Integrating California Independent System Operator’s (CAISO’s) and PacifiCorp’s networks—the two largest high-voltage transmission grids in the West—could yield billions of dollars in shared cost reductions within the first 20 years alone through efficiencies, a new study says.
The report commissioned by PacifiCorp stems from a memorandum of understanding signed by the independent system operator (ISO) and the Portland, Ore.–based utility in April 2015 to explore the possibility of PacifiCorp joining CAISO as a participating transmission owner.
PacifiCorp, a subsidiary of Berkshire Hathaway Energy (BHE), operates one of the largest grids in the western U.S., serving territory in Oregon, Washington, Idaho, Utah, Wyoming, and a small portion of northern California. Joining CAISO, which covers about 80% of California, would expand the ISO’s footprint by nearly 40%.
The Oct. 13–released report prepared by consulting firm Energy and Environmental Economics (E3) says that full integration of the systems would provide a number of operating, investment, and regulatory cost savings.
These include more efficient unit commitment and dispatch, resulting in lower generation costs from PacifiCorp’s participation in the ISO’s day-ahead market, and more efficient overgeneration, which could mean fuel and renewable cost savings owing to less curtailment of renewables.
Specifically, the report says integration of PacifiCorp and the ISO’s balancing authority could yield incremental savings of $62 million to $122 million for PacifiCorp in 2024, surging to $200 million to $272 million in 2030. CAISO customers would see estimated incremental cost savings of $92 million to $213 million in 2024, growing to $203 million to $894 million in 2030.
PacifiCorp customers will mostly reap the benefits of savings in fuel and energy procurement costs that result from participating in the ISO’s day-ahead market and importing renewable energy when California has excess supply. CAISO, which is facing a 50% Renewable Portfolio Standard target by 2030, will see increased benefits over time, the report says, due to long-lead times and “clear guidance” for planning and investment decisions.
The report notes that while utilities in the West aren’t anticipating the need for new resources in the near-term, population growth—estimated to spurt 20% from 2015 to 2030—and economic growth, along with retirements of existing generating plants, will trigger the need for new generation and transmission after 2020. New environmental rules and policies and changing customer preferences are also driving utilities to look for regional solutions, including new interstate transmission and regional wholesale markets.
A number of collaborative initiatives are already underway. Last November, CAISO and PacifiCorp set up a joint energy imbalance market (EIM), a real-time market that allows the entities to choose the least-cost resource every five minutes to meet the need for balancing across the system. Nevada-based NV Energy is slated to join the EIM in November 2015, and Puget Sound Energy and Arizona Public Service have announced intentions to join in fall 2016. Portland General Electric and Idaho Power Co. have also both recently announced plans to explore possible participation in the EIM.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)