regional electricity function:

1.  State and provincial general fund appropriations.

> This option involves securing new appropriations from state/provincial
> legislatures and could be included in a PUC or energy agency budget.

2.  Redirect or increase existing PUC contributions to support a Western
    enhanced regional electricity function.

> This option includes redirecting existing PUC funds for multi-state
> electricity issues to a Western enhanced regional electricity
> function. This would be a decision under the control of each PUC. This
> option also includes new PUC monies.

3.  Pass-through funds from control areas (and ultimately consumers) via
    the Western Electricity Coordinating Council.

> This option involves increasing revenue collected by WECC and passing
> through the increased revenues to the state/provincial regional
> electricity function. This is the mechanism contemplated in pending
> federal reliability legislation for funding Regional Advisory Bodies.

4.  Joint PUC contracting funds to address specific regional issues.

> PUCs typically have funds available for outside contractors to address
> specific issues. PUCs could collaborate in the hiring of a contractor
> to address a particular need.
>
> 5\. A grant from the proposed and existing regional grid management
> organizations in the Western Interconnection (i.e., California ISO,
> Alberta Electric System Operators, Grid West, WestConnect, SSG-WI)
>
> This option involves a grant from SSG-WI and/or each proposed RTO.
> Such funds would come from users of the California ISO and Alberta
> grids and the WestConnect and Grid-West "filing utilities."
>
> 6\. A grant from the U.S. Department of Energy.
>
> This has been the predominant source of funds for CREPC's work over
> the past year. DOE has been willing to support CREPC's work in the
> Western Interconnection through 18-month grants that expire in early
> 2005. DOE's support for CREPC will change as agency priorities and
> funding change.
>
> 7\. A FERC approved-wires charge added to transmission tariffs.
>
> This option would require FERC to add a wires charge to existing
> transmission tariffs in the Western Interconnection and pass through
> funds to an Western enhanced state/provincial regional electricity
> function. It is unclear if FERC has the authority to do so.
>
> 8\. Use of contractors funded by FERC or DOE to conduct work needed by
> states/provinces to support an enhanced regional electricity function.
>
> This is the model under which DOE's Lawrence Berkeley Laboratory has
> been providing assistance to CREPC in the past year on demand
> response, market monitoring, LSE IRPs, and resource adequacy.
>
> 9\. Form an industry advisory committee that requires contributions to
> participate.
>
> This model has been used to fund electricity activities of the
> Southern States' Energy Board.

[Discussion of Options]{.underline}

One issue affecting the recommendation of revenue options is whether
funds from a source would be limited to any of the five topical areas
identified by CREPC: reliability, resource adequacy, market monitoring,
transmission planning and expansion, and transmission permitting.

**1. State Appropriations:** In many states, general fund appropriations
are used to support regional institutions, such as the Western
Governors' Association and the Western Interstate Energy Board. However,
given the current state of revenues in most states and provinces, it
would be difficult to secure additional support from state and
provincial general funds. General funds would be desirable because there
would be no limitation on activities that could be financed with such
monies.

**2. Redirect/Increase PUC Funds:** Presently, most of the state PUCs in
the Western Interconnection are financed by fees.[^3] From these funds,
PUCs help fund multi-state electricity activities nationwide. Existing
PUC funds could be redirected to an enhanced regional electricity
function or new monies could be raised. Like general fund
appropriations, the advantage of funding an enhanced regional
electricity function from such PUC revenues is that the funds could be
used for any or all of the five regional functions. The disadvantage is
that the burden of such fees would fall only on PUC-jurisdictional
entities. Other beneficiaries of enhance regional electricity functions,
such as public power, independent power producers, and marketers, would
not directly contribute. Another disadvantage is the potential free
rider problem if a state/province does not contribute.

3\. Joint PUC Contracting Funds: Presently PUCs have funds available for
outside contractors to address specific issues. These funds could be
coordinated and aggregated to address a regional electric power
issue.(e.g., hiring of a contractor to help develop a West-wide market
monitor). Such funds could be useful in addressing one-time issues, but
would not be considered a source of funds to sustain an enhanced
state/provincial electricity function to address the broad range of
regional issues. The advantage is that the hiring of expert outside
consultants is a regular practice and PUC budgets typically include
funds for such contracting. The disadvantage is that multiple PUCs would
have to negotiate their share of a contract and there can be freeriders.

