Berkshire’s PacifiCorp Gets Tens of Millions in Benefits from Energy Imbalance Market

(BRK.A), (BRK.B)

$30 million in annual savings would make most investors wobbly, but in Berkshire Hathaway’s case it is making them more balanced.

In 2014, when Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in a new Energy Imbalance Market (EIM), the market was touted as a way to balance electricity in-flows and out-flows on a regional basis that would bring millions of dollars in benefits to participating utilities.

The EIM began financially-binding operation on November 1, 2014, by optimizing resources across the ISO and PacifiCorp’s balancing authority areas (BAAs), which includes California, Oregon, Washington, Utah, Idaho and Wyoming.

The EIM improves the integration of renewable resources and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the entire EIM region.

Tens of Millions in Benefits a Year

The predicted benefits have proven to be true, and the California Independent Service Operator (CAISO) has been able to quantify the benefits from the April, May, and June 2015 to be $10.18 million.

In its July report, CAISO said that it, “continues to prove EIM’s ability to select the lowest cost resource across the PacifiCorp and ISO balancing authority areas to serve demand and measures benefits within the following categories, which were described in an earlier study conducted by Energy + Environmental Economics (E3)1 for PacifiCorp and the ISO.”

The report noted:

• More efficient dispatch, both inter- and intra-regional, in the Fifteen-Minute Market (FMM) and Real-Time Dispatch (RTD) by automating dispatch every fifteen minutes and every five minutes within PacifiCorp’s two BAAs and between the PacifiCorp and California ISO BAAs.

• Reduced renewable energy curtailment by allowing BAAs to export or reduce imports of renewable generation when it would otherwise need to be economically curtailed.

• Reduced flexibility reserves needed in PacifiCorp BAAs, which saves cost by aggregating the load, wind, and solar variability and forecast errors of the combined EIM footprint. This report introduces the flexibility reserve benefits for PacifiCorp but defers measurement of reduced flexibility reserve benefits for the ISO to future reports due to the need to develop additional measurement techniques.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.