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Energy Insights

November 2015  •  Issue 5

Steve Berberich photoThe last few months have been remarkable, even historic, for the California ISO, and it's just the dawning of what will be an era of dramatic change for the energy market and power grid.

A common theme is developing in the recent activity of the ISO. As we work toward integrating electricity markets across state lines, the advantages of a western power grid become more clear and evident. A regional, coordinated system has the potential to save billions in energy costs in the next several years, and shepherd growing amounts of cleaner energy onto the grid.

While the cost benefits of the ISO's Energy Imbalance Market (EIM) were summed up in a recent report, NV Energy pledged to join the real-time market. Then, our current EIM participant, PacifiCorp, announced its intention to create a regional grid with the ISO. That was followed by a study that showed combining the two systems could substantially reduce energy costs, improve reliability and coordination, and incorporate more clean energy into the network.

The ISO also got the greenlight to explore modifying its governance structure to open the door for the grid regionalization, in the form of the recently passed state law, the Clean Energy and Pollution Reduction Act of 2015. The law requires California get half its energy from renewables by 2030.

There is much work to be done in the next few years. But the ISO and its stakeholders have begun a long journey toward the clean electricity network of the future, and we hope to be a model for the nation and the world on how to incorporate renewables, lower carbon output and create a healthier tomorrow for generations to come.


Steve Berberich, President and CEO

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PacifiCorp study on integration shows huge benefits

Combining the electric grids operated by the ISO and PacifiCorp could reduce energy costs by billions of dollars and help states meet environmental targets, according to a study on the creation of a western regional power marketplace.

The study added heft to a groundswell of support growing for a western regional energy market, seen as a way to accelerate the shift to cleaner energy sources and build a more reliable grid with lower electricity costs. To view the ISO's press release on the benefits study, click here.

PacifiCorp, based in Portland, OR, announced in April it will explore benefits of joining the ISO grid as a full participating transmission owner, marking the first step to a regionally coordinated energy market.

California is a worldwide leader in driving renewably sourced energy into its power mix, and has set a goal of getting half its electricity from renewable sources by 2030. But climate-changing greenhouse gases don't stop at state borders. A regional energy market could help propel California toward that benchmark, and more importantly, promote cleaner energy sources for the entire western region, serving as a model for the nation and world.

PacifiCorp's plan advanced discussions about the prospects and merits of a regional energy market. From environmentalists and utilities to policymakers and legislators, energy experts across the board are endorsing the concept of expanding the geographic area and resource diversity to lower carbon emissions and reduce electricity costs.

For more information on regionalization of the ISO power grid, click here to view our website's new regional energy market page, including a collection of “What They're Saying,” with statements from industry stakeholders.

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Landmark legislation signed by Governor Brown

Following passage of a landmark California law to fight climate change, the ISO is gearing up to play a major role in reducing carbon from the power grid.

Gov. Edmund G. Brown Jr. signed the Clean Energy and Pollution Reduction Act of 2015 in October. It enshrines a 50-percent renewable portfolio standard for the state and starts the process of allowing the ISO to become a regional electric grid.

The legislation grew out of Brown's commitment to shrinking the state's carbon footprint and reducing greenhouse gases. It is part of a growing shift to a regional system in the western states, with the aim of improving coordination of electric networks across a larger geographic footprint and encouraging more clean energy to flow into the grid.

The state is already on target to meet state mandates for getting 33 percent of the state's electricity from renewable sources by 2020, and now the ISO will support the new goal of procuring half of California's energy from renewables by 2030.

The legislation also sets in motion changes in law necessary for PacifiCorp and other utilities to join the ISO grid as full participants, which will lead to the regional electrical network of the future. Under the law, the ISO will be charged with studying issues surrounding regionalization, making recommendations for policies, and fostering the transition to a western power grid in the next several years.

The law also will double energy efficiency in all existing buildings by 2030.

For more information on the law, click here. To read the law, click here.

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NV Energy set to join EIM

EIMFollowing reports that the ISO's Energy Imbalance Market (EIM) has already saved $33 million in energy costs, the real-time market continues to grow, with NV Energy entering soon.

The market balances electricity demand and supply every 15 and five minutes.

The Las Vegas utility and the ISO have been preparing about a year for NV Energy's entry, spending the past two months extensively testing systems to make sure they are compatible and interfacing, and practicing processes for support of grid reliability.

The northwest utility PacifiCorp was the first out-of-state EIM participant, and since November 1, 2014, the market shaved more than $33 million off the cost of producing and delivering energy. With NV Energy entering the market, an independent study calculated EIM participants, including the ISO, will share an additional $9 million to $18 million per year by 2017 as economies of scale kick in. NV Energy itself will save $6 million to $10 million per year by 2017 and nearly $12 million by 2022.

Before implementation can proceed, the ISO and NV Energy need additional authorizations from the Federal Energy Regulatory Commission. New market entries are implemented on the first day of the month to align with market settlements. While awaiting final approvals, the ISO and NV Energy will continue to be prepared to bring the utility on as a fully participating member of the real-time market.

As more utilities enter the EIM, it's anticipated that more savings will be generated. Puget Sound Energy of Washington State and Arizona Public Service, based in Phoenix, Arizona, expect to begin participating in the EIM in October 2016. Meanwhile, Boise-based Idaho Power and Portland (Ore.) General Electric are now exploring joining the EIM.

For more information on EIM, visit the webpage here.

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ISO Stakeholder Symposium gathered international energy leaders

The ISO's 2015 Stakeholder Symposium drew nearly 900 participants from throughout the state, nation and world to discuss the challenges and solutions of shifting to clean energy sources. The two-day event at the Sacramento Convention Center was titled "Leading the Way to 50 Percent," reflecting California's mission to procure half its energy from renewable sources by 2030. It featured international perspective on greening the grid with attendees and speakers from Europe and Mexico.

To view slide show presentations and videos of keynote addresses, click here to visit the ISO Stakeholder Symposium page.

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SCE and ISO mark demand response milestone

Demand response means that consumers have the option to reduce their electricity use and receive bill discounts from their utilities for doing so. Previously, it was used only to reduce demand on the system to maintain reliability, such as during hot days or to ease grid stress during emergencies, but it has now become a significant grid resource.

In 2010, the ISO established the Proxy Demand Response and Reliability Demand Response Resources programs, allowing a third party – such as a utility or an independent vendor – to aggregate residential, small and large business consumers into one resource large enough to participate in the ISO's wholesale energy market. Southern California Edison is now aggregating about 320,000 customers as part of the programs and is actively offering about 164 megawatts* of proxy demand response into the market and about 1,227 megawatts from reliability interruptible customers. This demand response reduces the total generation needed to serve consumers and gives the ISO an opportunity to plan for resources more efficiently and reliably. The revenues from the utility's demand response program will help offset the prices that its customers pay for power bought on their behalf. But just like with generators, demand response has to be there as promised, because the ISO uses the megawatts in planning daily grid reliability.

Edison noted this market milestone in an August news release.

For the ISO's demand response vision, see our Demand Response and Energy Efficiency Roadmap.

*1 megawatt powers roughly 1,000 homes (750 during the summer)

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