By Jason Fordney
Berkshire Hathaway Energy subsidiaries PacifiCorp and NV Energy on Thursday asked FERC to lift bidding restrictions placed on them in the Western Energy Imbalance Market (EIM) and allow them to offer energy at market-based rates.
In a joint filing with FERC, the companies said the bid limits are “no longer appropriate” because they both meet criteria for EIM participation established in previous commission orders (ER17-2392, ER17-2394). Both utilities are currently restricted to using a cost-based default energy bid (DEB) when offering into the market, which they told FERC is “both contrary to organized market design and presents risks of unrecovered costs in some market intervals.”
A November 2015 FERC order found that the Berkshire companies’ request for EIM market-based rate authority had included a “deficient” analysis that failed to disprove their horizontal market power. The order also questioned CAISO’s ability to mitigate such power outside its own balancing area.
In establishing the bid limits, the commission pointed to potential intertie constraints between NVE and CAISO, as well as between the PacifiCorp West and PacifiCorp East balancing authorities. Arizona Public Service is also separately subject to the bid limits.
The commission last year denied the companies’ request for rehearing on that decision, saying that future market power studies must provide analysis of potential power in EIM submarkets stemming from transmission constraints, not just the market as a whole. (See Berkshire Denied Rehearing on Market Power.)
The companies’ latest filing relies on analysis performed by Charles River Associates (CRA) showing that, since the entry of NVE into the EIM, there has been little congestion between balancing authority areas, so they should not be considered “sub-markets,” and that the ability of third-party resources to balance the system mitigates market power concerns. CAISO has also implemented market measures that mitigate prices back to the DEB when competing supplies cannot reach a constrained area, the Berkshire companies said.
According to the filing, the companies “are not asking to charge market-based rates without mitigation. Rather, their bids will be subject to the CAISO tariff-based mitigation instead of the current blanket, seller-specific mitigation.”
The Berkshire companies said the CRA findings are backed by an assessment produced by CAISO’s own internal Market Monitor, which in July said transfer capacity in the EIM footprint is now sufficient to justify removing bid limits that are in effect for PacifiCorp, NVE and APS. (See CAISO Monitor Says EIM Bid Limits No Longer Needed.) The Department of Market Monitoring said it would support the companies’ request to FERC for market-based rates.
PacifiCorp was the first utility to participate in the EIM when the market became operational in November 2014. NVE applied to join the EIM in March 2015 and began participation in December 2015.
PacifiCorp operates 71 thermal, hydroelectric, wind-powered generating and geothermal facilities in California, Idaho, Wyoming, Washington, Utah and Oregon. NVE subsidiaries include vertically integrated utilities Nevada Power and Sierra Pacific Power.