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Berkshire Hathaway firms complicate Cal-ISO EIM

FERC OKs three EIM orders, frees up NV Energy

Rockville, MD (November 24, 2015) – At FERC's regular meeting it moved three orders on Cal-ISO's energy imbalance market (EIM) and NV Energy's participation in it. The two recently had to delay the utility's participation while waiting for some actions from FERC.

The commission accepted the ISO's "readiness proposal" that was designed to stop the uneconomic price spikes seen when PacifiCorp first joined the EIM late last year. The proposal included specific, measurable readiness criteria that have to be met before an entity can go live in the EIM.

The price spikes happened because PacifiCorp had challenges in giving the ISO timely and complete data, so it lacked adequate system visibility. That situation was exacerbated by limits on the resources PacifiCorp could use in the EIM.

The new requirements will make it so other members are able to show they are ready and will identify any operational issues before they start fully taking part. The criteria deal with full network model integration, systems readiness, load and variable energy resource forecasting, communications systems between the member and the ISO, the ability to issue settlement statement, outage management, scheduling, market simulation, parallel production plan and training.

The ISO will assess future market participants' readiness for EIM participation and make an informational filing at FERC 30 days before they start in full operation with the new market.

NV Energy did not have market-based rate (MBR) authority in its footprint and getting that for sales there and in the broader EIM was also a necessary move in joining the market. FERC's order on the MBR application was a mixed bag for the utility, rejecting some parts and accepting others.

NV Energy and PacifiCorp are owned by Berkshire Hathaway Energy and they filed jointly because FERC also required PacifiCorp to get an updated authority for its deals in the EIM with its corporate sibling set to join.

The two submitted a study claiming 11,811 MW of generation outside EIM territories was available to take part in that market, but FERC said it believes the number is lower. That figure assumed all of the generation in nearby markets could take part, but that is not the case.

The two also declined to study the PacifiCorp East balancing authority, reasoning that NV Energy's inclusion would open it up to more supply. But FERC said it was not convinced the EIM does not include submarkets such as PacifiCorp East.

The ISO has direct connections with NV Energy and PacifiCorp West, but none with the utility's East balancing authority. NV Energy is connected to the ISO and PacifiCorp East, but not West.

About 1,500 MW of supply can go from the ISO into NV Energy at any given time, but that is not always available, FERC noted.

"This is problematic because all of the EIM-participating generation in the NV Energy and PacifiCorp-East balancing authority areas is owned by the Berkshire EIM sellers," the commission said. "Therefore, when the interconnections between CAISO and the NV Energy balancing authority area are constrained, customers in the NV Energy and PacifiCorp-East balancing authority areas must take service from a Berkshire EIM seller for imbalance energy."

Given FERC's lack of faith in the market-power studies Berkshire submitted, the order moved onto whether the ISO's mitigation could handle that market power. FERC has a rebuttable presumption on MBR matters that ISO/RTO market monitoring and mitigation is sufficient to police market power.

This story was originally published in Utility Markets Today (http://www.utilitymarketstoday.com/members/Berkshire-Hathaway-firms-complicate-CalISO-EIM.cfm?ref=PressRelease) on November 20, 2015, and has been slightly edited for this format. To read more articles like this one, sign up for a Free Trial to Utility Markets Today.

UTILITY MARKETS TODAY is published 245 times per year on business days by Modern Markets Intelligence Inc. UMT's mission is to deliver exclusive news chronicling ongoing efforts to build competitive wholesale and retail energy markets with in-depth analysis on why some fail and others succeed.

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