CAISO, How It Pays for Lines, and the New Board Above Its Markets

CAISO started as California's grid operator. It became the West's market operator by accident of size. When it opened the Western Energy Imbalance Market in 2014, utilities from Oregon to Arizona joined because the savings were real. But every one of them was trading in a market whose operator answered to a board picked in Sacramento. CAISO's own leadership page shows how that works today: its Board of Governors, five members as of October 2026, includes Alice Reynolds, "appointed by California Governor Gavin Newsom" in February 2026.

That arrangement is the root of the fight covered here and in lesson 3. Utilities and regulators outside California liked the market. Many did not like the governance. The answer the region built is a new organization, the Regional Organization for Western Energy, or ROWE. Its first board was seated on September 30, 2026.

What CAISO is

The California Independent System Operator is a nonprofit that California's Legislature called into being. Assembly Bill 1890, the state's 1996 electricity restructuring law, required the ISO to be set up as a "separately incorporated public benefit, nonprofit corporation," according to a 2001 California Senate committee analysis. CAISO's own history notes that the federal Energy Policy Act of 1992 opened the door to independent system operators, and it dates its start to 1998.

The deal behind restructuring still shapes everything CAISO does. California's big utilities kept owning their high-voltage lines. They handed control of those lines to a neutral operator so any generator could reach any buyer on the same terms. So CAISO runs a grid that belongs to other people: PG&E, Southern California Edison, San Diego Gas & Electric, several city utilities and a string of independent transmission companies, each listed as a participating transmission owner in CAISO's rate sheets. Lesson 4 explains what that status means for rates.

Item	Fact	Source
Legal form	Nonprofit public benefit corporation under California law	AB 1890, per 2001 Senate analysis; Pub. Util. Code 340
Began operating	1998	CAISO
Area it balances	About 80 percent of California and a small portion of Nevada	CAISO planning overview
Size	26,000 circuit miles of transmission; 32 million consumers	CAISO
Markets	Day-ahead and real-time markets in its own area; operates the WEIM (since 2014) and EDAM (since May 1, 2026) for the wider West	CAISO; Western Energy Markets
Board	Five governors, appointed by California's governor and confirmed by the state Senate	CAISO; Pub. Util. Code 337
Federal regulator	FERC, for its tariff, wholesale market rules and transmission rates	CAISO; Federal Power Act section 205

As the balancing authority for its area (lesson 1 defines the term), it keeps supply and demand matched minute by minute. It runs the day-ahead and real-time wholesale markets that decide which power plants run and at what price. It operates the high-voltage grid it doesn't own, scheduling flows and handling outages. And it plans new transmission through an annual process covered in the next section.

The crisis that rewrote the board

AB 1890 created two bodies: the ISO and a separate California Power Exchange, where power was bought and sold. The original ISO board had 26 members, each seat assigned to a class of market interest. That design came apart in the 2000 to 2001 energy crisis. The Power Exchange filed for bankruptcy. FERC's December 15, 2000 order directed the ISO's 26-member board to hand decision-making to ISO management by January 29, 2001.

California moved faster than FERC. AB 5X, an urgency statute passed in January 2001, replaced the 26-member board with five members appointed by the governor and required them to be independent of any ISO market participant. The governor named all five on January 18, 2001, according to the same Senate analysis. Today's statute, Public Utilities Code 337, keeps that model: five independent governors, appointed by the governor, subject to Senate confirmation, serving three-year terms.

That is the core of other states' objections. A rule change approved by CAISO's board reaches a utility in Idaho or Arizona the same as one in Fresno, and only one state's governor picks the people voting. The tension is old. In November 1998, FERC ordered the ISO to drop AB 1890's California residency requirement for board members and the state oversight board's role in picking them, holding that the Federal Power Act preempted those requirements. California pulled the appointment power back in 2001, and it has held it since.

From California grid to Western market

The Western Energy Imbalance Market launched in 2014. It lets utilities outside CAISO buy and sell power in the real-time market every few minutes without handing over their grids. Idaho Power joined in 2018. CAISO's April 28, 2026 release counted 22 participants, with two more due in May, covering 80 percent of electricity demand in the Western Interconnection. The same release put total benefits since launch at $8.62 billion through the first quarter of 2026. Add the $459.71 million shown on the Western Energy Markets site for the second quarter and the running total passes $9 billion: 8.62 + 0.46 = 9.08. Those figures come from CAISO's own benefit calculations.

