Energy Legal Blog

Pacific Northwest Grid Restructuring Proposal Fails, Utilities Vow to Continue On Without Bonneville

Following persistent delays and bickering, the nine utilities that originally proposed the formation of Grid West voted unanimously at a meeting on November 1 to reject a compromise proposal put forth by the Bonneville Power Administration ("BPA"), with six of those utilities promising to forge ahead with plans for a new regional entity without BPA.  While Puget Sound Energy and Avista Corp. have announced they no longer plan to participate in a regional organization, PacifiCorp, Idaho Power, NorthWestern, Sierra Pacific Resources, Portland General Electric, and the British Columbia Transmission Corp. insist they intend to regroup and continue their plans to develop an independent entity in the Pacific Northwest. 

Negotiations to form an independent entity in the region have been going on for several months.  The Grid West proposal was put forth several months ago by a number of investor-owned utilities and BPA.  The parties drafted bylaws for Grid West, but were careful to make clear that the organization would not be a Regional Transmission Organization ("RTO"), a concept that would have faced strong opposition from state officials.  The Grid West parties even sought a declaratory order from FERC that the proposed entity would satisfy FERC's requirements but would not necessarily have to qualify as an RTO.  Following FERC's conceptual approval of Grid West in July, a number of public power agencies and municipal utilities, among BPA's primary customers, formed a group called the Transmission Improvements Group ("TIG") and put forth their own counter-proposal to Grid West.  TIG's proposal flirted with limited improvements to the transmission grid, but stopped far short of placing grid operations in the hands of an independent board.  [See Negotiations Continue on BPA's Role.]  The Grid West parties and TIG appeared to be at an impasse, when in late October, Deputy Secretary of Energy Clay Sell wrote a letter to BPA encouraging cooperation in the region.  BPA, in turn, released a compromise, or so-called "convergence," plan that sought to marry the two fundamentally antithetical proposals.  BPA convened a meeting of interested parties on November 1 to gauge support for the convergence plan; however, during this meeting, BPA failed to garner any support for its proposal. 

Following the rejection of its compromise plan, BPA has pledged to continue talking with interested parties, and TIG has stated that it has further ideas about how to proceed.  The six remaining Grid West utilities plan to rewrite the Grid West bylaws, removing the provisions that concern BPA, and plan to contact other entities that may want to join a future initiative, inducting the Alberta independent system operator and Public Service of Colorado.  However, even if these Grid West faithfuls cohere, it remains to be seen how effective their organization could be without BPA's involvement, given its large share (by most counts, approximately 75 percent) of the transmission facilities in the Pacific Northwest.