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Pursuit of West-Wide Power Grid, More Gas-Fired Generation Still Alive, Officials Say

Energy officials ranging from the head of FERC to a PacifiCorp delegation told a symposium convened by the California Independent System Operator (CAISO) on Thursday that a western regional power grid will eventually become a reality.

The expanding CAISO and PacifiCorp-created real-time energy imbalance market (EIM) begun with federal authorization two years ago is an "exciting" indicator of what's to come, said Federal Energy Regulatory Commission Chairman Norman Bay, speaking on the second day of CAISO's two-day symposium.

"I know there are discussions under way for more entities to join the EIM, and CAISO completed a study that showed $88 million in benefits by reducing curtailments of renewables," Bay said, adding that this success has led to talk about what he called "regionalization."

"This is all very exciting as I think there are significant benefits to be gained in terms of operating efficiencies from broader resources and load diversity, and for renewables it is important to have east-west diversity," he said.

Bay said there are "very strong arguments" for reliability through broader, regional grids, so "there are all these benefits, and we at FERC are following developments quite closely in the West.

He said it is a "big issue" for the West, and as a former resident of New Mexico he is aware that many western states guard their independence closely, particularly on energy issues. "I recognize that a lot of hard thinking has to occur at various state capitals and among different utilities in the West, but I would encourage people to do that."

California Gov. Jerry Brown in early August told state lawmakers there were still "some important unresolved questions" that would be difficult to answer in the short time remaining for the 2016 state legislative session that ended Aug. 31 (see Daily GPIAug. 9). At the CAISO symposium designed to address these questions, Michael Picker, president of the California Public Utilities Commission, cited the example of PacifiCorp's two western utility operators -- Pacific Power and Rocky Mountain Power -- having very little ability to transfer power back and forth.

Picker called the two utility operators, which combined rely on coal-fired resources for about 60% of their power, "thinly integrated companies," making it more difficult to form a western regional grid that includes both PacifiCorp companies.

PacifiCorp officials contacted by NGI on Thursday said 2,800 MW of the coal-fired generation is slated for replacement by natural gas-fired power and the narrow ability to transfer power supplies varies greatly, so it is not accurate to say, as Picker did, that there is only 200 MW of transfer capacity between Pacific and Rocky Mountain Power companies.

"It is fair to describe the current transfer capacity as somewhat limited," said Bob Gravely, a spokesperson for PacifiCorp's integration activity with CAISO. "The capacity is different going east-to-west than it is going west-to-east, and it can vary depending on the time of year and particulars of contracts."

Gravely added the PacifiCorp is participating in construction of the Energy Gateway project, which will increase the transfer capability between the two parts of the utility. "Another benefit of a regional grid is to increase the transmission capacity and interconnections throughout the region," he said.

PacifiCorp's current emphasis is on expanding the EIM and its effort to "explore full integration with and participation in the CAISO," Gravely said, adding that his company's senior officials agree with Brown's decision to not try to rush the western grid concept. "Getting the regional governance piece right is critical for this to move forward, and it was clear we were not there yet as the legislative session moved toward its end," he said. "We'd rather get it right than get it quickly."

Gravely said the goal now is coming up with a governance plan that can be advanced next year.

In the meantime, California's concerns about the large proportions of coal-fired power in PacifiCorp's portfolio are being addressed through plant retirements or conversions to gas-fired generation during the next 20 years, Gravely said.  "With that, the 60% coal will drop to 41% by 2025, 28% by 2030 and 24% by 2035."

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