CAISO answers to Washington and Sacramento at once. FERC approves its tariff, its market rules and the transmission revenue requirements of the companies whose lines it runs, under section 205 of the Federal Power Act. California appoints its board and, under AB 825, collects an annual report on its market and transmission work. Utilities in the other Western states answer to their own commissions, which can approve or end their market participation but have no vote at CAISO.

How CAISO plans and pays for lines like SWIP-N

CAISO adds lines to its grid through its annual Transmission Planning Process, required by Section 24 of its FERC tariff. Each cycle looks for reliability needs, which keep the system within planning standards, public policy needs, mostly delivering the resources California's laws and regulators call for, and economic needs, where a line's savings beat its cost. CAISO's planning overview lays out the phases.

Phase	What happens	Timing
Phase 1	Assumptions and models set; study plan finalized; policy mandates for the cycle named. The CPUC supplies resource portfolios and the California Energy Commission supplies load forecasts.	About 3 months, January to March
Phase 2	Technical studies, request window for alternatives, at least four public meetings, draft plan posted, Board of Governors vote	About 12 months; board vote in May
Phase 3	Competitive solicitation for eligible new regional lines in the approved plan	Only when the plan includes eligible lines

The most recent plan, for 2025-2026, was board-approved 5 to 0 on May 19, 2026. CAISO's April 7, 2026 release of the draft listed 38 upgrades, about $7 billion at full buildout. The approved plan kept 38 projects, but CAISO's approval release says updated assumptions cut the total to $6.7 billion over the next decade, so use $6.7 billion for the final plan and $7 billion only when quoting the draft. Both releases list an import of over 10 GW of wind from Idaho, Wyoming and New Mexico, relying largely on out-of-state lines already in development, SWIP-North among them. SWIP-N came through this process as a public policy project. CAISO's May 14, 2025 comments at FERC say the board approved it as meeting "an identified public policy need," the delivery of roughly 1,000 MW of Idaho wind in the CPUC's portfolios, and found it the most cost-effective, timely and efficient way to meet that need. The board's conditional approval came on December 14, 2023, through Addendum 1 to the 2022-2023 Transmission Plan. That places SWIP-N in the 2022-2023 cycle, which the board had approved May 18, 2023 and then extended to finish the SWIP-N studies. The addendum estimated the line at $1,090 million and set four conditions: Idaho PUC approval of Idaho Power's case by September 30, 2024, a CPUC reaffirmation of Idaho wind in its 2024-2025 portfolios, Great Basin's commitment to join CAISO as a participating transmission owner, and FERC acceptance of Great Basin's tariff. Great Basin then applied to become a participating transmission owner. CAISO's board approved moving ahead on that application in the fall of 2024, after a September 27, 2024 decision memo.

The 2025-2026 plan also shows how CAISO's reasons for building have shifted. Its release says more than half the projects, and more than half the $6.7 billion, are driven by forecast load growth, where earlier cycles leaned on reaching cheap renewables. Utility Dive's May 26, 2026 report on the vote adds that California has less data center demand than some other Western and Mid-Atlantic markets. The growth comes from electrification, manufacturing and large loads together.

2025-2026 plan item	What the approval release says
Load growth (CEC forecast)	About 15 GW by 2035 and 20 GW by 2040
Installed capacity needed (CPUC)	More than 74 GW by 2035 and 107 GW by 2040
Resources the plan supports	45 GW solar in California, southern Nevada and western Arizona; 8 GW Tehachapi wind; over 2 GW geothermal; over 4.5 GW offshore wind; over 10 GW wind imports from Idaho, Wyoming and New Mexico
Named projects	Trout Canyon to Lugo 500 kV line; Tesla to Trimble to Metcalf 230 kV corridor expansion in the Bay Area; series compensation on the Gates to Los Banos #3 500 kV line
Reconductoring	12 projects, 3 of them with advanced conductors
Canceled	Serrano to Del Amo to Mesa 500 kV reinforcement in the Los Angeles Basin, approved in 2022-2023, replaced by smaller upgrades and more storage after new cost information
Held for next cycle	A new 500 kV line to relieve Path 15 congestion, pending more engineering

The canceled project is the useful precedent for Idaho readers. An approved CAISO line is not a finished line. When a transmission owner's cost estimate rose, CAISO went back and found a cheaper fix. Whether a SWIP-N cost increase would get the same second look is worth asking CAISO directly.

