By Mary Alice Murphy
On Wednesday morning, Aug. 22, 2018, PNM filed documents to the Public Regulations Commission for the utility to enter the Energy Imbalance Market.
"We foresee a $17 million savings through better utilization of renewable energy through the EIM," Tom Fallgren, PNM vice president of generation, said. "The EIM was created in 2014, as a voluntary real-time balancing of energy resources. If our filing is approved, PNM would be the 13th entity in the EIM. Energy imbalance occurs when the supply of energy doesn't meet the actual demand for energy. The EIM pools the resources of all members and enables the utilities to buy and sell electricity for short periods of time, such as five minutes and 15 minutes, at the most economical rate."
He said it provides more efficient use of energy generation and maximizes the benefits of renewable energy with the most cost-effective energy to back up the intermittent renewables in real time.
"It provides reliability and ensures renewables are used to their full potential," Fallgren continued. "The benefits are the savings, which will be passed directly to PNM customers."
Steve Terrell of the Santa Fe New Mexico asked how much it would cost to join the EIM.
Fallgren said a one-time up-front capital cost of $20 million plus start-up operations and maintenance costs, also a one-time cost of $7.4 million. Ongoing O and M would cost between $2.9 million to $3.9 million.
Terrell asked when the savings would happen.
"If the request is approved, the costs and benefits will kick in around April 2021," Fallgren said.
Noah Long, Interior West and Northwest Climate and Clean Energy Program director, said the EIM has brought interest across the West. "We are excited to see PNM join. Over all the utilities participating, we have seen so far more than $400 million net savings. The big benefit as we move toward greater use of renewable energy is to stop the curtailment of development of renewable energy, because we can use it when it is produced. As PNM moves toward more renewables, it will provide more benefits, as we use renewables more efficiently and displace more carbon."
Susan of the Associated Press asked, as the EIM moves energy around, will it require PNM to create more transmission capability. "And a second question, how did you arrive at the $17 million in savings?"
"We don't anticipate any need for more transmission infrastructure," Fallgren said. "We had an organization, E-3, do a benefit study. They came up with the amount. The E-3 study showed that PNM has a good degree of connectivity, so we don't anticipate more transmission. E-3 did a number of studies. I will let Mark tell you about the estimates from the studies."
Mark Rothleder, vice president of market quality and renewable integration at the California Independent System Operator Corporation, known as Cal ISO, said his organization calculates the benefits. "The past quarter, we saw $71 million in savings. We've seen more savings as more utilities come into the system. The actual benefits are at or exceeding the forecasted benefits because of more participation. After April 2021, we will report and you will see PNM's benefits."
Fallgren said the $28.3 million one-time costs will be offset by annual savings.
Doug Howe of DHA Consulting, served on the EIM Board as well as on the NM PRC in the past.
"It's an honor being on the first governing body of the EIM board, from which I stepped down July 1 of this year. The governance of the EIM is operated by Cal ISO, which has its own board. The Governance Board of the EIM is completely separate from the Cal ISO board. The EIM governance board has five members from diverse areas around the country. Two are from California, two from the Northwest—Washington and Montana—and one from outside the West, from Texas. They bring diverse perspectives, including different state rules that the EIM has to take into account, in a neutral way, so it serves the needs of everybody."
He said he has become quite the advocate of EIM. "I view it as not just a necessary step, but a desirable step, to reduce costs, knit together our 30-some independent utilities so we can share energy with each other when we have it and they can buy it when they need it. It provides a large footprint to be able to move excess energy around the system, so as Noah said, we don't curtail renewable energy resources when a particular entity has an excess. I have long wanted New Mexico to be a part of the EIM."
Fallgren said, along with the significant benefit for customers, the added benefit is the efficient use of renewable energy, which is also a positive direction.
Susan of the AP asked if the initial spending would affect customer rates.
"We have asked to recoup those costs in our next rate case," Fallgren said. "We will see economic benefits. What we did was anticipate being part of the EIM for a long time. We did an analysis over a 5-year period. We will continue to pay back the customer." He explained that on every bill is a fuels component and the benefits come through on the fuels component.
With no more questions, the session ended.