On May 29, 2015 at their Executive Committee meeting, the participants in the Northwest Power Pool’s Market Assessment and Coordination Committee Initiative (NWPP-MC) unanimously adopted a resolution outlining the NWPP-MC’s priorities through the rest of 2015. Fully half of the announcement is dedicated to quotes from executives around the region describing their “full commitment”, “full support” and “commitment across the board” for the resolution. At the time many clean energy advocates took those statements at face value.
As part of that resolution, the NWPP-MC participants who operate balancing areas (BAs) agreed to join the ACE Diversity Interchange (ADI) program. The ADI pools the momentary imbalances (Area Control Error) among balancing areas. Instead of having to respond to ACE individually, ACE among the participants is aggregated and evened-out thereby minimizing the burden on individual BAs to dispatch balancing reserves. ADI has been operating in the West since 2006. Start-up costs to join are minimal — less than $25,000. Benefits of ADI have been estimated at $2.1 million/year in avoided reserve dispatch.
For start-up costs of $25,000 against a share of $2.1 million in benefits annually, joining ADI is a no-brainer. In fact, you might legitimately wonder why so many NWPP MC participants hadn’t already joined. But let’s set that question aside.
What is truly concerning is that in the three months since the NWPP MC Executives unanimously agreed to join ADI, only half of those who weren’t already participating have actually joined (PGE, BANC, Avista, Tacoma). To date, Chelan, WAPA, Seattle City Light and PSE still haven’t joined – despite the clear benefits and minimal start-up costs.
Despite their stated unanimous full commitment and support, NWPP has failed to achieve 50% participation in the lowest-hanging-fruit commitment. Other elements of the NWPP-MC initiative, like centrally cleared economic dispatch (CCED) and regulation reserve sharing, have higher costs and will require more internal operational changes – higher hurdles – than ADI. One wonders how successful the other elements of the proposal will be if they can’t achieve 50% participation in a proven, low-cost program with measurable benefits.
Nevertheless, many in the NW continue to believe that the NWPP MC represents a viable alternative to the Energy Imbalance Market. Maybe some of the stragglers will step up and join ADI. Maybe the other more complicated and more expensive elements of the NWPP-MC Initiative really will receive the unanimous full support and commitment promised. The underwhelming progress on ADI to date would indicate otherwise.
Nonetheless, BPA has scheduled workshops to explore its continued involvement in the next phase of the NWPP-MC Initiative. And just around the corner are pre-rate case workshops exploring how the Centrally Cleared Economic Dispatch program will impact BPA’s products and services offerings – like the wind integration rate (VERBS) and the quality of balancing service it will provide to support the operation and future development of renewable resources in the region.
If you have questions about NWPP-MC, EIM, ADI, CCED, or how any of these will impact the VERBS rate or your project, please contact us.
