Imperial Irrigation District Energy Consumers Advisory Committee Agenda Report 71 TO: FROM: SUBJECT: ECAC Members Robert A. Laurie, assistant general counsel, Energy Report on the Matter of IID v CAISO DATE: August 3, 2015 Staff Recommendation/Motion: No action required. Financial Analysis: None Background: On July 16, 2015, the Imperial Irrigation District filed a legal action against the California Independent System Operator. The action was filed in federal court and includes allegations of anti-trust violations based upon the CAISO s abuse of its monopolistic powers to the detriment of IID. Legal counsel will present a summary of the case and the events leading up to the filing of the complaint.
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72 July 16, 2015 FOR IMMEDIATE RELEASE CONTACT: Antonio Ortega, (760) 604-1092 IID files antitrust lawsuit against CAISO SAN DIEGO, Calif. The Imperial Irrigation District today filed civil litigation in U.S. District Court, Southern District of California, against the California Independent System Operator Corp. for its deliberate and systematic marginalization of IID, its ratepayers and all renewable energy generators seeking to develop projects in the district s service area. Through its actions over many years, CAISO has exercised its monopoly power to manipulate the import capability values, or deliverability, it assigns to IID to stifle competition, create uncertainty in the marketplace and effectively take over IID s energy balancing authority area. IID takes no pleasure in turning to the courts to obtain relief from CAISO s anticompetitive practices toward the district in doling out access and deliverability to its transmission grid, said IID General Manager Kevin Kelley, but we have been left with no other recourse. CAISO, which controls at least 80 percent of the state s electric transmission system, has placed IID and its renewable energy generators at a competitive disadvantage in vying for power purchase agreements. The result, Kelley said, has been to saddle IID s ratepayers with stranded transmission investment costs and handcuff economic development in both Imperial and Riverside counties. By using the concepts of resource adequacy and maximum import capability interchangeably, CAISO has blocked access to renewable energy projects interconnecting to IID s transmission grid. The dispute between the agencies extends back to 2011, when CAISO approved IID s upgrades to the Path 42 project that would send clean, renewable energy from Imperial and Riverside counties to the rest of California. IID subsequently expended nearly $35 million in completing its segment of the project. However, in the summer of 2014, CAISO used the loss of San Onofre Nuclear Generating Station as a pretext for reducing future deliverability from IID into the CAISO system to zero, stranding the district s investment in the Path 42 project and leaving it with no practical means of recovering its costs, other than to join the CAISO as a participating transmission owner. Imperial County has long been recognized for its vast renewable energy resources; at the same time, its unemployment rate is triple that of the state average, which is why county leaders naturally look to California s green economy to bring about positive change. Our region has and will continue to play a vital role in helping the state meet its clean energy goals, said Ralph Cordova, the county s executive officer. IID s ability to deliver green power is critical if we are to further develop our resources.
The abundance of renewable energy resources found only in this region will go untapped, Kelley said, if CAISO continues to manipulate the deliverability it assigns to IID. For more information or to view a copy of the legal brief, please visit www.iid.com/caisoaction (30) 73
SUMMARY OF CIVIL ACTION AGAINST THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR 74 CAISO has used deliverability to isolate and punish IID In its dealings with the Imperial Irrigation District, CAISO, which controls at least 80 percent of California s electric transmission system, has acted as a monopolist and violated antitrust laws. By its actions over many years, CAISO has placed IID and its renewable energy generators at a competitive disadvantage in vying for power purchase agreements. CAISO encouraged IID to spend nearly $35 million in upgrades to its transmission system for the express purpose of sending renewable energy from Imperial and Riverside counties to the rest of the state, then, in 2014, said, Never mind. CAISO has been using the IID grid, without permission or compensation, to import carbon-based generation from Arizona into Southern California. CAISO has no respect for IID s business model or its independence As California s third largest public power provider, IID s residential energy rates are among the lowest in the state. By contrast, the rates offered by neighboring utility and CAISO member San Diego Gas & Electric are among the highest in the nation. Through its manipulation of maximum import capability, CAISO has engaged in a deliberate and systematic effort to crush IID and take over its energy balancing authority area. In 2014, CAISO used the loss of San Onofre Nuclear Generating Station as a pretext for reducing future deliverability from IID into the CAISO grid to zero, stranding assets, stifling competition and attaching a cloud of uncertainty to the district s continued viability. In 2011, CAISO employed a bait-and-switch in approving IID upgrades to Path 42, enticing the district to spend nearly $35 million to increase transmission capacity and with it deliverability of renewable resources from Imperial and Riverside counties. IID completed its upgrades to Path 42 in January 2015 but has no practical means of recovering its investment unless it surrenders its balancing authority area and joins the CAISO. IID stands ready to partner in meeting California s clean energy goals Earlier this year, Gov. Brown unveiled a series of ambitious clean energy goals, chief among them an increase in renewable energy use from the current 33 percent to 50 percent by 2030. The Desert Renewable Energy Conservation Plan estimated that the Imperial Valley s overall renewable energy generating potential is at a minimum 10,000 megawatts. The Salton Sea Known Geothermal Resource Area itself possesses an estimated 1,700 megawatts of virtually emissionfree geothermal energy that could potentially replace energy lost at SONGS and future losses from once-through cooling power plants. The abundance of renewable energy resources found only in this region will go undeveloped if CAISO continues to manipulate the deliverability it assigns to IID. Without immediate action and/or intervention, IID, its ratepayers and renewable energy generators looking to build projects in Imperial and Riverside counties will remain isolated from the rest of California. CAISO s actions, as outlined in IID s complaint, are not only deceitful, they violate antitrust laws and have resulted in direct harm to IID.
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75 IID-CAISO Complaint Presented to Energy Consumers Advisory Committee Imperial Irrigation District v. California Independent System Operator Corporation Presented by Bob Smith 1
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77 The Parties IID is the Plaintiff CAISO is the Defendant 3
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