Federal energy regulators today signed off on a politically popular plan that allows California's grid manager to launch a voluntary "real time" energy market and share its electricity resources with five Western states.
The Federal Energy Regulatory Commission unanimously voted to conditionally accept the California Independent System Operator's (ISO) proposal -- as made through tariff revisions -- to design an energy imbalance market, or EIM, which pools energy resources in parts of Oregon, Washington, Utah, Wyoming and Idaho.
State grid operators have proposed to launch the market on Oct. 1.
FERC acting Chairwoman Cheryl LaFleur said the market represents an "exciting" milestone that allows a large region to receive benefits of belonging to a market, to enhance reliability and to handle growing renewable resources. FERC Commissioner John Norris agreed and said the energy landscape is changing quickly in the West with a surge of wind and solar, adding that it reflects a belief the system can be operated more efficiently.
"More people will hopefully join this," Norris said.
FERC Commissioner Philip Moeller said the commission will be "watching it closely up until it goes live in October, we obviously want it to be successful."
FERC Commissioner Tony Clark noted that one "caution sign" to watch for is the states' greenhouse gas regulations that are being promulgated and their ability to restrain interstate trade. States are also implementing clean energy goals at various levels. Clark said such policies can "segment the market in ways they may not otherwise be segmented" and should at least be a "yield sign."
FERC said the program will allow participants to buy and sell five-minute, real-time energy to meet demand through a market-driven regime built into California's existing real-time market. California ISO and PacifiCorp in the past released a report that found the market could result in benefits of up to $129 million a year from efficiency and integration of renewables.
The decision signifies a big win for Senate Majority Leader Harry Reid (D-Nev.), Nevada Gov. Brian Sandoval (R) and California Gov. Jerry Brown (D), who in recent months have pushed FERC to approve the plan. Reid has in recent weeks expressed his deepening interest in FERC and controlling who leads the agency.
Reid told FERC in a letter earlier this year that the proposed market would offer an automated, regional and far more efficient method of meeting real-time energy needs than the manual operations currently at play. His home state of Nevada is hoping to share its supply of solar and geothermal power, and the market would make available a larger pool of real-time green energy to meet demand.
Reid noted in the letter that Nevada's top power provider -- NV Energy Inc. -- released a study looking at linking with the ISO. It examined the potential for building transmission facilities between the two systems and sharing conventional and renewable-generated electricity. The company found that participating in the market would benefit customers in Nevada and California, prompting the utility to seek approval from Nevada state regulators to join, a step that Reid later hailed as "terrific."
NV Energy is the biggest authority in the state with its subsidiaries providing power to 85 percent of Nevada.
Sandoval and Brown said in separate letters to FERC that the market would help grid managers in Nevada and five other states optimize renewable energy resources, balance power supplies, enhance grid reliability and reduce power costs for customers partaking in larger pools of geographically diverse energy resources.
California ISO's board of directors signed off on the design of the market last year, noting that the market wasn't "new" but instead a set of rules and procedures that allows the creation of the market through existing market designs (Greenwire, Nov. 8, 2013).
The market arrives as California is managing an influx of green energy to its grid. The state's renewable portfolio standard requires that one-third of all power come from clean sources by 2020. The state's demand for green energy accounts for two-thirds of all renewable energy thirst in the Western Interconnection, which includes 11 states, some of Texas and parts of Canada and Mexico.
Part of the EIM arrangement includes the option of using renewable power from other states.
California ISO has said such an option is helpful because the sun rises earlier in the east and sets later in the west, meaning solar power is available longer. The ISO has also said grid operators -- as more wind and solar are brought online -- need to hold additional flexible generation, like natural gas-generated power, in reserve because green energy availability varies with the weather.
The EIM initially is with PacifiCorp, which supplies power to more than 1.8 million customers in parts of six states. The company operates as Pacific Power in Oregon, Washington and Northern California and as Rocky Mountain Power in Utah, Wyoming and Idaho, the ISO said.