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Seattle utility to join Western imbalance market


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Seattle utility to join Western imbalance market

The Western energy imbalance market is continuing to grow, with Seattle City Light agreeing to join in April 2019.

The municipal utility estimates that joining the market, or EIM, could save it $4 million to $23 million a year.

Participating in the market would allow Seattle City Light to get paid for helping the West to integrate renewable energy with the utility's flexible hydroelectric capacity, which totals 2,014 MW and accounts for about 60% of the utility's power supply, according to a report to the Seattle City Council, which approved the move in early November.

"This is the first in a number of steps to better integrate large-scale renewable resources in the west, and a new tool in our 'tool belt' to address climate change and set the foundation for a cleaner energy future," Seattle City Light general manager and CEO Larry Weis said in a news release Dec. 12.

Under the EIM, started in late 2014 by the California ISO and PacifiCorp, which operates in six western states, the grid operator dispatches power plants across the market's footprint to address changes in electricity supply and demand. Among other things, utilities can absorb excess renewable generation through the EIM that would otherwise be curtailed.

Pinnacle West Capital Corp. subsidiary Arizona Public Service Co., NV Energy Inc. and Puget Sound Energy Inc. also participate in the EIM. Utilities preparing to join the market include Portland General Electric Co. on Oct. 1, 2017, and IDACORP Inc. subsidiary Idaho Power Co. on April 1, 2018.

The Mexican grid operator El Centro Nacional de Control de Energía Baja Norte, the Balancing Authority of Northern California, the Sacramento Municipal Utility District, Los Angeles Department of Water and Power, NorthWestern Corp. and Tucson Electric Power Co. are considering joining the market.

As the EIM expands, its benefits grow with increased geographic and resource diversity.

Also, a larger EIM reduces congestion and limits the ability of market participants to exert market power, according to a biannual report from CAISO's department of market monitoring to FERC.

The frequency of potential structural market power in PacifiCorp's two balancing authority areas was cut sharply by the additional transfer capacity between the EIM areas and the ISO when NV Energy joined the market a year ago, according to the Dec. 6 report.

"With this additional transfer capacity, congestion between the ISO and the various EIM areas has dropped significantly and real-time prices became more uniform between most ISO and EIM areas," the report said.

Further, when APS joined the market in October, significant transfer capacity was added between Arizona and PacifiCorp East and between Arizona and the ISO, the report said.

Participation within the PacifiCorp and NV Energy area by non-Berkshire Hathaway Energy entities in the EIM remains limited, the report said, noting that only about 175 MW of gas-fired capacity in PacifiCorp East is controlled by a non-PacifiCorp entity and submitted energy bids into the EIM.

In a sign of how adding participants to the EIM increases its benefits, in late October the ISO reported that the market produced $26.2 million in savings in the third quarter, up from $12 million a year earlier before NV Energy joined the EIM.

Also, the expanded market allowed 33,094 MWh of renewable generation to be produced that would otherwise have been curtailed to keep supply and demand on the grid in balance, according to the quarterly report. In the year-ago quarter, the market avoided the curtailment of 828 MWh.

Ethan Howland is a contributing reporter to S&P Global Platts which, like S&P Global Market Intelligence, is a division of S&P Global Inc.