By Robert Mullin

The Seattle City Council authorized Seattle City Light to perform “a detailed analysis of costs, benefits and potential risks” of joining the Western Energy Imbalance Market (EIM) to inform the council’s decision on whether to approve the move.

The unanimous Oct. 31 vote came three weeks after council members Lorena González and Mike O’Brien voiced concern about the upfront costs of exploring membership, leading the council to defer a vote on entering an “exploratory phase” with the CAISO-run EIM. González had expressed concern that authorizing a study created an expectation that “we will invest and carry forward” with the market. (See EBA Speakers Ponder a Western RTO.) With its vote, the council is asking City Light to flesh out the findings of an EIM benefits study performed by consulting firm E3 that showed the utility could earn an additional $4 million to $23 million in yearly revenues from the market.

“City Light’s own evaluation of the E3 study identified a number of deficiencies that call the study’s revenue estimates into question,” González told RTO Insider after the meeting. “Furthermore, the cost estimates were based on those experienced by other utilities entering the market. I think it prudent for City Light to do its own assessment of the costs it is likely to incur.”

González said the council’s ordinance provides the utility with “the time and spending authority necessary to conduct a thorough gap analysis.”

“The council’s vote gives us the opportunity to further investigate participation in the EIM,” said Scott Thomsen, City Light’s senior strategic advisor in communications and public affairs. “This will involve more due diligence to get more details on the areas outlined in the [E3] report.”

Introduced in September, the original ordinance would have greenlit City Light’s membership in the EIM, but it was scaled back ahead of the council’s Oct. 10 meeting to require more analysis before a final decision.

As approved by the council, the ordinance includes a González-sponsored amendment requiring the city-owned utility to report its findings to the council’s Energy & Environment Committee by April 10, 2017.

“This amendment will allow the council to receive and review the results of this analysis within a reasonable timeframe and grant City Light sufficient time to conduct the analysis that is required,” González said.

She said that there are “significant risks that accompany [City Light’s] varying revenue projections,” which needed adequate time for the council to evaluate before the utility could enter “what would be a new line of business.”

With a generating portfolio heavy in hydroelectric resources, City Light stands to benefit from the EIM as an exporter of the flexible ramping capability needed to smooth out intermittent renewables.

The utility’s revenue estimates from the market are dependent in part on water supply conditions. Implementation is projected to ring in at about $8.8 million, while operations costs could run at around $2.8 million annually.

The Pacific Northwest’s ability to export power from surplus hydro can vary significantly based on precipitation.

“While there is a range in the estimated benefits, it is commensurate with the uncertainty in our current hydroelectric generation portfolio because of variable weather and water conditions,” City Light said in a summary and fiscal note to the council.

Seattle’s neighboring utility Puget Sound Energy began participating in the EIM last month, along with Arizona Public Service. (See Arizona Public Service, Puget Sound Energy Begin Trading in EIM.) Last month also saw Sacramento Municipal Utility District become the first publicly owned utility to announce its intent to join the market. (See Sacramento Utility to Join EIM; Other BANC Members May Follow.)