By Hudson Sangree
LAS VEGAS — CAISO’s Western Energy Imbalance Market Governing Body and Regional Issues Forum met last week in Sin City’s fake take on an ancient Egyptian pyramid, the Luxor Hotel and Casino. In the casino, gamblers pulled on the handles of slot machines while nursing free drinks. In a nearby meeting room, RIF participants discussed resource adequacy while sipping free coffee.
They also heard from representatives from Modesto Irrigation District, Tacoma Power and Turlock Irrigation District, who explained why they plan to join the West’s real-time interstate electricity market.
Money was a factor, but so too was the evolving Western electricity market, where interstate trading of diverse resources across state lines appears key to the future.
“As more and more folks join the EIM … the thought of not participating in that market is just not feasible … to be blunt,” said James McFall, Modesto’s assistant general manager of electric resources. “You’d get left out in the cold, and we’d have a very illiquid market to access at that point.”
The irrigation district was formed in 1887 to supply water to farmers in California’s Central Valley. It became an electricity purveyor in 1923 and now serves nearly 129,000 retail, commercial and industrial customers across 560 square miles.
The neighboring Turlock Irrigation District, which is two days older than MID, has a similar backstory, said its energy markets manager, Dan Severson. Its hydroelectric dams in the Sierra Nevada foothills are now part of a portfolio that includes natural gas, biomass, solar, wind and geothermal generation.
In his presentation, Severson echoed some of McFall’s remarks. He said that as EIM participation increases, the bilateral hour-ahead markets are becoming less liquid, with fewer trading — which will increase costs going forward. As the EIM looks to expand to a day-ahead market, liquidity could be further reduced, he said.
By joining the EIM, “we [have] access to a larger network of energy providers and increased revenues from sales and increase purchase of megawatt-hours,” Severson said.
Tacoma Power’s electricity comes mainly from hydropower, said Clay Norris, the utility’s power manager. The 125-year-old municipal utility is a subsidiary of a parent company, Tacoma Public Utilities, that also owns and operates a short-line railroad serving the Port of Tacoma.
Norris said Tacoma Power ran its own analyses instead of hiring a consultant when it considered joining the EIM. Its scenarios didn’t all pencil out. The utility has about a 70% chance of recovering the hefty start-up costs of joining the market in the next 10 years, he said.
But the move was about more than finances, he said, echoing that bilateral trading was becoming more difficult in the West, and the broader market of the EIM is now the primary route for buying and selling electricity, with diverse resources and fluid trading.
“This decade has really been about the EIM, I think,” Norris said.
Washington, like several other Western states, now has a 100% clean energy mandate by midcentury and needs to modernize its trading practices to achieve that goal, he said.
The three new entrants join a growing list of EIM participants in a Western market that’s proven popular for its financial benefits and wholly voluntary participation.
The Balancing Area of Northern California signed an implementation agreement with CAISO that will allow members Modesto, Turlock and others to begin trading in the EIM in April 2021.
The BANC agreement represents the second phase of the balancing area’s approach to incorporating its members into the EIM. Sacramento Municipal Utility District entered the market in April. (See SMUD Goes Live in Western EIM.)
Tacoma plans to begin participating in the EIM in 2022. By that time, 77% of the Western Electricity Coordinating Council’s total load will be active in the EIM.