By Robert Mullin

SACRAMENTO, Calif. — Western utility leaders at CAISO’s annual stakeholder event said they welcome the operational benefits and increased regional cooperation of the Energy Imbalance Market but remain wary of organizing the wider West under a CAISO-run RTO.

At a Sept. 7 panel discussion on market regionalization at the CAISO Stakeholder Symposium, executives at utilities planning to join the EIM cited its main advantage: the improved integration of intermittent renewable resources.

“We were blessed with 1,000 MW of PURPA [wind projects],” said Lisa Grow, senior vice president of operations at Idaho Power, which will become the sixth company to join the EIM when it makes the move in April 2018. “We’re unable to integrate that” by itself, she said.

The utility and the state’s regulators have complained that its service territory has been flooded with excess generation by large but “disaggregated” wind farms developed under the Public Utility Regulatory Policies Act, which was enacted in 1978 to encourage the growth of small-scale, independent generation projects. (See FERC Conference Debates PURPA Costs, Purchase Obligations.)

With a minimum system load of about 1,100 MW, Idaho Power serves most of the state’s electricity users. The utility currently derives about half of its energy from hydroelectric projects.

Grow said her company expects to realize only a modest financial benefit from membership. But the company’s hydro-rich portfolio translates into a high degree of ramping capability, which should be an asset for the utility as it seeks to offload its surpluses into an EIM. Flexible and carbon-free generation will become increasingly valuable as Western states increase their renewable portfolio standards and California looks to significantly cut greenhouse gas emissions.

‘Big Hurdle’

In neighboring Oregon, Portland General Electric, which is scheduled to join the EIM next year, sees the market as a cost-effective way to integrate renewables. A law passed earlier this year will require the utility to achieve a 50% RPS by 2040.

“That is a big hurdle,” said Maria Pope, PGE’s senior vice president of power supply and operations and resource strategy. “My sense is that, irrespective of the market benefit, the advancements in the technology and processes have value in themselves.”

Utah Associated Municipal Power Systems (UAMPS), which initially protested PacifiCorp’s decision to join the EIM, is likely to join itself after a recently completed benefits study, CEO Doug Hunter said.

A publicly run nonprofit that provides wholesale electricity to 45 community-owned utilities in seven states, UAMPS owns generation and transmission assets in Utah and sits “right in the gunsights” of the EIM, Hunter said.

“We’re the definition of regionalism. … We really see it as a marketplace that we can enter — and our customers can benefit from this,” Hunter said, adding that the outcome of the EIM’s implementation “wasn’t as dire as we thought it would be.”

California Public Utilities Commissioner Mike Florio, who moderated the panel, turned the discussion to the Northwest’s largest public entity — the Bonneville Power Administration.

“Is it ever in the cards for Bonneville to join, or would that take an act of Congress?” Florio asked.

“Serving our preference customers is our priority,” said Elliot Mainzer, Bonneville’s administrator and CEO. “But having a market for surpluses would be important.”

Bonneville’s decision to join the EIM “will depend on how the governance functions,” Mainzer said. “But at this point, no decision on that.”

The market’s five-member governing body, which represents various stakeholder sectors, was selected in June and met for the first time earlier this month. (See EIM Governing Body Convenes First Meeting, Selects Leadership.)

Mainzer emphasized the importance of his agency to staying “constructively engaged” with the EIM, especially because PacifiCorp’s participation requires the use of Bonneville’s transmission system.

“So far, it’s worked effectively,” Mainzer said. “Managing at those seams, staying communicative … really matters.”

No ‘Gateway Drug’

Florio called the prospect of full membership in CAISO a “hot potato” for many utilities. He sought panelists’ thoughts on the challenges to regionalization.

“Early on, when talking with [Arizona regulators] about [joining the EIM], there was a lot of pessimism,” Arizona Public Service COO Mark Schiavoni said. CAISO CEO Steve Berberich and “I had to assure that this wasn’t some kind of gateway drug to something broader.”

“I think the concept of exporting California policy to the intermountain West was one of the biggest issues — a big part of the reluctance on the part of politicians,” Hunter said.

For UAMPS, the concerns come down to economics — specifically, the allocation of costs under a Western RTO.

“We could quadruple our transmission access charge” under an RTO, Hunter said. “We just don’t see the benefit.” He added that UAMPS was encouraged by California’s decision to slow down the ISO’s expansion efforts to “get a handle” on some of the more controversial issues. (See Gov. Brown Reaffirms Commitment to Expanded CAISO.)

Schiavoni said the focus of regionalization must expand to include the needs of other Western states. “Until there’s dialogue and conversation that goes beyond California, I just don’t see movement toward that broader market,” he said.

“If I were outside California, I’d want to see California give up some control,” said Pat Hogan, senior vice president of transmission and distribution at Pacific Gas and Electric.

Citing the dependencies of the physics, politics and economics of the grid, Mainzer said he was concerned about “spreading volatility over a broader footprint.”

“You have to be able to trust each other to share the optimization,” Mainzer said. “If you can’t get beyond the governance … you’re bound to get the market design wrong.”

“I think it’s important not to underappreciate where we are now,” Pope said. “There’s a lot of work to be done.” The EIM is “extremely well-constructed,” she said, adding that she liked the ability of participants to enter and exit the market at will. “I would hate to jump into something that would add complexity without having a benefit.”

Comparative Approach

Hunter told the panel there are benefits to having a competitor to a CAISO-run RTO.

“We’re lucky because right now we have a proposal to the east of us that will allow us to do a comparative approach,” said Hunter, referring to a competing effort by the Mountain West Transmission Group to create its own RTO in the inland West. (See Mountain West RTO Could Pose Competition for CAISO.)

Hunter noted that Mountain West had received proposals from multiple RTOs to operate the potential market — including CAISO and PJM.

“In my neck of the woods, PJM is like the Antichrist,” Hunter said.

“If PJM is the Antichrist, what is the California ISO?” Hogan asked.

“Well, it’s the potential Good Witch of the West,” Hunter replied.