Greenhouse Gas Accounting in the Electricity Imbalance Market

Danny Cullenward submitted a comment to the California Independent System Operator (CAISO) on the Second Revised Draft Final Proposal concerning regional greenhouse gas accounting and the Electricity Imbalance Market (EIM).

I am very grateful for the attention CAISO and the EIM stakeholder community have given the question of GHG accounting in the EIM and commend CAISO for its leadership on this issue. In the Second Revised Draft Final Proposal, CAISO has decided to abandon the two-pass solution as a means of identifying the net GHG emissions attributable to serving California-based load via the EIM. CAISO cites internal and external stakeholder concerns regarding the potential for market participants to game the two-pass bidding structure, potentially distorting markets and resulting in inaccurate GHG accounting.

In response, CAISO has proposed an alternative mechanism for accounting for EIM GHG emissions. I take CAISO’s concerns seriously and agree that alternative approaches could work well to accurately identify the net GHG emissions attributable to California load. However, I believe the current proposal’s different treatment of fossil vs. zero-carbon resources raises both substantive policy concerns and legal risks that merit additional discussion. To address these concerns, I outline an alternative solution that retains CAISO’s basic approach but would instead rely on the California Air Resources Board (CARB) to retire allowances attributable to GHG emissions from secondary dispatch.

To read the full comment letter, please download the report (PDF).