**4. Pass-through of Funds Via WECC:** The Western Electricity
Coordinating Council is primarily financed by a fee assessed on control
areas determined by the control area's annual net energy for load
relative to net energy for load within the Western Interconnection.
Participation in WECC and payment of the fee is voluntary. At present
all control areas, except Avista, contribute to WECC. WECC could collect
a surcharge on its fees and pass through the revenues to a
state/provincial enhanced regional electricity function. The advantage
of this approach is that the cost would be borne by nearly all users of
the Western electricity system. In addition, the collection system is
already in place and would continue if federal reliability legislation
is enacted. The disadvantage is that it is likely that the funds from
such a grant could only be used for activities within the scope of WECC.

**5. Grant from Proposed RTOs/SSG-WI:** The four existing or proposed
regional grid management institutions (California ISO, Grid West (aka
RTO West), WestConnect and the Alberta Electric System Operator) could
individually or through SSG-WI provide a grant. The advantage of this
option is that many of the users of the grid would contribute and the
funds could be used for activities beyond those conducted by WECC (e.g.,
market monitoring, transmission permitting). The major disadvantage is
that two of the four entities, Grid West and WestConnect, do not
presently exist. Activities by these entities, including participation
in the Seams Steering Group-Western Interconnection, are dependent on
the willingness of "filing utilities" to provide funds. The filing
utilities do not include all entities within the geographic footprint of
Grid West and WestConnect. Additionally, SSG-WI has difficulty in
securing funds from Grid West, WestConnect and the California ISO to
finance its current activities[^4]. SSG-WI is not a legal entity and has
no staff. Similarly, WestConnect and Grid West are not legal entities
and have no staff.

**6. Grant from U.S. Department of Energy:** Many recent activities of
CREPC have been made possible by three grants from the U.S. Department
of Energy, one for exploring the value of a multi-state electricity
entity and two for work on transmission to enable increased wind
generation. Two of these grants expire in March 2005; the third expires
in 2006. In addition, DOE has provided CREPC with in-kind support from
Lawrence Berkeley Laboratory. Grants from the Department of Energy have
been extremely helpful in addressing regional electricity issues.
However, agency priorities can change rapidly and heavy reliance on DOE
grants does not meet CREPC's recommendation for a sustained source of
funding.

**7. FERC approved wires charge:** A wires charge added to all
transmission tariffs in the Western Interconnection that are filed with
FERC could be a source of revenue. This option requires further
investigation and may not be feasible under current law. In addition, it
is not clear how this option would apply to transmission owners and
others not under FERC jurisdiction. The advantage of this option is that
such revenues may be able to support all enhanced regional electric
power functions. The disadvantage may be that it cannot be implemented
under current law.

**8. FERC or DOE contractors:** In the past year, DOE has provided the
services of Lawrence Berkeley Laboratory to research issues of interest
to CREPC. LBL is spending about \$250,000 annually on this effort. A
number of CREPC members from states have also signed confidentiality
agreements with FERC that allows FERC's Office of Market Oversight and
Investigations to share general information on market performance. A
Western enhanced regional electricity function could expand its reliance
on DOE and FERC contractors to address issues important to the West.

**9. Industry advisory group to CREPC:** This option, which is analogous
to what the Southern States' Energy Board has done, would accept
contributions from companies in the electric power industry in exchange
for being named as members of an advisory committee. This option has the
advantage of generating revenues that can be spent on any of the CREPC
priorities. The disadvantage is that it may leave the impression of
preferential access to regulators by companies that pay to become
members of the advisory committee.

[Recommended Option]{.underline}

It is proposed that the enhanced regional electricity function be
financed by several sources of revenue. Over a two-year period, the mix
of resources would shift from reliance on grants and federal government
contractors to more sustainable funding by the users of the grid. Graph
1 shows the recommended phase-in of different sources of funds over the
next two years. It is noteworthy that unlike other regions (e.g.,
Midwest, Northeast), this proposal provides no contribution to an
enhanced regional electricity function by RTOs or the Seams Steering
Group-Western Interconnection. [^5] If funds are not available from the
sources shown, grants from DOE could be pursued to help bridge the gap
until the proposed revenue sources are in place.

