Buffett’s PacifiCorp Studies Joining California Power System
Source: by Lynn Doan, Bloomberg • Posted: Thursday, April 16, 2015
PacifiCorp, part of Warren Buffett’s Berkshire Hathaway Inc., is considering joining California’s power grid, expanding the state’s access to renewable energy.
The company is studying the feasibility of becoming a transmission-owning member of the state-wide network operated by California Independent System Operator Corp., the company and the Folsom, California-based ISO said in statements on Tuesday. The Portland utility would become one of only two transmission owners outside of California to be a part of the system.
The ISO would take operational control over PacifiCorp’s 16,300 miles of transmission lines spanning six western states, expanding its footprint by almost 40 percent and increasing the renewable energy available to help meet California’s goal of buying 33 percent of its power from renewable energy resources by 2020. The move would build on a market that the ISO and PacifiCorp established Nov. 1 that allows utilities to trade power between their territories within seconds, smoothing out swings in supply and demand.
“PacifiCorp’s full participation can make our market much stronger,” California ISO chief executive officer Steve Berberich said in an e-mailed statement. The utility’s membership “can help lower costs, better leverage assets and reduce emissions across the region.”
PacifiCorp is the second-largest owner of wind-powered generation in the U.S., behind MidAmerican Energy Co., another Berkshire Hathaway Energy Co. unit, according to the company’s website.
Energy Portfolio
Buffett’s energy subsidiaries have spent at least $26 billion to accumulate a portfolio of transmission lines and power plants in the western U.S. The joint “energy imbalance” system that PacifiCorp and California ISO began last year increased Berkshire renewables’ access to markets.
“There are a lot of questions that will need to be answered, but we have an opportunity and an obligation to look at whether taking this next step will provide additional benefits for customers,” Cindy Crane, chief executive officer of PacifiCorp’s Rocky Mountain Power unit, said in an e-mailed statement.
Adding renewable generation to California’s grid threatens to further cut prices for independent power generators. Gas-fired plant owners in the state including Dynegy Inc. have said the influx of solar and wind on the California grid has had a negative financial impact on traditional generation.
“Any additional supply, all else being equal, is negative for merchant generators,” Paul Patterson, a New York-based analyst for Glenrock Associates LLC, said by phone on Tuesday.
The Federal Energy Regulatory Commission is investigating the energy imbalance market run by California ISO and PacifiCorp after the system resulted in “price spikes” within PacifiCorp’s territory, filings show. The agency held a technical conference last week about the pricing anomalies.