By Robert Mullin
Arizona Public Service and Puget Sound Energy have moved a step closer to linking up with CAISO’s Energy Imbalance Market.
The ISO on Aug. 1 commenced the operations testing phase to prepare the companies for full entry into the real-time market this fall. Over the next two months, the two utilities will operate in the market under real conditions, although their transactions will not become financially binding until Oct. 1.
The testing period will enable grid operators, system engineers and market managers to verify that systems are working as planned, CAISO said.
Unlike an RTO, the EIM does not require transmission-owning members to turn over operational control of their balancing authority areas (BAAs). Generator participants are also allowed to bid real-time energy into the market on a voluntary basis; there is no must-offer rule.
A recent CAISO report said the EIM has accrued $88.2 million in benefits to its participants since the market commenced operation in November 2014. (See EIM Report Shows Continued Growth in CAISO Exports.) Berkshire Hathaway Energy’s NV Energy and PacifiCorp are currently the only utilities participating in the market. Portland General Electric is scheduled to join in October 2018, followed by Idaho Power in spring 2019.
“The addition of APS and PSE will create more opportunities to produce additional benefits, including improved integration of renewable energy,” CAISO CEO Steve Berberich said in a statement.
APS serves about 1.2 million customers in Arizona and operates nearly 6,000 miles of transmission. A 2015 EIM benefits study by consulting firm Energy and Environmental Economics (E3) assumed the utility would maintain about 2,500 MW of transfer capacity with CAISO and another 600 MW with the PacifiCorp East BAA. The utility has no direct links with NV Energy.
The E3 study also determined that EIM membership would help APS lower costs by $7 million to $18.1 million, including $1 million to $3.2 million from the reduced need to maintain flexibility reserves — the type of capacity required to quickly firm up variable output from renewable resources. Implementation costs were estimated at $13 million to $19 million.
PSE serves about 1.1 million electricity customers in Washington state and operates about 2,600 miles of transmission, with a 1,600-MW import capability to compensate for a shortage of generation resources.
But the utility also has a surplus of flexible capacity, “which is probably why we’re joining the EIM,” Phillip Popoff, PSE manager of resource planning, told the Infocast California Energy Summit in May. The utility expects to realize annual benefits of $18 million to $30 million, with start-up costs estimated at about $14 million.
EIM start-up costs include metering upgrades to enable generating plants to capture data at five-minute increments, new market software, business process changes and Open Access Transmission Tariff revisions.
Both utilities will additionally incur ongoing costs of $3.5 million to $4 million a year, which includes fees paid to the ISO to manage the market.
