How will PNM joining a new regional market affect you?

New Mexico’s largest electricity provider wants to join a financial market with other regional utilities so it can sell and buy energy the day before it’s produced and delivered.

The Public Service Company of New Mexico on Monday announced its intent to join the California Independent System Operator, or CAISO, Extended Day-Ahead Market. It’s a voluntary, day-ahead regional market that PNM believes will enhance power reliability and increase economic benefits for New Mexicans.

Day-ahead energy markets allow companies to sell and purchase electricity at financially binding, day-ahead prices for the next day, ensuring buyers and sellers can hedge against real-time price changes and volatility, according to national substation packager Peak Substation Services.

Kelsey Martinez is the director of regional markets and transmission strategy at PNM. She said the CAISO day-ahead market goes live in the spring of 2026, and PNM could start participating as early as spring of 2027.

She said the market offers both economic and reliability benefits for PNM customers.

Regional markets reduce renewable energy curtailments, she said, because PNM is sharing renewables across a large geographic footprint.

“And so by nature, the lower cost fuel resources like solar and wind are shared more efficiently, and that lowers the cost of energy overall for the footprint,” Martinez said. “And so we take those savings and pass them back to customers directly through the fuel and power purchase clause on their bills.”

She said the markets also create more “situational awareness” to the western grid as a whole, allowing utilities to bring generation on ahead of time, eliminate unnecessary outages and respond as a group to reliability challenges.

“So you’re really able to see how the effects of different weather patterns in the West might affect the whole group and the price of energy as a whole,” she said. “And basically, when you’re aware of things a day in advance that affect the whole western United States, the whole West is better prepared.”

Martinez said it’ll cost a little more than $1 million for PNM to join the CAISO day-ahead market, but PNM expects savings to add up to around $20 million annually.

She also said it’s financially easy to exit the market if PNM decided to do so, for reasons such as a major topological change or new transmission system built in a different part of the system.

“Then it could change which market we see more benefits in, and we would restudy it,” Martinez said. “And there’s really no exit hurdles to get out of these day-ahead markets, so it’s very little risk to the customers and a great deal of reward.”

This day-ahead market adds onto CAISO’s real-time market that PNM has been part of since 2021, the Western Energy Imbalance Market. Martinez said the real-time market has saved PNM customers about $125 million to date.

“Participating in (the Extended Day-Ahead Market) is the next step in realizing the value of New Mexico’s renewable energy potential for our customers, helping us ensure continued clean and reliable service at the lowest possible cost,” PNM President and CEO Don Tarry said in a statement.

Editor's note 11/12/24 2 p.m.: This article has been corrected to clarify language about companies' ability to hedge against real-time prices and volatility in day-ahead markets.