The Western Energy Imbalance Market’s (EIM) economic benefits include a more efficient and automated dispatch of resources, Don Fuller, director, Strategic Alliances at the California ISO (Cal-ISO), said on June 28, noting that other benefits involve regional cooperation in terms of reducing renewable curtailments.
As noted in his presentation, which he delivered during a panel titled, “Regional planning dynamics play out in the West,” as part of TransmissionHub’s TransForum West event in Denver, the Cal-ISO began tracking avoided curtailment since April 2015, and carbon emissions were reduced by 55,114 metric tons since NV Energy joined the EIM in November 2015.
Fuller noted that PacifiCorp and NV Energy are participating in the EIM and “we have both Arizona Public Service and Puget Sound Energy on schedule to go operational Oct. 1 of this year, followed next year by Portland General Electric, and then” in 2018 by Idaho Power.
He also referenced the recent announcement by the Los Angeles Department of Water and Power about its intent to pursue the EIM, “so, we’re working with them also.”
As TransmissionHub reported, in the first full quarter with NV Energy as a participating member of the EIM, benefits of the EIM were $18.9m during 1Q16, the Cal-ISO said May 2.
Fuller also addressed governance structure matters. As noted in his presentation, through a public stakeholder process, a committee developed a long-term structure for EIM governance. The proposal elements are:
- Five independent – non-stakeholder – members
- Delegated authority over EIM-related market rules
- Candidates selected by a stakeholder nominating committee, approved by the ISO Board
- Body of state regulators to advise the EIM Governing Body and ISO Board on matters of interest
- Regional issues forum as a public vehicle for discussion of EIM-related issues, including impacts to neighboring balancing authority areas; the next meeting is scheduled for Aug. 4 in Boise, Idaho
Fuller noted that the slate of candidates assembled by the nominating committee to serve on the EIM governing body are – as listed in his presentation: Carl Linvill, principal, The Regulatory Assistance Project; Doug Howe, consultant, Vanry & Associates; John Prescott, (retired) president and CEO, Pacific Northwest Generating Cooperative; Kristine Schmidt, president, Swan Consulting Services; and Valerie Fong, (retired) director of Utilities, City of Palo Alto.
He also presented a list of state regulators, covering the eight states committed to the EIM at this point. As noted in his presentation, that list includes Commissioners Doug Little of Arizona, Ann Rendahl of Washington, and Bill Russell of Wyoming.
His presentation also outlined a timeline for regional integration activities, designed to allow PacifiCorp to obtain state regulatory approvals before the end of 2017.
“At the ISO, we have some existing policies that need to be revised to better accommodate regional organization – we’re in the middle of those now, [looking at] things like transmission access charge, resource availability, and also some work that we’re starting on more policy work regarding greenhouse gas compliance,” he said. “So, that’s all underway in terms of the stakeholder processes.”
Fuller also discussed the regional governance principles and process. As noted in his presentation, eight overarching principles for governing a regional ISO include:
- Preserving state authority over matters currently regulated by states
- Developing a new method for selecting board members, following a transitional period
- Establishing a body of state regulators from each state in the regional footprint
- Having a committee of stakeholders and regulators be appointed – similar to the EIM transitional committee – to implement the proposed principles
Fellow panelist Carolyn Barbash, vice president, Transmission Restructuring, PacifiCorp Transmission, discussed the drivers for regional integration. As noted in her presentation, those drivers are economic savings for end-use customers through automated efficient unit dispatch; renewable integration; emissions reductions; reliability improvements through increased visibility; and more efficient regional planning and infrastructure expansion.
Benefits of regional integration involve efficient dispatch and unit commitment savings; lower combined peak capacity needs; more efficient over-generation management; and renewable procurement savings, her presentation noted.
Among other things, Barbash noted that “going in” to a full regional integration presents “a lot of yet to be determined costs” and “yet to be determined risks.”
As TransmissionHub reported, a report commissioned by PacifiCorp concluded that combining the grids of the Cal-ISO and PacifiCorp could produce between $3.4b and $9.1b in shared cost reductions in the first 20 years through better grid management and efficiencies gained by planning for the resource needs of a single system, rather than multiple systems.
The study, conducted by Energy and Environmental Economics (E3) and released last October, said development of a regional ISO in the West is likely to reduce greenhouse gas emissions through coordinated planning, reduce curtailment of renewable resources, and lower costs to build new renewable resources, PacifiCorp and the Cal-ISO said in an Oct. 13, 2015, joint statement.
As noted in Barbash’s presentation, requirements for full integration involve:
- An independent regional governance that is acceptable to a diverse stakeholder environment
- Positive net benefits to PacifiCorp customers
- Approval by each state regulatory body and FERC
Also speaking on the panel was Johannes Pfeifenberger, principal, The Brattle Group, who referenced the experience from other regional markets. As noted in his presentation, most studies of regional market benefits show production cost savings of 2% to 8%. In addition to those savings, studies show regional markets also reduce investment costs, roughly doubling benefits, as there is a reduced need for resource adequacy capacity, improved access to lower-cost renewable resources, and a reduced need for, and cost of, balancing resources to address variable renewable generation output, his presentation noted.
His presentation noted that, with regards to total California benefits from a western regional market, an “SB350 Study” showed that California savings are estimated to be at least $1bn to $1.5bn – 2% to 3% of retail rates – by 2030. The magnitude depends on the ability to access lower-cost and more diverse renewable resources; the ability to sell – re-export – excess California intermittent resources in a bilateral market; and prices for resource adequacy, the presentation added.
His presentation also noted that experience in regional markets with wind-rich areas shows significant voluntary renewable generation development, well beyond the renewable portfolio standard (RPS) needs of the region.
Pfeifenberger noted the growth of wind energy development in Texas “without any RPS requirement.”
As noted in his presentation, in the past five years, Texas built 7,700 MW of wind – 6% of the load – and the Midwest built 9,200 MW.
Fellow panelist, Joe Taylor, manager – Transmission Access for Public Service Company of Colorado and Southwestern Public Service, two operating utilities of
Xcel Energy (NYSE:XEL), discussed the Mountain West Transmission Group (MWTG), whose goal, as noted in his presentation, is to create a single multi-company transmission tariff and explore “Day 2” market alternatives. The MWTG currently includes seven parties with nine transmission tariffs. The participating transmission owners include Basin Electric Power Cooperative; Public Service Company of Colorado; and Tri-State Generation and Transmission Association, his presentation added.
Taylor noted the “strong cooperative effort” over three years, and significant success with rate design and cost shift mitigation, despite multiple failed attempts at regional tariffs in the past.
“We signed a memorandum of understanding summarizing” the work to date, he said, adding that that “was a big step for us.”
The MWTG then “almost immediately developed a request for information,” (RFI), for RTO response, he said.
“[L]ast month, we issued a request for information and we sent it to” the Cal-ISO, Midcontinent ISO, PJM Interconnection and Southwest Power Pool, he said.
As noted in his presentation, the RFI is to obtain information and cost estimates from the RTOs on interconnection processes and planning concepts, among other things. The RFI is one of multiple sources of information to help the group in consideration of the path forward, the presentation noted. The target tariff start date is in 2018, according to the presentation.