Regional Energy Market Gains Momentum as APS Announces Intent to Join

With very little fanfare, Arizona Public Service (APS), which serves 1.1 million customers in parts of Phoenix and central Arizona, recently announced its intent to join the CAISO Energy Imbalance Market (EIM). In a letter to the Arizona Corporation Commission on April 17th, APS shared a consultant report that concluded that there are “substantial benefits” to be gained from joining and that it believes it’s in “the best interests of our customers to participate in the EIM.”

How substantial? The report by the consulting firm E3 estimates the savings by 2020 to be between $7.0 and $18.1 million per year for APS. They acknowledge that this estimate is conservative and doesn’t include other potential avoided costs, benefits from improved operation in other markets in which they participate, nor does it attempt to estimate the reliability benefits joining the EIM would create.

Perhaps more interesting is that APS’s participation in the EIM would save existing participants (CAISO, PacifiCorp, and soon NV Energy) between $2.2 and $8.1 million annually.  That’s a combined savings of $9 to $26 million, not including other benefits, and that doesn’t include Puget Sound Energy, which announced it’s intent to join too late to be included in the study.

With APS joining CAISO, PacifiCorp, NV Energy, and Puget Sound Energy, the EIM will cover 8 states in the west serving 35.3 million customers with a total annual savings conservatively estimated at $67 – $218 million. With those kinds of savings, it’s just a matter of time before more utilities announce they are joining the party.