This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.
Wyoming wind powering Nevada? Oregon hydropower in Arizona? Utah coal power in Idaho? California solar in Utah?
It’s all happening now, and two of the largest power providers in the Western states want to encourage more of it.
Pacificorp, parent of Rocky Mountain Power and electricity provider in six states, has joined with the California Independent System Operator (CAISO) to set up the “Extended Day-Ahead Market,” where utilities across 11 states can sell their excess power or buy excess from others as needed to supply their customers.
The market builds on the Western Energy Imbalance Market, which was also formed by Pacificorp and CAISO back in 2014. The imbalance market is a real-time resource where utilities can buy and sell their power every 5 minutes, allowing them to adjust when their customers demand more or less than what was expected. About 5% of the electricity in the West comes through that imbalance market.
“Every system has quirks and inefficiencies,” said Scott Bolton, Pacificorp’s senior vice president of transmission and market development. By pooling everyone’s resources in a market, one utility’s inefficiency can become another’s valued resource.
In particular, this resource pooling allows more and better use of renewable sources like wind and solar that vary with climate, Bolton said. “The idea is to reduce fuels” when non-fuel sources are available, he said.
Pacificorp and CAISO say the imbalance market has saved customers $2 billion since its inception, including $500 million for Pacificorp customers alone. Pacificorp provides power to about 80% of Utahns.
“We’re selling Northwest hydro in spring and early summer runoff months. …. We’re selling thermal resources (coal power) from Utah” when wind and solar produce less, Bolton said.
The day-ahead market will essentially make that imbalance market proactive instead of reactive. Utilities across the West will be able to buy and sell power a day in advance, which allows them to schedule their resources based on the next day’s weather forecast and other factors like power plant maintenance.
Instead of 5% of the power purchased through the imbalance market, 80% or more of western electricity could be bought and sold through the day-ahead market, Bolton said.
The day-ahead market is notable for what it isn’t: a regional transmission organization. In an RTO, power sources and transmission lines are controlled by a single entity.
Pacificorp and CAISO proposed creating an RTO back in 2016, but it faced political opposition from then Utah Gov. Gary Herbert and others who thought it would give California too much control over Utah power.
Unlike an RTO, the day-ahead market does not require approval from the Utah Public Service Commission, which regulates electric utilities in the state. But it still allows for much of the efficiencies that would come with an RTO.
Michele Beck, whose Office of Consumer Services advocates for Utah electricity customers, thinks the potential savings to consumers may not be as high as proponents project, but she still sees a benefit.
“I think that studies and experience show that the day-ahead market will provide additional benefits that customers are already receiving from the energy-imbalance market,” she said.
Utah Associated Municipal Power Systems, which represents most of the Utah power customers who aren’t Rocky Mountain customers, doesn’t currently participate in the imbalance market, but spokesman LaVarr Webb said UAMPS may still see impacts from the day-ahead market because Pacificorp manages the grid in Utah.
“At this time the large majority of UAMPS operations impacts are thought to be mostly administrative,” Webb said. “That being said, UAMPS has engaged with outside consultants to do a full analysis of what this means for UAMPS, not only impacts to operations but also opportunities for UAMPS to become a participant.”
Pacificorp also is joining the Western Resource Adequacy Program, an effort to standardize power planning so utilities share a common understanding.
Unlike the plan for a regional transmission organization, no political opposition to the day-ahead market has emerged, and clean-energy groups have come out in favor.
“We are pleased that this CAISO final proposal is moving forward with other options for day-ahead energy markets that would all help maximize transmission and integrate more cost-effective clean energy resources onto the grid, and we look forward to further work to expand regional energy markets and transmission efficiency,” said Heidi Ratz, senior manager of market and policy innovation at the Clean Energy Buyers Association.
Tim Fitzpatrick is The Salt Lake Tribune’s renewable energy reporter, a position funded by a grant from Rocky Mountain Power. The Tribune retains all control over editorial decisions independent of Rocky Mountain Power.
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