During particularly hot weather, Cal ISO has been right on the edge of not having enough power to meet demand. The operator had to order power at least a day ahead of an expected spike in power consumption.
But new system called an "energy imbalance market," is changing that. The system is a partnership between Cal ISO and PacifiCorp Power, which is based in Oregon.
Don Fuller with Cal ISO says the operator and power company can now automatically purchase the cheapest available power from each other when it's needed.
"It could fluctuate from hour-to-hour," says Fuller. "It could be that we've got a couple hundred megawatts flowing into California one hour and it could switch around the next hour under this approach."
PacifiCorp Power supplies power to six western states.
NV Energy from Nevada plans to join the market next year.
The new system is expected to cost as much as $6 million to establish with at least $29 million in annual savings.
An independent monitor is tasked with making sure there is no collusion or price-fixing among power suppliers.
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