On Tuesday, February 12, 2013, the California Independent System Operator Corporation (“CAISO”) and PacifiCorp executed a Memorandum of Understanding (“MOU”) committing to jointly work toward the creation of a real-time energy imbalance market (“EIM”).  The parties identified several potential benefits from an EIM: participating in the EIM would allow PacifiCorp to quickly and accurately balance resources, efficiently meeting the needs of its transmission customers, while allowing CAISO to utilize its existing EIM system and processes to gain access to a wider array of resources.  Initially the EIM would be expanded only to include PacifiCorp, but both CAISO and PacifiCorp envision the EIM potentially including additional entities. 

CAISO and PacifiCorp are the two largest grid operators in the Western United States.  CAISO operates transmission facilities under its operational control, as well as wholesale electricity markets, including an energy imbalance market.  PacifiCorp is a vertically integrated utility that operates two Balancing Authority Areas, provides retail electric service to customers in California, Idaho, Oregon, Utah, Washington and Wyoming, and provides electric transmission service in nine Western states.  PacifiCorp will not be joining CAISO and will maintain control of its assets and responsibilities; the joint project is limited to the EIM service.

Prior to implementing the EIM, CAISO and PacifiCorp must execute a definitive formal agreement, referred to as the “Implementation Agreement,” which will detail the terms of agreement for the EIM project.  CAISO will then consult with EIM stakeholders, including PacifiCorp, for feedback regarding the expanded EIM and the development of rules under which the EIM will operate.  The parties anticipate that the new EIM framework would be consistent with the current CAISO governance and would allow for voluntary participation.  CAISO’s current EIM is operated pursuant to a tariff on file with FERC; in order to expand the EIM, the CAISO tariff will need to be updated with the new governing rules and procedures, subject to FERC approval.  PacifiCorp’s FERC-approved tariff will also require updating to synchronize with the new EIM provisions.

The MOU indicates that CAISO’s initial implementation costs associated with PacifiCorp will be covered by PacifiCorp, consistent with cost-causation principles.  When other entities are invited to participate in the EIM, they will be expected to fund their proportionate share of implementation costs.  Ongoing EIM administrative and implementation costs not accounted for would be recovered through a rate filed with FERC.  The initial draft schedule calls for the EIM market to open to initial participation as soon as October 2014.

To read more on the CAISO/PacifiCorp EIM project, click here.