![](media/image1.wmf){width="5.5in" height="3.401388888888889in"}

By comparison, the budget adopted for the Organization of MISO States
for the first six months of operation was \$500,000.

Graph 2 illustrates a proposed allocation of expenditures in six areas:

1.  Reliability

2.  Resource adequacy

3.  Market monitoring

4.  Transmission planning and expansion

5.  Transmission permitting

6.  Reporting to Governors and CREPC

![](media/image2.wmf){width="5.621527777777778in"
height="3.463888888888889in"}

The distribution of estimated expenditures among the activities and
sources of revenue are based on the following:

-   Reliability activities will be minimal until 2006 when WECC would
    have in place a pass-through mechanism. Until then, state/provincial
    participation in reliability activities will be limited to
    participation of Class 5 representatives on the WECC Board and the
    occasional state/provincial participant in a WECC committee meeting.
    Beginning in 2006, state/provincial participation in WECC committees
    would be substantially increased.

-   Resource adequacy work will steadily increase from \$50,000 in six
    months in 2005 to an annual total of \$250,000 in 2006 before
    dropping to a sustained funding level of \$100,000 annually. This
    expenditure trajectory assumes a more aggressive role for
    states/provinces in addressing resource adequacy issues. Once an
    acceptable and tested approach to measuring resource adequacy is in
    place in 2006, the level of activity on this topic would decline to
    a monitoring level. Revenue for this activity initially would come
    from a DOE grant, with core PUC funding and the Western Conference
    of Public Service Commissioners contributing in 2005. In 2006, all
    resource adequacy work would be funded via WECC pass-through funds.

-   Market monitoring activity in 2005 and 2006 would significantly
    increase as a west-wide market monitor is designed and implemented.
    Sustaining funding for activities of a west-wide market monitor
    (costing an estimated \$5-\$10 million annually) would come from
    company subscriptions, per the pending SSG-WI proposal. The funds
    shown in the graph are to enable states/provinces to participate
    effectively in the development of the west-wide monitor and,
    beginning in 2007, review the monitor's findings. Revenue for this
    function would initially come from a grant from DOE, core PUC funds,
    the Western Conference and PUC contract funds. The contract funds
    would be used to hire an expert consultant to assist
    states/provinces in the design of the market monitor. The PUC
    contract funds would be phased out at the end of 2006.

-   Transmission planning and expansion expenditures would grow over the
    period shown in the chart on the assumption that this activity will
    become increasingly important as the need for new generation
    resources becomes apparent. Note, however, that like all
    expenditures in the graphs, we presume the heavy lifting on
    transmission planning will continue to be done by industry through
    sub-regional transmission planning efforts and some type of
    interconnection-wide planning effort as a follow-on to SSG-WI's
    work. Over time, grants from DOE and WIEB funding would be
    supplanted by core PUC funding and WECC pass-through funds, under
    the presumption that by 2006 WECC will be conducting transmission
    expansion planning. If WECC is prohibited from doing transmission
    expansion planning, then funds would need to come from a successor
    to SSG-WI.

-   Permitting expenditures would initially come from a grant from DOE
    and WIEB, but over time the DOE contribution would be picked up by
    core PUC funding.

-   \$20,000 per year is allocated for reporting to Western Governors
    and CREPC. These funds would cover the bi-annual CREPC meetings and
    bi-annual reports to governors. The cost would be split between PUC
    core funding and WIEB.

ATTACHMENT A

June 2004 Report to Western Governors (less appendix)

**Report to Western Governors on an**

**Enhanced Regional Electricity Function**

**in the Western Interconnection**

**June 2004**

The causes and economic consequences of the 2000-2001 Western
electricity crisis that began in California and rippled across the
entire Western Interconnection are well-understood. The necessary steps
to avoid a future crisis, however, are not in place. The Western
industry is deeply divided about the value of Regional Transmission
Organizations and the appropriate role of the only existing grid-wide
institution, the voluntary Western Electricity Coordinating Council.
Many are skeptical about the wisdom and feasibility of remedies
advocated by the Federal Energy Regulatory Commission.

