FERC last Monday gave a green light to an agreement between the West's two largest grid operations to create a real-time energy imbalance market (EIM) that promises to create substantial efficiencies and cost savings on the overall grid. It also could have lasting impacts on demand for natural gas throughout the West.
Following the federal regulators' approval, the California Independent System Operator (CAISO) last Tuesday on a preliminary basis released a revised proposal for the structure and rules of the EIM, reflecting stakeholder feedback to the grid operator since it announced the deal with PacifiCorp early this year (see Daily GPI, Feb. 13).
A CAISO spokesperson last Wednesday said the Federal Energy Regulatory Commission (FERC) determined that the agreement with MidAmerican Energy Holdings Co.'s Portland, OR-based utility that operates two grid balancing areas covering six western states was "reasonable and not unduly discriminatory or preferential."
The deal between the two major western grid structures calls for PacifiCorp to pay CAISO $2.1 million in fixed start-up fees to enable the Pacific Northwest-based utility to participate in the California grid operator's EIM.
Longer term, PacifiCorp expects to negotiate an agreement that will result in better reliability and increased cost savings from more tightly integrating increasing volumes of renewable-based power between the two grids. This promises to reduce somewhat the overall need for gas in the power sector, according to utility officials.
Nevertheless, when the preliminary agreement was announced last February, CAISO CEO Steve Berberich said the West's natural gas generation fleet remains "a largely critical element to be able to back up the increased use of renewable resources" anticipated in the years ahead.
The revised market design proposal and adjustment to CAISO's stakeholder process does not affect the planned October 2014 start for the expanded EIM , the CAISO spokesperson said.
"The EIM is intended to reduce operations expenses for both parties through more efficient dispatch of resources within and between balancing authorities," said the spokesperson, adding that there should be a reduced need for flexibility reserves and more efficient use of renewables.
Berberich has reiterated that this expanded EIM will allow the state grid operator to make greater use of renewables and use the West's natural gas fleet more efficiently.
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