By Robert Mullin
The Sacramento Municipal Utility District (SMUD) announced on Friday it will begin negotiations with CAISO to join the Western Energy Imbalance Market, and other members of the Balancing Authority of Northern California (BANC) may follow.
BANC said a cost-benefit analysis with the Western Area Power Administration’s Sierra-Nevada Region (WAPA-SNR) determined that some of its six members would benefit from joining the EIM.
“We also view the EIM as a tool to help us integrate increasing penetrations of variable renewable energy resources in the future,” Jim Shetler, BANC’s general manager, said in a statement.
The joint powers agency said it will seek an arrangement allowing it to phase in members who want to join the EIM. Any agreement must recognize “the unique situation faced by the BANC members as public power entities and their existing arrangements,” the agency said.
SMUD would be the first BANC member to participate. The utility expects $2.8 million in yearly net benefits from transacting in the market — a figure that nets out the estimated $6.7 million in implementation fees and $2.6 million in annual operations costs.
In a presentation to its board of directors last week, SMUD management said EIM participation will improve the region’s renewable integration, potentially reduce reliance on gas-fired generation and provide “many of the benefits of regionalization while preserving [local] control over resources.”
“We view this is an extension of our existing market engagement with the CAISO,” said SMUD CEO Arlen Orchard. “SMUD also believes this further demonstrates our commitment to collaboratively work with California entities to help achieve the state’s energy and environmental goals.”
SMUD operates under an agreement that enables the utility to bid power into CAISO through a single hub in which one proxy price is selected to represent all connection points between the two areas. The ISO entered into a similar agreement with WAPA last year.
“We are extremely pleased to see a major regional public power utility like SMUD step forward to engage in the EIM,” CAISO CEO Steve Berberich said.
In addition to SMUD, BANC’s members are the Modesto Irrigation District, the cities of Redding, Roseville and Shasta Lake, and the Trinity Public Utility District.
The joint powers agency’s footprint extends from Modesto, Calif., to the Oregon border and includes a portion WAPA’s transmission grid and the U.S. Bureau of Reclamation’s hydroelectric resources in California. The agency’s members also control capacity on the California-Oregon Intertie, one of two high-voltage transmission lines linking California with the Pacific Northwest.
Founded 70 years ago, SMUD serves 1.4 million people, making it the sixth largest municipally owned utility in the country and the second largest in California, behind the Los Angeles Department of Water and Power.
BANC, which began operations in 2011, is the third largest balancing area in California and the 16th largest of the 38 balancing areas in the Western Electricity Coordination Council. Created as an alternative to CAISO, BANC is responsible for balancing load among its members, as well as coordinating system operations with neighboring balancing areas. BANC contracts with SMUD to perform day-to-day balancing functions.
BANC’s announcement came three days after Mexico’s grid operator said it will explore EIM participation for Baja California Norte, a region already interconnected with CAISO. (See Mexico Grid Operator to Explore Participation in EIM.)
The current EIM members are Arizona Public Service, NV Energy, PacifiCorp and Puget Sound Energy. (See Arizona Public Service, Puget Sound Energy Begin Trading in EIM.) Portland General Electric is slated to join the market in October 2017, followed by Idaho Power in April 2018.
