NPP Petitions FERC for Input on Proposed CCED Market

Since 2012, the Northwest Power Pool’s (NPP’s) Members’ Market Assessment and Coordination Committee has spearheaded an effort to improve the reliability, efficiency, and cost of regional operations. On September 4, the committee petitioned the Federal Energy Regulatory Commission (FERC) for the answers to key “threshold questions” about its final work product – a proposal to provide a platform, called the Centrally-Cleared Energy Dispatch (CCED) Market, for voluntary 15-minute trading at a single clearing price.

Currently in the Northwest, transactions are performed bilaterally – as deals between two parties without a market operator. Organized markets for sub-hourly trades are new in the Northwest and are just now being evaluated. One such market is the western Energy Imbalance Market launched by the California Independent System Operator (CAL-ISO) and PacifiCorp in November 2014; which aggregates the variability of electricity generation and load for multiple balancing authority areas and utility territories, and performs a five-minute security constrained economic dispatch.

As described in the petition, the CCED Market would be an automated sub-hourly market overseen by a market administrator that performs centralized clearing of voluntary bids and offers from participants to inform regional energy dispatch, facilitated under the existing regional transmission framework.

The proposed market – intended to go live by year-end 2017 – would be built on a flexible implementation platform that preserves “future market optionality.” Specifically, NPP envisions that (1) infrastructure, capabilities, and procedures serving as the platform for the CCED should be as adaptable as possible, at reasonable cost, for future evolution to a five-minute security-constrained economic dispatch market (SCED); and (2) if NPP decides to implement the CCED, the members will use information gained from initial operation of the CCED to assess expected incremental benefits and costs of transitioning from CCED to SCED.

Thirteen balancing authorities (BAs) and three scheduling entities have signed on as founding CCED members – among them: Avista; Balancing Authority of Northern California (BANC);Bonneville Power Administration (BPA); Eugene Water & Electric Board; Idaho Power; NaturEner Wind Holding; NorthWestern Energy; Portland General Electric; Powerex; Public Utility District No. 1 of Chelan County; Public Utility District No. 1 of Snohomish County ;Puget Sound Energy; Seattle City Light Department; Tacoma Power; Turlock Irrigation District; and Western Area Power Administration, Upper Great Plains.

They are ready to advance the proposal, if the requested input from FERC is provided, the group said, noting, "Recognition by the commission that an all-voluntary market model is acceptable; that the unique characteristics of the region's resource mix will factor into oversight of market behavior; and that the region will have reasonable certainty with respect to the shape of the developing market are all critical factors in determining whether to move ahead."

Indeed the NPP petition asks that FERC agree to the following four “declarations” prior to implementation of the CCED Market platform:

1. Voluntary participation: Participation in the CCED Market is voluntary – and it is consistent with applicable law and precedent that each potential CCED Market participant is free to decide whether to (1) join or withdraw from the CCED Market; and (2) offer its energy for sale to, or bid to purchase energy from, the CCED Market in any interval at any given level.
2. Market manipulation: A decision by a generation owner/operator not to offer to sell generation in any interval in the voluntary CCED Market will not by itself demonstrate intent to manipulate the market and, in evaluating the presence of intent, the commission will take into account the unique factors affecting the operations and marketing of power from hydroelectric resources.
3. Exemptions: Participation in the CCED Market by exempt utilities [Federal Power Act, Section 201(f)] will not diminish the scope of their statutory exemption.
4. No unexpected changes: Under the Mobile-Sierra doctrine, an electricity or natural gas supply rate established resulting from a freely negotiated contract is presumed to be "just and reasonable." The petitioners ask that the commission declare that specific core features of their proposal can be protected by application of the “public interest” standard of review under the Mobile-Sierra doctrine, or its equivalent. For example, they said, Mobile-Sierra or its equivalent should be granted so that the market administrator will not propose or advocate other markets, such as a day-ahead, weekly, or monthly energy – or a capacity market.

Finally, in order to adhere to their delivery schedule, the petitioners requested that FERC issue a decision on the requested declarations no later than December 31.

The group promised, “This new regionally developed operational framework will afford a wide range of benefits while preserving local decision-making and protecting the integrity of the region’s power system, which has delivered low-cost, clean, reliable power to customers for decades.”