Where the money comes from: the Transmission Access Charge

Once a line is built and placed under CAISO's control, its owner files a transmission revenue requirement at FERC: the yearly amount, including return on investment, that it may collect. CAISO recovers those amounts through its Transmission Access Charge. Section 26.1 of CAISO's tariff says the regional access charge "shall be paid by each UDC and MSS Operator based on its Gross Load," meaning the utilities that serve customers inside CAISO's area pay it on every megawatt-hour their customers use. Power leaving or crossing CAISO's grid pays a matching Wheeling Access Charge.

The June 1, 2026 rate sheet shows the scale. Participating transmission owners' high-voltage revenue requirements totaled $3,233,492,029 a year, spread over 204,197,048 MWh of gross load, for a regional rate of $15.8352 per MWh. Great Basin isn't on that sheet yet; its revenue requirement starts flowing when SWIP-N goes into service. FERC's October 31, 2025 order in docket ER25-2025 accepted Great Basin's transmission owner tariff and formula rate, effective August 20, 2025, with a 9.8 percent base return on equity and a capital structure capped at 51 percent equity. Great Basin had first asked for 10.8 percent and 60 percent equity, and cut both after talks with the CPUC, the California Department of Water Resources and the Northern California Power Agency, which then withdrew their protests. FERC also granted abandoned-plant and regulatory-asset incentives and a 50-basis-point adder for joining CAISO, the adder taking effect once CAISO has operational control. It rejected arguments that the line no longer made sense after Lava Ridge.

The subscriber model, and why SWIP-N isn't under it

CAISO built a second door onto its grid in 2023. Under the subscriber participating transmission owner model, which FERC accepted March 12, 2024 in docket ER23-2917, a developer whose line was never picked in the planning process can still place it under CAISO's operational control. The difference is who pays. Subscribers, the buyers who sign up for the line's capacity, fund the whole cost, and FERC's order says no revenue requirement for those facilities goes into the Transmission Access Charge. Anyone else who uses the line pays a non-subscriber usage rate capped at the TAC.

SunZia shows the subscriber model at work. The 550-mile line, built to carry up to 3,650 MW of New Mexico wind to Arizona and the CAISO grid, with CAISO's share at 2,100 MW, has been energized and placed under CAISO's operational control, CAISO said in July 2026. Its costs are recovered through the subscriber agreement with the wind generator and that generator's power contracts, outside the Transmission Access Charge.

SWIP-N's CAISO block came in through the front door instead. It was approved in planning as a policy project, and CAISO told FERC that its ratepayers would be responsible for funding the revenue requirement on 77.169 percent of the line's total cost. In exchange, CAISO gets operational control of the same share of Great Basin's entitlements on SWIP-N and the One Nevada line: 1,117.5 MW southbound and 572.5 MW northbound, per Great Basin's application as described in CAISO's 2024 memo. Great Basin owns and maintains the towers and wire. CAISO decides how that capacity is scheduled and who gets to use it, under its tariff, the way it does for every other line it runs.

Who pays what

Piece of SWIP-N	Who pays	How it reaches a bill	Who decides
CAISO block, 77.169 percent of cost	Customers of utilities inside CAISO's area, mostly in California	Great Basin's revenue requirement flows into the regional Transmission Access Charge once the line is in service	FERC, on Great Basin's rates; CAISO, on scheduling
Idaho Power ownership, 250 MW northbound (about 11.4 percent)	Idaho Power, then its customers if the Idaho PUC allows	A future Idaho PUC cost-recovery case; Order No. 36874 made no prudence finding	Idaho PUC
Idaho Power's other 250 MW northbound, rights from GBT Northbound	Idaho Power, through payments under its agreements	Same future PUC case	Idaho PUC

The open questions for Idaho sit in the bottom two rows and in the seam between them. What will Idaho Power's owned share cost when it's finished, and what will the leased 250 MW cost each year? What happens if CAISO walks away? PUC staff said that if CAISO drops out, the agreements give Great Basin six months to present a plan to finish construction by October 1, 2029, or the participation agreement may be terminated. And Idaho has no seat where the biggest decisions about the line get made: CAISO's board, its planning process and the CPUC portfolios that justified the CAISO block. Idaho parties can file comments in CAISO's planning process like anyone else. They cannot vote.

