Seeking to modify its open-access transmission tariff, Puget Sound Energy (PSE) has filed with federal and state regulators to join the Western energy imbalance market (EIM) on Oct. 1.
The utility filed with FERC on Feb. 10, and the Washington Utilities and Transportation Commission (UTC) on Feb. 11, listing benefits of enhanced integration of renewable resources, less generation reserves needed due to power transfers from other EIM participants and reduced curtailment of renewable resources.
The “flexibility reserve benefits” include a scenario where 300 MW of real-time transfer capability is available through the EIM, PSE said in both filings.
The EIM, which is administered by the California ISO (Cal-ISO), balances supply and demand in multiple balancing authority areas (BAAs) in the West and enhances efficiency in the dispatch of generation to meet demand, including improved access to renewable resources in several states, the Cal-ISO has said.
PSE in 2015 became the third utility to announce its intent to join the EIM, after PacifiCorp and NV Energy. PSE told FERC that its decision “was based on extensive internal due diligence and was informed by the benefits realized by PacifiCorp from the outset of the market, as well as the significant benefits predicted by a consultant’s independent analysis.”
Those benefits include roughly $18m in savings from sub-hourly dispatch of generation and $9.1m in savings related to PSE’s ability to locally balance wind generation currently balanced in an external BAA, it said in the FERC filing. The reduced curtailment of renewable resources both within and outside of PSE’s BAA would amount to $0.8m per year.
“These benefits are expected to contribute to significant savings for consumers in Washington State,” PSE told FERC.
The savings from reduced power costs would flow to retail customers through PSE’s rate case process, a PSE spokesperson told TransmissionHub Feb. 17.
“These financial benefits are in addition to the reliability benefits for our customers and our region,” the PSE spokesperson said.
In its filing with the UTC, PSE said it engaged in extensive discussion with stakeholders and took their feedback into account when making its tariff revisions. That included a limited number of customers who choose alternative power suppliers and are retail wheeling customers of PSE, the utility noted.
Under the revised tariff, all PSE transmission customers, including those with retail wheeling contracts, would receive equal treatment as PSE participates in the EIM, the utility told the UTC.
PSE noted that under an agreement previously approved by the UTC, the utility’s retail wheeling customers currently pay for energy imbalance service using an index price at the Mid-Columbia trading hub, and it is proposing to revise the pricing to be consistent with its other transmission customers. The utility worked with an industrial customer group and the retail wheeling customers to reach a consensus on the pricing terms it said, asking the UTC to modify its orders associated with the earlier agreement.
PSE asked the UTC to act on its petition before April 15, which would signal to FERC that the state regulators agree that the retail access customers should be treated the same as PSE’s other transmission customers once financially binding EIM participation would begin on Oct. 1.
The first entity outside the Cal-ISO footprint to join the EIM was PacifiCorp, with NV Energy beginning participation in December 2015, while PSE and other utilities are looking to join in 2016 and 2017.
PacifiCorp and NV Energy are subsidiaries of Berkshire Hathaway (NYSE:BRK). Other utilities looking to join the market include Arizona Public Service, a subsidiary of Pinnacle West Capital (NYSE:PNW), and Portland General Electric (NYSE:POR). IDACORP (NYSE:IDA) subsidiary Idaho Power is considering joining the EIM after deciding last September to withdraw from participating in the Northwest Power Pool’s effort to form a voluntary generation dispatch market in the region.
Other utilities have expressed an interest in joining the EIM, and “it is an exciting time in the West,” PSE told FERC.
“The benefits currently enjoyed by EIM market participants will only be increased through broader participation as a greater diversity of loads and resources are integrated through [Cal-ISO’s] economic dispatch,” PSE said.
The EIM that PSE would join on Oct. 1 would include load in eight states “and envelop roughly half of the load in the Western Interconnection,” PSE said, noting that it plans to begin testing and market simulations in July to ensure a smooth transition toward October participation.
The Cal-ISO had filed, and FERC approved on May 19, 2015, an implementation agreement for PSE, which contemplated a memorandum of understanding (MOU) with the Bonneville Power Administration (BPA) for PSE to utilize its existing BPA transmission rights in the EIM, the utility told FERC. Since then, BPA has determined that the MOU is not necessary, but discussions with BPA about dynamic transfer limits and transmission use in the EIM are ongoing, including a stakeholder process BPA initiated in January to work through operational issues associated with other potential EIM entities joining the market.
“The stakeholder process timeline contemplates completion well before PSE’s implementation date” and prior to the testing and market simulation period, PSE told FERC.