Electricity Markets

CAISO, utilities start developing regional day-ahead market

The California Independent System Operator is starting a stakeholder process that could lead to a regional day-ahead power market in the western U.S., which could save up to $227 million a year, according to a study.

The extension of the day-ahead market, or EDAM, would build on the Western Energy Imbalance Market run by CAISO, according to a presentation to be delivered at an Oct. 3 webinar discussing a feasibility assessment of the proposal.

The study by the Brattle Group and Energy+Environmental Economics found a day-ahead market in the West could save $119 million to $227 million a year, partly through reduced production costs that result from more efficient day-ahead hourly trading and unit commitment, and the use of available transmission through an organized market.

It could also lead to reduced renewable curtailments and lower greenhouse gas emissions, according to the study.

A day-ahead market in the West could support increased levels of renewable energy on the grid and lead to more efficient decisions around deciding which power plants should run the next day. Fourteen electric utilities and other entities that participate in or plan to join the EIM are supporting the effort.

They include: Arizona Public Service, Avista, the Balancing Authority of Northern California, Idaho Power, Los Angeles Department of Water and Power, NV Energy, NorthWestern Energy, PacifiCorp, Portland General Electric, Powerex, Public Service Co. of New Mexico, Puget Sound Energy, Seattle City Light and Salt River Project.

The utilities cautioned that there are major issues that must be tackled in creating the EDAM, including governance structures, transmission costs and accounting for greenhouse gas emissions obligations, according to a Sept. 16 letter from the group to the CAISO Board of Governors and EIM Governing Body.

"We do not view this process as a 'build it and they will come' exercise," the utilities said. "Only by shaping the EDAM design to be realistic, built upon known advantages of the EIM, and in recognition of the needs of the broader West, can the design hope to attract the broad participation needed to reap the potential benefits of the new market.”

The Western Resource Advocates, an environmental group, is supporting the EDAM.

“Adding day-ahead market services to the energy imbalance market would allow utilities to better plan for and optimize renewable energy use on the grid through more efficient unit commitment and more effective integration of variable energy resources across a larger footprint,” Jennifer Gardner, a senior WRA attorney, said Sept. 19.

The EIM, which balances supply and demand, is limited to real-time transactions while market participants generally make power plant commitment decisions a day-ahead, the entities supporting the stakeholder effort said.

Creating a voluntary day-ahead market "presents a significant opportunity to build off the success of the EIM and to pursue additional economic and environmental benefits," they said.

Under the envisioned day-ahead market, participants would not need to be CAISO members and the voluntary market wouldn't lead to any changes in state regulatory authority.

“Transmission control, planning and cost allocation remains with member utility,” an upcoming presentation said. “It is unlikely that EDAM will result in a single, unified transmission rate across the EDAM footprint.”

CAISO will launch a stakeholder process in October, starting by releasing a paper outlining the initiative.

During the October 3 webinar, representatives from the Balancing Authority of Northern California, Puget Sound Energy, PacifiCorp and CAISO will discuss the feasibility assessment on behalf of the Western EIM entities.