PNM seeks to join Western states in ‘energy imbalance market’
Deal allows utilities to buy, sell power more efficiently
Public Service Company of New Mexico, the state’s largest electric utility, plans to join 12 other Western state utilities in what is known as an “energy imbalance market” — a regional agreement that allows members to buy and sell power to more efficiently meet demands.
The initiative is designed to increase use of renewable energy sources, such as solar and wind, and lower overall power costs.
PNM said the deal could mean annual savings of $17 million to $20 million, which would be passed on to customers. Customers, though, would foot the bill for startup costs and annual maintenance.
The plan has support from cleanenergy advocates who say it could benefit both customers and the environment.
“Energy imbalance is when the planned supply of energy doesn’t equal the actual demand for energy,” Tom Fallgren, vice president of generation at PNM, said in a Wednesday conference call with reporters. When this happens, he said, the energy imbalance market “pools the generated resources of all the members and enables the utilities to buy and sell electricity for a brief period of time … at the most economical rate.”
In other words, if there were a surge in electricity demand in Idaho, PNM could sell energy generated by rooftop solar systems in New Mexico to help cover that state’s need.
“This process allows the members of the market to create a more efficient use of generation and maximize the use of renewable energy,” Fallgren said.
PNM on Wednesday asked the state Public Regulation Commission to allow it to recover some $28 million in startup costs, plus ongoing operation and maintenance costs of about $3 million to $4 million a year, through a customer rate increase. If the commission grants the request, PNM would join the Western Energy Imbalance Market in April 2021.
Fallgren said fuel cost savings would offset the extra expenses for customers.
“This would provide the large footprint needed to move renewable energy
around,” energy consultant Doug Howe, a former member of the Public Regulation Commission, said in the conference call. Howe recently stepped down after two years as chairman of the Western Energy Imbalance Market’s governing body.
“I have long wanted New Mexico to be a member of the EIM,” he said.
Current members include California ISO; Arizona Public Service; Nevada Energy; Idaho Power; PacificCorp (which serves Oregon, Northern California, southeastern Washington and part of Utah); Portland General Electric; Powerex (a Vancouver, Canada-based utility); and the Washingtonbased Puget Sound Energy.
The Los Angeles Department of Water and Power and three other utilities are expected to join the market by 2020.
The website for the Western Energy Imbalance Market says eight utility members have seen nearly $402 million in savings since the market was launched in November 2014.
Fallgren said PNM doesn’t anticipate building more transmission infrastructure when it joins the Western Energy Imbalance Market. “PNM does have a good degree of electric connectivity,” he said.
Clean-energy advocacy groups, some of which have opposed PNM plans in the past, said they like the idea.
A senior staff attorney for Western Resource Advocates — which frequently intervenes in PNM cases before the Public Regulation Commission — said Monday her group “is very supportive of PNM joining the Western EIM.” Jennifer Gardner said in an email that such markets “are an essential tool to achieve a clean energy future in the near-term. This is because organized markets reliably and cost-effectively integrate renewable resources, reduce emissions, and lower operating costs while improving reliability and making more efficient use of existing transmission.”
Since 2015, Gardner said, Western EIM has reduced greenhouse gas emissions by 306,112 metric tons for California utilities alone.
Mariel Nanasi, director of the Santa Febased New Energy Economy — and one of PNM’s fiercest critics — also had good things to say about the basic concept.
“In general, I think this is a good idea because joining a pool of energy producers lessens the amount of ‘reserve’ any one particular utility needs on its system,” she said. “We have just received PNM’s filing and haven’t had a chance to review it. The question will be: Is this cost-effective for customers?”
Noah Long, a lawyer with the Natural Resources Defense Council, said his group is excited about PNM joining the market group. “We’re hopeful that PNM will start seeing a share of those benefits when it joins, and particularly hopeful that PNM moves to a more renewable energy-dominated system in the coming years,” he said.
PNM is proposing eliminating coal power from the company’s resources by 2031 and shutting down the aging San Juan Generating Station by 2022.
“We’re hopeful that the 2020s will see really significant increases in renewable generation, and this will provide even more value to customers here in PNM’s territory and across the West as more renewable energy is utilized displacing more carbon,” Long said.