Western EIM benefits gain in 4Q15 on NV Energy addition, Cal-ISO says

Even with a transmission outage that hindered transfers of power for more than one month in 4Q15, the Western energy imbalance market (EIM) produced benefits of about $12.3m during the quarter, with the addition of NV Energy in December 2015 contributing to that total, the California ISO (Cal-ISO) said in a Feb. 1 report.

The report broke down the benefits by month, with about $2.5m for October 2015, about $3.5m for November 2015 and about $6.3m for December.

The 4Q15 benefits pushed the total benefits since the EIM began operations outside the Cal-ISO region on Nov. 1, 2014, to about $45.7m, the Cal-ISO said.

The first entity outside the Cal-ISO footprint to join the EIM was PacifiCorp, with other utilities looking to join in 2016 and 2017.

The expansion of the EIM, with NV Energy joining on Dec. 1, 2015, improved benefits through increases in transfer capability between the EIM participants, the Cal-ISO said in a Feb. 1 statement. The interregional transfers allow each balancing authority area (BAA) to take advantage of lower-cost resources in other areas, Cal-ISO said.

The lower level of benefits in October was mainly driven by a transmission line outage that started on Sept. 15, 2015 and ended on Oct. 30, 2015, with the outage causing the transfer capacity from the PacifiCorp East area to PacifiCorp West area to drop from 200 MW to zero, the report said. The line’s return to service in late October contributed to the higher approximately $3.5m EIM benefit in November, according to the report.

The outage was on the Mid Point – Hemmingway – Summer Lake transmission line that connects the PacifiCorp eastern BAA with its western BAA, a PacifiCorp spokesperson told TransmissionHub Feb. 2. The line was out of service due to maintenance for that period, he said.

NV Energy was pleased to join the EIM and the report “validates many of the assumptions we had about the benefits of our participation to our customers,” a spokesperson for NV Energy told TransmissionHub Feb. 2.

Although the report only reflects one month of EIM operations for NV Energy, “we believe it demonstrates the value of continual transmission system expansion in the West,” the NV Energy spokesperson said.

The EIM balances supply and demand in multiple BAAs and enhances efficiency in the dispatch of generation to meet demand, including improved access to renewable resources in several states, the Cal-ISO said. The benefits listed in the report fall into three categories; more efficient dispatch in the 15-minute and real-time dispatch markets, reduced curtailment of renewable resources by allowing BAAs to export or import such resources when they would otherwise need to be economically curtailed, and a lower level of flexibility reserves needed in all BAAs.

The report did not break down the dollar amount for each benefit category, but said that the transfers across the BAAs provide lower supply costs for participants and was a significant contributor to the benefits. The transfer volumes are a good indicator of the level of benefits attributed to the EIM, the report noted.

Besides the benefits from transfers, savings were realized by EIM participants in avoiding the reduction of renewable resources during times of oversupply, the Cal-ISO said. The avoided curtailment of renewable resources during 4Q15 was 17,573 MWh, which represented a jump from the 828 MWh of avoided curtailment during 3Q15.

The report did not provide a reason for the large gain, although the report on 3Q15 EIM benefits noted that avoided curtailments were less than the previous quarter because there were fewer transfers from the Cal-ISO to PacifiCorp because of higher prices in the Cal-ISO area.

The environmental benefits of the avoided renewable curtailments in 4Q15 was an estimated 7,521 metric tons of carbon emissions, the Cal-ISO said, adding that it does not quantify those benefits in dollar amounts.

Similarly, the lower level of flexibility reserves needed was calculated for each month, but dollar amounts were not provided because the savings are tightly integrated with real-time dispatch operations, the Cal-ISO said. The report listed the “flexible ramping procurement diversity savings” at 83 MW in October, 179 MW in November and 261 MW in December.

The savings were lower in October because the PacifiCorp East area could not share flexible ramping resources with other EIM regions during the transmission line outage, the Cal-ISO said.

PacifiCorp and NV Energy are subsidiaries of Berkshire Hathaway (NYSE:BRK).

Besides those current EIM participants, other utilities looking to join the market include Arizona Public Service, a subsidiary of Pinnacle West Capital (NYSE:PNW), and Puget Sound Energy. Both of those utilities have signed agreements with the Cal-ISO to participate in the EIM starting next October, while Portland General Electric (NYSE:POR) signed an agreement to participate in the EIM starting Oct. 1, 2017.

In addition, 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.

“We still anticipate making a final decision about participation” in the EIM during 1Q16, an Idaho Power spokesperson told TransmissionHub Feb. 2.

When Idaho Power said it was leaving the Northwest Power Pool effort, it asked the group to “leave on-ramps available for future participation” in case it decides not to join the EIM.