California Grid Operator Expands Into Nevada

Pahrump, Nevada, newest territory on California's grid | Photo: Mike Fischer/Flickr/Creative Commons License

The California Independent System Operator (CaISO), the non-profit corporation that manages 80% of California's power grid, has done something it hadn't done before since it was established in 1996: It's expanded across the state line. In 2013, CaISO will take over transmission grid operations for the Valley Electric Association, a public-owned utility based in Pahrump, Nevada.

CaISO's expansion into the Pahrump Valley is driven by construction of the 500-megawatt Hidden Hills Solar Project, proposed for just across the state line from Pahrump near Tecopa, California. The expansion will allow power from Hidden Hills to be sold to Pacific Gas and Electric (PG&E) without leaving the CaISO system, by way of a VEA transmission line between the Pahrump area and Southern California Edison's Eldorado Substation south of Las Vegas. It will also allow California ratepayers to foot the bill for the costs of that new transmission.

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What is...? The Grid

Explainer: Renewable Portfolio Standards
The CaISO expansion has been in the works for some time: the ISO and the Nevada utility drafted a Memorandum of Understanding in August 2011. Last week's announcement that VEA -- along with Colton's public utility -- had been approved to join CaISO was the end of a somewhat drawn out regulatory overview process of the new partnership.

Without the agreement, power PG&E bought from Hidden HIlls would have been much harder to credit toward the utility's Renewable Portfolio Standard requirements. Under the RPS law, California's investor-owned utilities must derive 33% of their power from renewable sources by 2020. Due to the complex nature of electrical power trades between CaISO and other grid operators, counting Hidden Hills power toward RPS goals would have required grid operators to use a process called "dynamic transfer," which most grid operators are reluctant to do as it is expensive and complex even by the arcane standards of grid operation.

So without CaISO expanding into VEI's corner of Nevada, Hidden Hills' owner BrightSource Energy would have had to either push for transmission across many miles of desert on the California side, including Death Valley National Park; sell power to the much smaller Nevada market, or compete with other generators in California without the advantage of the RPS incentive.

This point has been far from lost on BrightSource, which has been pushing for the ISO expansion. Clay Jensen, BrightSource's senior director of project development, spoke effusively about the benefits of a CaISO partnership at the VEA's annual meeting this past April. As reported in the Pahrump Valley Times;

"Without this move, having renewable energy, connected renewable energy built in this area to serve California, I'm not going to say it's impossible, but it would be very difficult," Jensen said. "It allows system costs to be shared by system users, joining the CAISO allows for network upgrade costs. Those are the costs of upgrades that have to be done to the system to enable the new generator to get to market and the California rate base. It allows for sharing of those costs with the entire California rate base. This provides huge opportunities for building upgrades by having those that benefit from the power, PG&E in California, in this case with Hidden Hills, actually contributing to the cost of those network upgrades." [Emphasis added.]

The ISO expansion may have been prompted by Hidden Hills in California, but a number of proposals for solar power generation on the Nevada side of the line stand to benefit at well. VEA's service territory stretches from Sandy Valley, a few miles northwest of BrightSource's Ivanpah Solar Electric Generating System, to the sparsely populated southern corner of Nevada's Mineral County due east of Yosemite. Some Nevada solar and wind development plans have been stymied by California's RPS reporting requirements, having VEA join the California grid may well prompt a rush of proposals for solar projects along the western edge of Nevada, in a land that plenty of sunshine reaches but the California Environmental Quality Act does not. Though much of that territory is ill-served by transmission, building new lines will be a lot easier if California ratepayers cover the costs.

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