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WGG Comments – NV PUC Docket No. 11-04025

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BEFORE THE NEVADA PUBLIC UTILITIES COMMISSION
DOCKET NO. 11-04025

INVESTIGATION REGARDING THE CREATION OF AN ENERGY IMBALANCE MARKET

COMMENTS OF WESTERN GRID GROUP

The Nevada Public Utilities Commission voted to open Docket No. 11-04025 on May 11, 2011 to investigate creation of an Energy Imbalance Market. In the first Notice issued in the docket, the Commission requested that interested parties file comments by September 30, 2011 and that these comments may include recommendations regarding the scope of the investigation, analyses evaluating the costs and benefits of an EIM, and any other information that might aid the Commission in conducting this investigation. In response to the Commission’s request, Western Grid Group files these comments that include our recommendations for the scope of this investigation.

WGG commends the Nevada PUC for opening this ground-breaking EIM investigation docket. We believe that a diligent and complete investigation of EIM costs and benefits will help the Commission, jurisdictional Nevada utilities and Nevada’s electric customers determine whether and to what extent Nevada utility participation in the EIM would be beneficial to Nevada consumers.

Western Grid Group (“WGG”) works with utilities, regulators, Governors and other decision-makers to plan and support transmission access for clean resources, and to encourage development and implementation of operational and market reforms that reduce costs of integrating renewables while improving system operational flexibility. WGG works in regional and subregional planning venues and in state regulatory proceedings to reduce barriers that limit transmission access for clean resources. Biographies of the Western Grid Group are found at: http://www.westerngrid.net/about/team/bio/
Within Western Electricity Coordinating Council, (“WECC”) WGG has monitored and supported development of the Efficient Dispatch Toolkit and the Energy Imbalance Market proposals. WGG attended the Western Governor’s Association’s EIM Crossroads meeting (http://www.westgov.org/EIMcr/index.htm) and has been actively supporting the WECC EIM cost and benefit study work. In addition, WGG previously filed comments with WECC about their EIM analysis: http://www.westerngrid.net/2011/07/how-a-westwide-eim-helps-reliability/

Scope for NVE Balancing Area EIM Analysis

WECC has completed a cost benefit analysis for establishing an EIM within the Western Interconnection and a functional description of the proposed EIM. While both efforts support development of an EIM, an investigation at the balancing area level still needs to be completed. In fact, WECC has stated that balancing areas need to decide for themselves whether it makes sense for them to participate in an EIM. The remainder of these comments provide a brief summary of WECC’s effort to evaluate establishment of EIM in the Western Interconnection and WGG’s recommendations for scope of the investigation in this docket.
Western Electricity Coordinating Council (“WECC”) has completed two white papers addressing its efforts to assess an EIM. The first was completed on June 22, 2011 and is entitled, “WECC Efficient Dispatch Toolkit Cost-Benefit Analysis.” This paper provides a range of cost and benefits attributed to establishment of an EIM based upon various levels of balancing area participation and various infrastructure and operating cost scenarios.

This paper can be found at the following link: http://www.wecc.biz/committees/EDT/EDT%20Results/EDT%20Cost%20Benefit%20Analysis%20Report.pdf .

The second paper, “Energy Imbalance Market Functional Specification” Dated September 8, 2011, provides the functional specification for the EIM investigation that is currently being contemplated. This document was prepared by the Efficient Dispatch Toolkit Steering Committee, of WECC.
This document can be found at the following link: http://www.wecc.biz/committees/BOD/09212011/Lists/Minutes/1/12a%20EIM%20Functional%20Specification.pdf.

These two papers should provide the background information to understand WECC’s effort to describe the proposed EIM and analyze the cost and benefits of establishing an EIM in the Western Interconnection. WECC’s efforts are ongoing.

From the perspective of our analysis to date, we believe that there are potentially enough regional benefits that have been demonstrated in WECC’s analysis to suggest that the burden of proof should be placed on utilities that determine not to participate in the EIM to show in detail, upon the public record, why they should not participate.

Accordingly, we recommend that the focus of this investigation should be on assessing the cost and benefits to the NVE balancing area associated with participation in a regional EIM.
To help the Commission determine the scope of analysis to undertake in this investigatory docket, we respectfully submit the following questions for the Commission’s consideration and goals for this investigatory docket.

