Northwest power pool ends market operator search

OREANDA-NEWS. The Northwest Power Pool members have ended the formal process for choosing an independent operator to oversee its proposed energy imbalance market for the Pacific northwest and western Canada but work still continues on the proposed market structure.

A 19 member-member committee of the pool representing balancing area and scheduling coordinators with almost 26GW of installed capacity issued a formal request for proposals in October 2014 to find an independent operator for the proposed market and a decision was expected early this year.

The California Independent System Operator (ISO) and the Southwest Power Pool (SPP) submitted bids. But the solicitation was closed due to "challenges with both bids," Seattle City Light director of power contracts Robert Cromwell told Argus.

Cromwell serves on the leadership group of the northwest pool's market assessment and coordination committee which issued the request for proposals. The committee includes the Bonneville Power Administration, British Columbia's BC Hydro, Seattle City Light, Portland General Electric and 15 other members of the northwest pool.

The California ISO launched an energy imbalance market in November 2014 that incorporates PacifiCorp's Pacific northwest and Rocky Mountain balancing areas but that effort has been plagued by price volatility that has required constant manual intervention by dispatchers to keep prices from spiking.

SPP ran an energy imbalance market in the central US for more than a decade before transforming into a more formal day-ahead power market in early 2014.

The bids "both met our technical needs but presented challenges in other areas," Cromwell said.

The committee ended the search for a market operator but continues to talk to each bidder to "find ways, if possible, to move forward," he said.

SPP officials said in a statement that "the success of our previous [imbalance market] and our related expertise puts us in a unique position to help the NWPP create a market that meets its short- and long-term business objectives."

Cromwell said work continues in other areas in hopes northwest utility leaders will commit to the new market structure later this year. The group is considering a declaratory filing at the Federal Energy Regulatory Commission and developing technical tools needed to implement the imbalance market.

"This is the first time in roughly a decade we have every utility, balancing authority, the major scheduling entities all working together toward some common goals," Cromwell said. "It is tremendously encouraging."

A successful outcome is far from assured. Some northwest public utilities are concerned about additional costs to operate the market and some are said to be weighing membership in the fledgling California imbalance market.

The northwest pool last year estimated cost savings from the new market at \$70mn-\$80mn/yr. Some pool members are concerned that costs of operating the market will exceed savings significantly.

The northwest market will be based on a security-constrained economic dispatch model under an independent operator. The northwest pool said its imbalance market will differ from others because its members rely on coordinated hydropower generation and already have reserve sharing policies.