A group of western utility executives, transmission officials, and regulatory analysts are convening in Portland, Oregon next week to discuss the creation of a western Energy Imbalance Market (“EIM”). The EIM is part of an Efficient Dispatch Toolkit (“EDT”) proposed by aWECC subcommittee and the Western Interstate Energy Board (“WIEB”) that would include: (1) the EIM to supply energy imbalance service and congestion management, and (2) an Enhanced Curtailment Calculator (“ECC”) to manage power flow impacts across Balancing Authority (“BA”) seams. As a point of reference, the Southwestern Power Pool launched a similar “Energy Imbalance Service” in 2007.

Why: Renewable energy capacity in the West is expected to grow from roughly 13,000 MW today to 70,000 MW by 2020 as the result of state renewable energy requirements. Current energy balancing practices are insufficient to meet the challenges of the anticipated variable generation increases in the Western Interconnection, according to a white paper prepared by WIEB staff. Current bilateral transmission and scheduling practices do not, for instance, make use of remote balancing resources in the Western Interconnection and the EIM could help make more efficient use of generating resources located throughout its footprint.

What: The proposed EIM would be a “sub-hourly, real-time energy market tool that dispatches balanced energy.” It would not include unit commitment or ancillary services. Energy imbalance is currently settled exclusively within BAs; by contrast the EIM would allow the “West to settle energy imbalance and re-dispatch transactions across BA borders.” Contingency reserves will remain the responsibility of the BA.

How: The EIM would be designed similar to imbalance markets administered by Independent System Operators (“ISOs”) and Regional Transmission Organizations (“RTOs”), but would not require the creation of an entirely new RTO and would not include a consolidated regional tariff for wholesale transmission service (although it would require an umbrella tariff). The participating transmission providers would retain their own Open Access Transmission Tariffs (“OATTs”) for ongoing traditional activity, but Schedule 4 (Load Imbalance) and Schedule 9 (Generator Imbalance) would be replaced with a market-based settlement for balancing energy.

Who (would run it): An additional yet-to-be-determined aspect of the EIM is what agent would operate it. Options being assessed for the Market Operator role include:

  • Creation of a new division within WECC that could take advantage of a “seamless flow of information” because the EIM operator is expected to rely on WECC Reliability Centers data, but there is concern that WECC has no institutional experience operating a market.
  • Reconstitution of one or more Subregional Entities (such as western transmission planning groups) given existing familiarity and communication among companies within each Subregional Entity. There is similar concern that the Subregional Entities do not have experience operating markets and, if each were to implement its own EIM, it could lead to complicated coordination and duplicative efforts.
  • Creation of New Third-Party Market Operator that would focus on market operation, but this option comes with the disadvantages of creating an organization from the ground up and associated higher start-up costs.
  • Creation of a new division in an Existing Third-Party Market Operator (e.g. California ISO or Midwest ISO) that could take advantage of existing institutional infrastructure, adapted to a Western EIM design, and provide for lower start-up costs.

What Else: Other issues still to be resolved include the footprint, governance and corporate structure, start-up financing and exit provisions. You can read more about the options under consideration by clicking here.