Peak Reliability, the independent reliability coordinator of the Western Electricity Coordinating Council, or WECC, has tapped the expertise of the PJM Interconnection to review how to set up a possible organized market in the western U.S.
Peak Reliability in 2014 spun off from the regional entity WECC and is responsible for coordinating reliability across 14 western states, two Canadian provinces, and a part of northern Mexico. On Dec. 7, Peak and PJM subsidiary PJM Connext, in a joint statement, announced a formal agreement to review the design of the western power grid.
"PJM has an established track record as an innovative and cost-effective provider of system operations and market services," Peak Reliability President and CEO Marie Jordan said in the statement. "Our partnership seeks to leverage Peak's West-wide system model, PJM's markets expertise, and our combined processes, people and tools. Both Peak and PJM share a strong commitment to developing solutions, tailored to the Western Interconnection."
Peak Reliability Chief Strategy Officer Pete Hoelscher said in a separate interview, "At a very high level, we are going to be looking at everything including a full [regional transmission operator] and full energy market." Hoelscher said the final shape of any outcome depends on what stakeholders recommend. A stakeholder outreach session would run from January to March 2018. By the end of March, the target is for PJM Connext and Peak to report on stakeholder recommendations and the direction in which they want to go.
There has been a "sea change" in the West in terms of more stakeholders preferring organized markets, Hoelscher said after having spent the last year talking to members. He is not presupposing what the organized market could look like but said nothing is ruled out at this point. "It could very well be an RTO," he said, adding that it could also involve looking at transmission planning.
Hoelscher was not sure how the stakeholder process would involve the California ISO, which manages power markets in California and parts of Nevada, or how it would align with the CAISO's Energy Imbalance Market, or EIM, which began in 2014 to allow real-time trading among members who join. The EIM currently has five utility members from across the Western Interconnection, with seven more scheduled to join through 2020 and others considering participation.
"I am not sure we know yet how we're going to connect with the EIM participants or CAISO. Clearly if we end up in a market that butts up against CAISO ... we would certainty want to work with them to figure out how to work across seams," Hoelscher said.
Peak Reliability knows the systems of the Western Interconnection and its strong data model, the West-wide system, but Hoelscher said PJM is the best partner because of its knowledge of markets and its credibility.
PJM President and CEO Andy Ott said in a statement, "We believe that our partnership will lead to a viable and credible alternative structure in the West, and we're looking forward to working with the Peak team to develop that option."
Peak Reliability ensures reliability for 74 million customers. By comparison, PJM serves 65 million customers across all or part of 13 states and the District of Columbia, stretching from the mid-Atlantic region to northern Illinois.
