Western Energy Markets Approves Use of Western Energy Imbalance Market Assistance Energy Transfers

The Western Energy Markets (WEM) Governing Body, in its vote under the California Independent System Operator's (ISO) independent governance structure, has approved the continued use of the Western Energy Imbalance Market (WEIM) Assistance Energy Transfers, or AET.

AET enables WEIM balancing areas to access energy transfers when they are short of sufficient capacity to meet demand. The feature was implemented in 2023 and helps balancing authorities to receive energy transfers through the WEIM when market rules restrict such transactions.

The AET, which included a sunset provision scheduled to take effect Dec. 31, 2025, has been used by WEIM balancing authorities. According to the action by the WEM Governing Body, the sunset provision is expected to be removed depending on the approval of the Federal Energy Regulatory Commission (FERC).

The Governing Body also approved a change regarding a surcharge applied to WEIM entities short on supply. As the new rule, the surcharge will not be applied if the energy transfers are made in coordination with a reliability coordinator to help maintain reliability of the grid.

The Governing Body meeting was held under the new governance structure under Step 1 of the West-wide Governance Pathways Initiative. Developed with a broad range of Western stakeholder support, the Pathways proposal aims to help improve independent governance of ISO electricity markets.

The Step 1 governance change was generated when the Public Service Company of New Mexico signed its implementation agreement to join the ISO’s Extended Day-Ahead Market in 2027.  Step 1 provided the WEM Governing Body primary decision-making authority over ISO markets, with those matters coming to the California ISO Board of Governors on a consent agenda, where the AET proposal was approved.

Step 2 of the Pathways Initiative is expected to develop a new independent regional organization to look after and approve proposals to change the tariff rules for the Western markets. Senate Bill 540, under consideration in the California Legislature, is predicted to help the ISO make the change necessary to support transition to an independently governed Western market if certain conditions are met to safeguard California’s interests. The bill will allow the ISO to administer the electricity markets overseen by the new entity and enable California utilities to participate in it.

Both of the approved assistance energy transfers proposals are required to be filed with FERC and will be effective immediately, provided the tariff changes are approved.