ORIGINAL REPORTING: Why California Wants Western Electricity Delivery Organized

Better together: How an organized market can help clean up the western US grid; Today 38 separate balancing authorities deliver power out West. A new paper says a single market would be more efficient.

Herman K. Trabish, May 11, 2016 (Utility Dive)

Editor’s note: This California grid operator effort continues at a steady pace despite political changes at the federal level.

When brownouts and price spikes caused the California energy crisis in 2000, the momentum for power sector deregulation and organized markets stalled, leaving the nation with a complicated mix of market and regulatory structures. Utilities in the Southeast and West, except for the California Independent System Operator (CA ISO), continue to operate in the vertically-integrated model, absent the organized market structure that now serves more than two-thirds of Americans. But a formal proceeding at the CA ISO is now underway that would integrate the 38 separate Western balancing authority areas (BAAs) into a market potentially richer in resources than the Midcontinent Independent System Operator (MISO) or the PJM Interconnection.

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Organized markets in other regions have proved that grids with larger geographic footprints and bigger resource bases are cleaner, cheaper, faster, and safer to operate than those run by vertically-integrated utilities, according to Regional Transmission Organizations: Recommendations for the West from the Natural Resources Defense Council. It argues that a single organized Western market could integrate significantly higher amounts of renewable energy generation. Real time, economic dispatch would allow the system operator to choose the lowest-cost resources to meet demand. Renewables, because they have no fuel cost, are often the lowest cost and first dispatched generation resources though the historically low price of natural gas means it undercuts wind and solar in some regions. The more renewables there are, the less fossil generation is used to meet load and the less competitive conventional plants become… click here for more

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