General Questions to Assess the Status of a WECC- wide EIM Investigation:

1. What is the status of WECC’s EIM investigation and what does WECC’s EIM cost and benefit analysis show to date?
2. How does balancing area participation affect the cost and benefit analysis for an EIM? If benefits are dependent upon the level of balancing area participation (i.e., more participation equals more benefits), how can an analysis be coordinated with other balancing areas so that a true measure of the benefits and costs can be made?
3. What efforts are underway by WECC for providing assistance with an assessment of implementing a WECC-wide or partial WECC-wide EIM?
4. What analysis is currently contemplated by balancing areas for assessing the costs and benefits of participating in an EIM?

Recommended Goals for this Investigation:

1. Identify the range of benefits to Nevada attributed to participation in a regional EIM;
2. Identify the drawbacks to Nevada attributed to participation in an EIM;
3. Determine how NVE will coordinate its analysis with other balancing authorities for assessing the cost and benefits of participating in an EIM (e.g., is NVE working with other balancing areas to complete this assessment?);
4. Identify EIM analysis completed by other balancing areas addressing costs and benefits of participating in an EIM that could be used in this investigation (determine who else is conducting this analysis and how are they doing it);
5. Determine what inter-balancing area cooperative framework is required for completing a coordinated balancing area analysis;
6. Identify what other tools and analysis (such as the E3 and NREL analysis) show regarding the impact of an EIM on the NVE balancing area (e.g., what do the E3 and NREL methods for assessing EIM impacts show about the impact of an EIM on NVE?);
7. Identify the tools and analysis that are required to complete a cost benefit analysis of the EIM for NVE’s balancing area and determine whether NVE has the proper tools to complete such an analysis (If NVE does not have the proper tools, what is required to complete such an analysis?);
8. Identify what EIM analysis has been completed by NVE or is contemplated by NVE and determine what position NVE has espoused on the EIM proposal;
9. Identify the range of rate impacts on Nevada customers assuming participation in an EIM (e.g., would rates be higher or lower with or without an EIM?);
10. Determine whether an to what extent an EIM will affect utilization of transmission and generation assets by NVE;
11. Determine how an EIM will affect the amount of capacity required within NVE’s balancing area;
12. Determine how participation in an EIM will affect the reliability of NVE’s system;
13. Determine the anticipated impact on transmission revenues associated with participation in an EIM;
14. Determine the production cost impacts of participation in an EIM;
15. Determine the emission level impacts of participation in an EIM;
16. Determine whether NVE has generation resources that could be dispatched in an energy imbalance market and how would such participation affect retail customer rates;
17. Determine how the costs of integrating renewable resources through the resource planning period in order to comply with Nevada’s RPS (or exceed the RPS) compare with and without an EIM.
Conclusion:
Participation in an EIM appears to offer the following benefits:
1) More efficient use of the transmission system;
2) More efficient dispatch of generating resources;
3) Greater ability to integrate renewable generating resources;
4) Lower cost for balancing loads and resources; and
5) Reduced potential for firm load curtailment.
In addition, EIM may have the potential to offer additional benefits:
6) The potential to reduce reserve requirements; and
7) The potential to improve system reliability.
Regional analysis performed by WECC and its supporting consultants appears to suggest that, if implemented within defined parameters and budgets, balancing area participation in a WECC-wide EIM would offer cost savings net of implementation and operating expenses that could be shared among regional participants. Therefore, we suggest for the Nevada commission’s consideration that the focus of this investigation should be on a balancing area and inter-balancing area assessment of participation in an EIM, with the burden placed on regulated firms that operate balancing areas to show why they should not participate in the EIM proposal.

Western Grid Group thanks the commission for this opportunity to contribute to a truly groundbreaking effort. We believe that other jurisdictions will be looking at the Nevada commission’s efforts to help them with their own assessment of what public interests might be advanced by broad participation in the EIM proposal now before the region.

Respectfully submitted,

/s Carl B. Linvill

Carl B. Linvill

/s John E. Candelaria

John E. Candelaria

For the Western Grid Group