Evaluation of production cost savings from consolidation of balancing authorities in the U.S. western interconnection under High wind and solar penetration

This paper introduces a comprehensive analysis to quantify the potential savings in production cost due to consolidation of 32 U.S. Western Interconnection Balancing Authorities (BAs). Three simulation scenarios are developed: the current structure of Western Electricity Coordinating Council (WECC) BAs, full copper-sheet consolidation, and full consolidation with transmission congestion considered. The study uses a WECC Transmission Expansion Planning Policy Committee model that was developed for the year 2020. The model assumes 8% wind and 3% solar energy penetration as percentage of total WECC demand in 2020. Sensitivity analyses are carried out to assess the impact of transmission hurdle rates between WECC BAs on potential benefits. The study shows that savings ranging from $440 million (2.4% of total one-year production cost) to $610 million (3.2%) per year in thermal unit production cost due to consolidation can be achieved. The copper-sheet consolidation scenario shows a further savings of $240 million (1.4%) per year.