Puget Sound to join western imbalance market

OREANDA-NEWS. Washington state-based utility Puget Sound Energy plans to join the US western energy imbalance market in 2016, citing potential benefits of as much as \$30mn/yr.

The imbalance market, launched in November 2014 by the California Independent System Operator (ISO), allows for the dispatch of energy across six western states to cover imbalance needs — real-time deviations in demand and generation from anticipated levels. The imbalance market area includes the ISO and the PacifiCorp balancing areas in the Pacific northwest and the Rockies.

Nevada utility NV Energy will join on 1 October, expanding the market's reach to seven states.

"The greater number of [imbalance market] participants means the western grid customers benefit from lower costs and enhanced reliability as our technology automatically optimizes the grid, finds the lowest cost energy to meet demand over the western region," California ISO president Steve Berberich said.

Puget Sound's economic analysis projects annual benefits of \$18mn to \$30mn from the market's intra-hour power scheduling and plant dispatching capability.

Existing market participants may see \$4mn in savings per year with the addition of Puget Sound.

Puget Sound is the largest utility in Washington state, serving 1mn customers. Puget relies on its 3,000MW generating fleet for about half of its energy mix. Its own generating portfolio includes 1,900MW of gas-fired generation and 269MW of hydro in Washington state and 677MW of coal-fired generation at the Colstrip plant in Montana. But hydropower comprises the single largest share of the utility's total energy mix.

The five-month old western imbalance market started off with significant, unforeseen volatility in prices, especially for exchanges between PacifiCorp balancing areas.

Puget Sound had been involved with more than a dozen Northwest Power Pool members exploring a separate energy imbalance market to serve the Pacific Northwest and western Canada.

It was not clear what effect Puget Sound's move to join the California-based market will do to the effort in the Pacific northwest.

The disjointed service area of the imbalance market will depend even more on the transmission infrastructure operated by the Bonneville Power Administration. The federal power marketing administration operates the California-Oregon Intertie and the Pacific DC Intertie that collectively can move up to 8GW of electricity into California from the northwest.

Transmission rights allocation will feature prominently as an area of contention as the imbalance market expands.

The market operator and some regulators are keen to give imbalance market participants more preferential rights for scheduling use of transmission lines. But holders of long-term capacity rights on those lines have been battling the concept, which they view as a free ride for the imbalance market entities.