NV Energy moves to join Western energy imbalance market

Dive Brief:

NV Energy has filed with the Nevada PUC to voluntarily participate in the regional energy imbalance market (EIM) agreed to last year by California’s grid operator and PacifiCorp, the Pacific Northwest utility owned by MidAmerican Energy.
If approved, NV Energy will bring its 1.3 million customers and 40 million yearly tourists to a shared marketplace that will be initiated in October 2014 by PacifiCorp and the California Independent System Operator (ISO). NV Energy, also owned by MidAmerican Energy, a subsidiary of Warren Buffett’s Berkshire Hathaway, would join in October 2015.
In an EIM, utilities can share generation resources to balance supply and demand through an online marketplace. An NV Energy study showed it would incur one-time set up costs of $11 million to $15 million and yearly costs of $2.5 million to $3 million to upgrade its present hourly transaction capability and keep its computer software, metering and telecommunications systems synced to the ISO’s five minute marketplace.
The five minute transactions would be conducted by a computerized marketplace but all decisions would be made by NV Energy personnel. The potential annual gross benefits to NV Energy customers are estimated at $6 million to $9.5 million in 2017 and $7.7 million to $12.2 million in 2022.

Dive Insight:

Advocates say the EIM will allow NV Energy to cut costs by being able to match demand with the least-cost available generation from a larger pool of diverse resources and sell off excess output.

Examples of cost savings are (1) NV Energy could buy otherwise curtailed excess California wind at a lower cost than its fossil plants could produce power and (2) NV Energy could sell its excess capacity if California’s wind or solar resources are unexpectedly compromised.

The American Public Power Association (APPA) expressed concern that voluntary participation in the EIM could lead to mandatory participation in an RTO, leading to more centralized markets and increased FERC supervision. APPA also says it is not clear if EIMs offer greater returns than costs and lead to increased reliability.