The grid merger that could reshape the western power sector
Politics, the old adage goes, makes for strange bedfellows. So it is with a proposal to merge PacifiCorp’s five-state transmission system with the California Independent System Operator.
A combined western grid could save consumers up to $9 billion over the next two decades, according to a study commissioned by the grid operators last year. It could also transform the West’s power system, prompting a boom in wind and solar and an end for many coal-fired plants.
But the plan is drawing objections from interests as varied as the Sierra Club and California lawmakers to Wyoming politicians and regulators. No one, it seems, wants to give up control of their transmission wires.
Greens fear California, with its requirement to obtain 50 percent of its electricity from renewable sources by 2030, would be required to accept the coal power that now underpins PacifiCorp’s system.
Politicians in Wyoming, one of the five states in the PacifiCorp grid, worry a merger could allow California to import its energy policies via electric wire and prompt a shutdown of the Cowboy State’s coal plants. Especially galling to them is the fact the CAISO commissioners are appointed by the governor and approved by the state legislature.
“I am not going to have Wyoming subject to the decisions of the California legislature,” Gov. Matt Mead warned in a recent interview.
Golden State lawmakers are similarly skeptical of a marriage with America’s top coal mining state, if for an entirely different set of reasons.
Six legislators, including Senate President Kevin De Leon, wrote a letter to California Gov. Jerry Brown in February, saying that while they were open to the idea of regionalization, a merger “must not undermine state sovereignty or cede authority of our state’s cutting edge clean energy and climate policies to others who do not have the same strong commitment and legal framework to reduce climate pollution and promote clean energy.”
A western grid isn’t a new idea. The concept of regional transmission system gained some traction around 2000. What’s different this time are renewables. California has so much solar power now that it is essentially turning off panels in the middle of the day because there is nowhere to send the electricity. Idaho, Oregon, Utah, Washington and Wyoming — the five states in PacifiCorp system — have significant wind resources, which generally produce late in the day and into the evening. Combine the two, the thinking goes, and you create a cheap, reliable, low-carbon grid.
There is already some precedent for such coordination. PacifiCorp and CAISO formed an energy imbalance market in 2014 to help address the variations. In its first year, the EIM, as it is called, generated $21 million in cost savings.
Significant challenges nevertheless remain. An integrated grid could cause some PacifiCorp plants to run less because they would have to compete to sell their power on the electricity grid. Under the California model, power generators compete to sell their power to CAISO. The lowest cost power is then sent over the wires to a local utility. PacifiCorp often assumes all three roles in its system.
That shift is a concern to Wyoming regulators. As a regulated utility, PacifiCorp is entitled to a guaranteed rate of return on its power plants. If those facilities run less, they worry, consumers might pay forced to make up for the reduced revenues in the form of higher rates. PacifiCorp is now studying what those costs could be.