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Sweeping Changes in Western Energy Markets

May 6, 2015 By Josh Kessler

PacifiCorp and the California Independent System Operator (CAISO) just announced an agreement to explore the feasibility of integrating their two markets. CAISO, which oversees the only competitive electricity market in the West, manages 80 percent of the energy flow in California. Although the Nevada Valley Electric Authority joined CAISO in 2013, PacifiCorp is a much larger entity, serving 1.8 million customers across six western states. According to the COMPETE Coalition, if PacifiCorp opts to join CAISO, this would mark the ISO’s first major expansion beyond California.

CAISO and PacifiCorp have already collaborated in operating a regional Energy Imbalance Market (EIM) since November 2014 aimed at improving reliability and renewable energy integration. A CAISO analysis shows that the EIM generated about $6 million in benefits in the first two months of 2015 and is expected to save customers between $21 million and $129 million per year. NV Energy of Las Vegas plans to join the EIM this October.

Argus Media reports that Arizona Public Service (APS), which serves 1.2 million customers in Arizona, is also exploring the possibility of joining the EIM. APS recently filed a study with the Arizona Corporation Commission that shows the utility could save customers between $7 million and $18 million per year if it joins the EIM, while existing EIM customers would save an additional $2 million to $8 million per year. This would require APS customers to pay for a one-time implementation cost of $13 million to $19 million – a payback period of about 1 to 3 years.

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