The three steps

The West-Wide Governance Pathways Initiative grew out of a July 2023 letter from individual state utility commissioners asking for a way to expand Western markets under independent governance. A launch committee of utilities, public power, consumer advocates, generators, public interest groups and labor drew up a stepped plan. ROWE's site lays it out.

Step	What it does	Status as of October 2026
Step 1	Gives the WEM Governing Body primary authority over CAISO's real-time and day-ahead market rules	In effect since July 2025, per ROWE
Step 2	Creates a new independent organization to govern the markets, with CAISO continuing to operate them; required California legislation	AB 825 signed in September 2025; ROWE board seated September 30, 2026; tariff and contract not yet filed at FERC; target January 1, 2028
Step 3	Longer-term expansion of what the organization offers	No date

CAISO's February 2, 2026 news release on its first AB 825 report says the law "envisions transitioning market governance to a new regional organization after January 1, 2028." The law also makes CAISO report every year, by February 1, to California's governor and Legislature on market, tariff and transmission activity. California kept a reporting hook. Other states got a seat at an advisory table, which is the heart of the objection discussed below.

ROWE's first board

ROWE's September 30, 2026 release names five directors. The release describes each one's background:

Director	Background given in ROWE's release
John Di Stasio	Former president of the Large Public Power Council
Evelyn Kahl	General counsel and chief policy officer, California Community Choice Association
Paul Kjellander	Former Idaho Public Utilities Commission commissioner and its longest serving president
Deborah Smith	Member of CAISO's Western Energy Markets Governing Body; advisory committee at Pacific Northwest National Laboratory
Rebecca Wagner	Member of the Western Energy Markets Governing Body

No voter elected these five. No governor appointed them and no legislature confirmed them. A nominating committee drawn from the Pathways process picked candidates, and the ROWE Formation Board, a volunteer board, formally appointed them. That is how most RTO boards in the country are chosen, and it is the point of the design: no single state's politics controls the board. It also means no state's voters can remove a director.

Idaho has one notable connection. A former Idaho PUC president now sits on the board that will write the rules for the market Idaho Power says it leans toward joining. That fact proves nothing on its own. Ask what it means in practice when ROWE's rules come up.

What CAISO keeps

ROWE will govern. CAISO will still operate. The software, the settlement systems and the operating staff stay at CAISO in Folsom under a contract between the two organizations. CAISO also keeps its own California balancing area, transmission planning and interconnection work.

CAISO's board wrote to ROWE's new directors on October 5, 2026. The letter says CAISO supports "the process outlined in AB 825," proposes that the two develop "a shared conceptual framework" for their relationship, and points toward negotiating a full ISO-ROWE coordination agreement in 2027. It also says CAISO will announce organizational changes to separate its balancing and transmission roles from its market operator role. ROWE's site says the tariff amendments and the CAISO and ROWE contract will go to FERC only after a review process. So as of mid-October 2026, the agreement that defines how independent ROWE really is has not been written.

The case for and the case against

Supporters' strongest evidence is the money and the breadth of support. Six states' regulators signed an October 7, 2026 letter celebrating ROWE's seating and restating three goals: a broad footprint without seams, governance "independent, transparent, and representative of all Western states," and keeping the gains from the WEIM and EDAM. The signers were commissioners from California, Oregon, Washington, Nevada, New Mexico and Arizona. The markets' operator reports large savings; the Western Energy Markets home page showed $459.71 million in WEIM savings beside its second quarter 2026 benefits report, and $11.38 million for EDAM since its May 1, 2026 launch. Supporters argue a West split into two day-ahead markets leaves money on the table, and that ROWE gives non-California states more say than they have ever had over CAISO's markets.

Opponents' strongest evidence is the structure itself. The Bonneville Power Administration studied the Pathways path in 2025 and chose SPP's Markets+ instead, in a policy decision announced May 9, 2025. BPA's announcement cited a governance structure it said preserves the benefits of the federal hydro system and market design changes made through an independent process open to market participants. At that point the California legislation Pathways needed had not passed; AB 825 came four months later. Jeff Pierson's Feeding the Beast No. 4 adds the Idaho angle: California wrote conditions into its own statute, while Idaho's protections consist of the right to leave. No Idaho commissioner signed the October 2026 regulators' letter.

Where does the evidence point? On governance, both sides describe the same facts. ROWE is more independent of California than CAISO's board, and less independent than an organization that also ran its own operations. Which matters more depends on rules not yet written: the CAISO and ROWE contract, the dispute process, and who pays for what. That is where Idaho still has a say.