Since the crisis, Western governors have been the only effective
unifying force for improving the operation of our interconnected Western
electricity grid. Western governors provided the catalyst for
improvements in transmission planning and permitting. They have
recommended actions to protect the reliability of the grid and improve
the assessment of the adequacy of resources to meet demand.

However, the bridge to a reliable and economic Western electricity
system is fragile and in need of continuing gubernatorial attention. The
next step in strengthening the Western electricity system requires an
enhanced state and provincial regional electricity function that can
help implement the governors' direction through sound analysis and
active participation in grid management issues. In its current form, the
existing Committee on Regional Electric Power Cooperation of the Western
Interstate Energy Board's[^6] is not capable of providing the necessary
level of analysis and participation.

In December 2002, Western governors directed that the concept of an
enhanced state/provincial regional electricity function be explored. In
the fall and winter of 2003-2004, the Committee on Regional Electric
Power Cooperation undertook a bottom-up evaluation of the value of an
enhanced regional electricity function in five critical areas:

-   Reliability;

-   Resource adequacy;

-   Market monitoring;

-   Transmission planning and expansion; and

-   Transmission permitting.

In March, the Committee consolidated the findings from work groups in
each of the five areas into recommendations to Western governors. In
brief, the Committee found:

-   Continued progress in pro-active transmission planning is contingent
    on the voluntary efforts of a few companies and regular engagement
    of Governors; pro-active planning has not become routine.

-   The WGA Transmission Permitting Protocol appears adequate for
    coordinating permitting reviews of proposed interstate transmission
    lines, but has not yet been tested because no new interstate
    transmission line has been proposed since the Protocol was signed in
    2002.

-   At this time, [the West does not need the formality of an
    interstate]{.underline} compact, nor is there a need to transfer any
    state-level authority to a regional body.

-   [However, there is an urgent need to enhance the regional
    electricity function]{.underline}.

    -   This requires additional resources for states/provinces to act
        regionally to:

        -   Ensure quality analysis of the adequacy of resources to meet
            demand;

        -   Enable coordination among the states/provinces and the
            Federal Energy Regulatory Commission on monitoring Western
            electricity markets;

        -   Enable active state participation to advance regional
            transmission planning and expansion and ensure Governors'
            policy objectives are addressed.

    -   To be successful, any enhanced regional electricity functions
        need the imprimatur of Western Governors.

    -   Governors should establish a task force to examine options for
        sustainable funding of regional electricity functions.

    -   Initial budget estimates range from \$800,000 to \$900,000 and
        cover: a small core staff and operating budget (\$435,000);
        funds to contract out technical work (\$250,000); and
        state/provincial travel funds (\$150,000). Further support may
        be necessary to respond to possible federal energy legislation
        containing provisions on reliability or preemption of state
        transmission siting and permitting authority. By comparison, the
        initial budget for an analogous group established in 2003 in the
        Midwest called the Organization of Midwest Independent System
        Operator States is slightly less than \$1 million per year.

-   I[f federal energy legislation is enacted]{.underline} to establish
    mandatory reliability standards and grant the Federal Energy
    Regulatory Commission the power to pre-empt state electric
    transmission siting laws, then additional action is needed.

    -   Governors would need to create an interconnection-wide Regional
        Reliability Advisory Body.

    -   Additional resources would be needed to participate in the
        federal government's identification and designation of "national
        interest" transmission lines where state permitting authority
        would be pre-empted.

The Committee recommends that the Governors (1) accept the
recommendations, (2) direct that a process be established to solicit
stakeholder input on the recommendations, and (3) take action on the
recommendations at the WGA 2004 winter meeting.

Absent political leadership of Western Governors backed by improved
analysis and greater participation by state and provincial agencies, the
West will not be prepared to deal with a future Western electricity
crisis. That failure will set the stage for federally-imposed solutions
that may not meet the needs of the region.

Attachment B

**Recent Level of Effort on Regional Electric Power Issue**

Over the past year or so, CREPC's work on regional electricity issues
has benefited from three grants from DOE and in-kind support from DOE's
Lawrence Berkeley Laboratory. These grants started at different times
during the year. The graph below shows the estimated annualized level of
support for CREPC-related activities. Below the graph is a short
description of the activities under the three grants and the support
from LBL.

