When Arizona utilities file their next integrated resource plans, they’ll be required to include an analysis of cost savings and other benefits they could realize from Western regional market participation. 

And starting Nov. 1, utilities must report to regulators at least twice a year on their activities related to joining a day-ahead market. 

The Arizona Corporation Commission voted Oct. 8 to approve an order acknowledging IRPs filed last year by Arizona Public Service (APS), Tucson Electric Power (TEP) and UNS Electric (UNSE). But as part of the approval, commissioners adopted a slew of amendments that create new requirements for future IRPs. The utilities’ next IRPs will be due in 2026. 

One of the approved amendments, from Commissioner Nick Myers, requires utilities to include in their next IRPs an analysis of cost savings and other benefits resulting from regional market participation. The analysis will show the impact of market participation on utilities’ portfolio development, reserve margin, resource adequacy, reliability during extreme weather events, transmission planning and capacity needs. 

APS and TEP are members of CAISO’s Western Energy Imbalance Market (WEIM) and are weighing the choice of two day-ahead markets: CAISO’s Extended Day-Ahead Market (EDAM) and SPP’s Markets+.  

“Most of our utilities might even be participating already in those markets by the time the next IRP is due,” Myers said during the meeting. “But I would love to see the analysis of how it’s affecting them at that point in time and, if they’re not in the market, how they think it will.” 

Myers said his amendment was in response to stakeholder requests for a market analysis in future IRPs. 

Semiannual Reporting

An approved amendment from Commissioner Lea Marquez Peterson also addressed regional market participation.  

It directs utilities to include in their future IRPs portfolios that capture the benefits of joining a day-ahead market. For their preferred portfolios, utilities must state their market enrollment assumptions. 

Marquez Peterson’s amendment also will require utilities to report on their day-ahead market activities semiannually, including “metrics and other decision-making elements.” 

The amendment had the support of stakeholders including Western Resource Advocates (WRA). 

“If we are going to decide to go into EDAM or we’re going to decide to go into Markets+, how are we making that evaluation?” Alex Routhier, WRA’s senior policy adviser in Arizona, said during the meeting. “What metrics are we using … and what benefits do we expect to capture?” 

APS and TEP have participated in the development of EDAM and Markets+. UNSE joined WEIM in 2022 through participation with TEP, which acts as its balancing authority. UNSE also has worked with TEP on day-ahead market development. 

Another Arizona utility, Salt River Project (SRP), has been involved in day-ahead market development but is not regulated by the Arizona Corporation Commission. 

Coal Plant Closures

The integrated resource plans show how the utilities plan to meet their customers’ energy needs over the next 15 years. The IRPs are updated every three years. 

The utilities forecast growing demand and at the same time are planning for the retirement of coal-fired power plants. APS pledged in its 2023 IRP to exit by 2031 from the coal-fired Four Corners plant, which it operates and partly owns. 

TEP owns and operates Units 1 and 2 at the coal-fired Springerville Generating Station and owns 7% of Four Corners Units 4 and 5. 

An amendment that commissioners adopted Oct. 8 requires APS to show in future IRPs that it has a “sufficient dependable and dispatchable capacity” to ensure resource adequacy before it exits Four Corners, where the utility has 970 MW of capacity. 

The amendment from Myers and Commissioner Kevin Thompson also requires an annual progress report from APS, starting on Aug. 1, 2025, on ensuring resource adequacy in 2031. 

The amendment initially said the dependable capacity it calls for should not include battery storage.  

But Thompson said during the commission meeting that the battery-storage restriction was dropped. He noted that technology is rapidly advancing and the commission should be consistent in applying its philosophy of being technology- and generation-neutral. 

“I don’t want to micromanage APS’ decision as they deploy new generation,” Thompson said.