BANC, SMUD consider joining Energy Imbalance Market

The Balancing Authority of Northern California (BANC) and the Sacramento Municipal Utility District (SMUD) announced Oct. 21 that they will initiate negotiations with the California Independent System Operator (CAISO) to participate in the western Energy Imbalance Market (EIM).

The EIM is a real-time, wholesale power market managed by the ISO that enables participating utilities to buy energy available across eight western states, including California, Oregon, Washington, Utah, Idaho, Wyoming, Nevada and Arizona.

The EIM is also expected to make it easier for renewable energy producers in the West to sell their power into the California ISO market and serve its growing demand for carbon-free electricity.

Since it began operation in November 2014, the western EIM has realized more than $88m in cost benefits and reduced carbon emissions by more than 126,000 metric tons by using excess renewable energy in place of fossil-fueled generation resources, CAISO said.

The EIM uses software to automatically analyze western grid needs and find low-cost generation to meet demand every five minutes.

After completing an extensive cost/benefit analysis in conjunction with its members and the Western Area Power Administration’s Sierra Nevada Region (WAPA-SNR), BANC has concluded that there are benefits for some of its members to join the EIM.

BANC is interested in entering into an arrangement with the CAISO for EIM participation that would allow phasing in those members who would like to participate in the EIM.

The key for BANC will be an agreement that recognizes the unique situation faced by the BANC members as public power entities and their existing arrangements.

“Based upon our evaluations, we believe there are both financial and operational benefits of the EIM to our balancing authority and for some of our members”, said BANC General Manager Jim Shetler. “We also view the EIM as a tool to help us integrate increasing penetrations of variable renewable energy resources in the future,” he added.

SMUD has elected to be the first member of BANC to participate in the EIM. “We view this is an extension of our existing market engagement with the CAISO. SMUD also believes this further demonstrates our commitment to collaboratively work with California entities to help achieve the state’s energy and environmental goals,” said SMUD CEO Arlen Orchard.

“We are extremely pleased to see a major regional public power utility like SMUD, step forward to engage in the EIM,” California ISO CEO Steve Berberich. “We look forward to working out the details of the agreement to allow BANC to participate in the EIM.” 

BANC is the third largest balancing authority in California and the 16th largest in the Western Electricity Coordinating Council (WECC).SMUD is the nation’s sixth-largest community-owned electric service provider and it has been serving Sacramento County (and small adjoining portions of Placer and Yolo Counties.

Current EIM participants include Portland-based PacifiCorp, NV Energy of Las Vegas, Arizona Public Service, and Puget Sound Energy of Washington. Portland General Electric and Idaho Power have agreed to participate beginning in 2017 and 2018, respectively. Recently, Mexican grid operator El Centro Nacional de Control de Energía (CENACE) announced that it is exploring participation in the EIM.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.