![](media/image3.wmf){width="5.622222222222222in" height="4.59375in"}

[Transmission for wind grant:]{.underline} WIEB was the recipient of a
\$125,000 transmission-for-wind grant from DOE through the Wyoming
Energy Office. It is estimated that the annualized expenditure under
this grant is about \$108,000. The bulk of the work has been spent
supporting the Rocky Mountain Area Transmission Study, including a
\$37,000 contribution to the cost of a project facilitator. Funds have
also been used to support CREPC's participation in SSG-WI transmission
planning activities.

[Wind grant:]{.underline} WIEB was the recipient of a three-year grant
to share information among states on wind-related developments.
Estimated expenditures on an annualized basis are \$67,000. Much of the
work under the grant relates to transmission activities, including
transmission barriers to wind development (e.g. discriminatory control
area practices, development of a "conditionally firm" transmission
product) and development of the National Wind Coordinating Committee's
annual western transmission workshop.

[Multi-State Entity grant]{.underline}: This \$275,000 grant from DOE
has provided funds to support the development of CREPC's recommendations
for an enhanced regional electricity function and much of the staff
participation in related activities, such as the WRAT's work on resource
adequacy, transmission permitting under the WGA transmission permitting
protocol, market monitoring, and WECC activities. It is anticipated that
the \$50,000 in consultant funds under this agreement will support
resource adequacy work. On an annual basis this grant has provided
\$150,000 of support.

[Western Conference of Public Service Commissioners:]{.underline} Over
the years, the Western Conference has provided \$12,000 in support for
CREPC. Last fiscal year no funds were provided. The annualized level of
support shown in the chart is \$6,000.

[WIEB dues:]{.underline} In the past year, WIEB dues (and meeting
registration fees) contributed \$38,000 to CREPC's work. This is lower
than in past years due to the availability of funds from DOE grants.

[LBL in-kind support:]{.underline} In the past year, DOE has funded
Lawrence Berkeley Lab to assist CREPC on regional electricity issues,
including market monitoring, resource adequacy, LSE integrated resource
plans, and a public database for transmission planning and resource
adequacy assessments. On an annualized basis, it is estimated that LBL's
in-kind contribution is about \$250,000.

Not reflected in the table are:

-   The in-kind contribution of the California Energy Commission to the
    natural gas adequacy modeling that will be input into electricity
    resource adequacy determinations; and

-   In-kind contributions of states/provinces on the issues above, Grid
    West development and WECC-related issues.

[^1]: For example, WECC's budget is approximately \$13 million annually.

[^2]: SSG-WI has primarily relied on volunteers to conduct its work in
    market monitoring, transmission planning, common system interface
    coordination, congestion management, and price reciprocity. A major
    product of SSG-WI has been in the planning area where PacifiCorp has
    provided the greatest in-kind contribution.

[^3]: The Arizona Corporation Commission and the New Mexico Public
    Regulation Commission are financed by general fund appropriations.

[^4]: For example, SSG-WI was unable to pay for printing of copies of
    the October 2003 SSG-WI transmission planning report, because the
    California ISO and WestConnect filing utilities were not willing to
    contribute to the cost. More recently, SSG-WI temporarily stopped
    funding the consultant facilitating SSG-WI's work on market
    monitoring.

[^5]: At present, RTO-like organizations only exist in California and
    Alberta. Additionally, SSG-WI has been unable to finance even its
    minimal on-going activities because many of the "filing utilities"
    and the California ISO are reluctant to continue to make financial
    commitments to SSG-WI. Some companies are beginning to consider a
    replacement for SSG-WI that would address commercial issues and
    include broader participation by companies than SSG-WI.

[^6]: The Western Interstate Energy Board includes all the states and
    provinces in the Western Interconnection. Its members are appointed
    by the governor or premier. Its legal basis is an interstate
    compact. The Board serves as the technical energy arm of the Western
    Governors' Association. The Board's Committee on Regional Electric
    Power Cooperation is comprised of interested state and provincial
    utility regulatory commissions, governors' energy agencies and
    facility siting agencies in the Western Interconnection. The
    Committee was established in 1984 and is a valuable forum for
    sharing information on issues affecting the Western grid. The
    Committee rarely adopts positions on issues. When it does it acts by
    unanimous agreement.