UPDATE 1-Calif ISO, PacifiCorp to expand real-time energy market

Tue Feb 12, 2013 5:35pm EST

Feb 12 (Reuters) - The California Independent System Operator (ISO) and PacifiCorp have signed an agreement to expand the ISO's real-time energy imbalance market to take advantage of PacifiCorp's growing renewable resource base in the Northwest, officials said Tuesday.

ISO officials said the plan should attract other participants to the market as well.

"Increased coordination of energy systems in the West is critical if we are to meet important challenges such as ensuring reliability, keeping costs down for customers and effectively integrating renewable resources," Greg Abel, chief executive of Portland-based PacifiCorp, said in a statement.

Pacificorp, a unit of MidAmerican Energy Holdings Co, operates utilities in California, Oregon, Washington, Utah, Wyoming and Idaho, and will invest about $2.1 million to set up its systems.

Through more frequent dispatch of power generation to match actual electric demand across a broader geographic region, officials said the voluntary energy-imbalance market will better utilize the growing amount of available wind and solar power.

"It allows us to call on each other's flexible resources in a very dynamic way," Abel said.

More work is needed to quantify financial benefits for PacifiCorp. "We clearly know there are significant benefits," Abel said.

PacifiCorp utilities own 1,000 megawatts of wind generation, contract with another 900 MW of wind, he said. Another 600 MW of wind generation is located in PacifiCorp's two balancing authorities. PacifiCorp will not join the ISO.

California's ISO plans to implement the expanded imbalance market by October 2014.

The savings will also help California customers, said Steve Berberich, president of the ISO which dispatches power to serve about 40 percent of the load across the 14-state western power region.

Due to the diverse nature of generation and utility ownership across the West, numerous attempts to coordinate grid activity and transmission planning in the region have met with limited success or failure.

However, Berberich said market participants have been talking about and studying a variety of imbalance-market designs for several years.

"What we're finding is that Pacificorp is an outstanding partner for us to begin this effort," Berberich said on a call with reporters. "They provide a good example of value that can be had for their customers. That same value can be had for the other players in the West, too."

The memorandum of understanding signed by PacifiCorp and the ISO is expected to lead to a formal agreement to be considered by the ISO Board of Governors in March.

MidAmerican is a unit of Warren Buffett's Berkshire Hathaway .