(BRK.A), (BRK.B)
Berkshire Hathaway’s NV Energy has been issued an order from the Federal Energy Regulatory Commission to redo its rates, including issuing revised rates that go back retroactively to Jan. 9, 2015.
The new rates will bring consumers refunds as FERC found that NV Energy, and Berkshire’s other utility PacifiCorp, were not allowed to sell electricity at market rates.
“…we find that the additional information supplied by the Berkshire MBR Sellers has failed to rebut the presumption of market power in the PACE, PACW, Idaho Power, and NorthWestern balancing authority areas. In the absence of reliable delivered price test (DPT) analyses rebutting the presumption of market power, we find that continuation of the Berkshire MBR Sellers’ market-based rate authority in these four balancing authority areas is not just and reasonable.”
FERC went on to order new rate plans.
“Therefore, we herein revoke the Berkshire MBR Sellers’ market-based rate authority in the PACE, PACW, Idaho Power, and NorthWestern balancing authority areas. Accordingly, the Berkshire MBR Sellers are directed to file revised market-based rate tariffs further limiting sales at market-based rates to areas outside of the PACE, PACW, Idaho Power, and NorthWestern balancing authority areas within 30 days of the date of this order.”
The order comes as Berkshire has been reaping millions in benefits from the recently formed western Energy Imbalance Market.
NV Energy entry into the real-time market in December 2015 produced significant benefits because their participation increases transfer capability between the participants. Interregional transfers enabled in EIM allows each balancing area to take advantage of lower cost resources in other areas.
According to the California Independent System Operator (ISO), total benefits realized in the 2015 fourth quarter were $12.29 million, which increases the total benefit since the November 2014 EIM launch to $45.7 million.
Besides the benefits produced by interregional transfers, savings were also realized by avoiding having to reduce renewable resources’ output in the ISO control area during times of oversupply.
The total avoided energy reduction for Q4 was 17,573 megawatt hours, which greatly outpaced the avoided reductions of 828 megawatt-hours in Q3.
Avoiding the renewables output reductions in Q4 displaced an estimated 7,521 metric tons of carbon emissions.
About the Energy Imbalance Market
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. The only real-time energy market in the Western U.S., advanced ISO market systems automatically balance supply and demand for electricity every fifteen minutes, dispatching the least-cost resources every five minutes.
© 2016 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.