PNM announces plan to join CAISO EDAM regional energy market

Rhea-AI Summary

Public Service Company of New Mexico (PNM), a subsidiary of TXNM Energy (NYSE: TXNM), announced plans to join the California Independent System Operator (CAISO) Extended Day-Ahead Market (EDAM). EDAM builds on CAISO's real-time Western Energy Imbalance Market (WEIM), which PNM has participated in since 2021. PNM aims to enhance reliability and economic benefits for customers, leveraging New Mexico's renewable energy potential. The WEIM has already provided New Mexico customers with nearly $125 million in benefits. EDAM is projected to offer $20 million in annual benefits and is scheduled to launch in 2026, with PNM's participation expected by 2027. This decision follows policy guidance from the New Mexico Public Regulation Commission (NMPRC). CAISO President and CEO, Elliot Mainzer, expressed enthusiasm for PNM's participation, highlighting the potential for greater economic and reliability benefits.

Positive

• PNM's participation in EDAM is expected to provide $20 million in annual benefits to New Mexico customers.
• The WEIM has already delivered nearly $125 million in benefits to New Mexico customers since 2021.

Negative

• PNM's participation in EDAM will not commence until 2027, potentially delaying the realization of projected benefits.

Insights

Energy Market Analyst

The planned integration into CAISO's EDAM represents a significant strategic move with tangible financial benefits. The projected $20 million annual benefits for New Mexico customers builds upon the proven success of PNM's WEIM participation, which has already generated $125 million in customer benefits since 2021. This expanded market participation will enhance PNM's ability to optimize its renewable energy resources and improve grid reliability through increased regional coordination.

The day-ahead market structure provides better resource planning capabilities compared to real-time markets, potentially leading to more efficient pricing and resource allocation. This could particularly benefit PNM's renewable energy integration efforts, as day-ahead planning helps manage intermittent generation more effectively. The 2027 target implementation timeline allows for proper system integration and risk management procedures to be established.

Utility Financial Analyst

This market expansion demonstrates strong financial stewardship and operational efficiency potential. The $20 million projected annual benefits represent approximately 0.5% of PNM's annual revenue, a meaningful contribution to cost management efforts. The successful track record with WEIM validates the business case for expanded market participation, showing management's ability to execute on complex market integration initiatives.

The regulatory support from NMPRC, backed by independent analysis from The Brattle Group, reduces implementation risk and suggests a smoother pathway to realizing these benefits. This market participation could also enhance PNM's competitive position in the broader TXNM Energy portfolio, potentially improving long-term shareholder value through operational efficiencies and enhanced grid reliability.

ALBUQUERQUE, N.M., Nov. 11, 2024 /PRNewswire/ -- In a continued effort to enhance reliability and economic benefits to customers, Public Service Company of New Mexico (PNM), a wholly-owned subsidiary of TXNM Energy (NYSE: TXNM), has announced its plan to join the California Independent System Operator (CAISO) Extended Day-Ahead Market (EDAM).

EDAM is a voluntary day-ahead regional market, expanding on CAISO's real-time regional market known as the Western Energy Imbalance Market (WEIM), which PNM has been a participant of since 2021.

"Participating in EDAM 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," said Don Tarry, PNM President and CEO. "We know from our experience with the WEIM – which has provided New Mexico customers nearly $125 million in benefits since we joined in 2021 – coordination with other regional utilities can deliver substantial efficiencies and cost benefits for our customers." EDAM is expected to provide $20 million in annual benefits to New Mexico customers.

Both the day-ahead and real-time markets are designed to deliver significant reliability, economic, and environmental benefits to customers throughout the Western United States. This is done by using the resources across the west and increasing coordination between utilities. While EDAM is scheduled to launch in 2026, PNM hopes to begin participation as early as 2027.

PNM's decision comes after the New Mexico Public Regulation Commission (NMPRC) issued a statement of policy and guiding market principles for regional market participation based on a series of inquiries and workshops this year to discuss potential participation by New Mexico utilities in a day-ahead regional market, including a presentation from The Brattle Group.

"We are honored that Public Service Company of New Mexico has announced its intent to join EDAM," said Elliot Mainzer, CAISO President and CEO. "We look forward to building on the proven track record of the Western Energy Imbalance Market to deliver even greater economic and reliability benefits to PNM customers."

Background:
TXNM Energy (NYSE: TXNM), an energy holding company based in Albuquerque, New Mexico, delivers energy to more than 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM. For more information, visit the company's website at www.TXNMEnergy.com.

Contacts:

Analysts	Media
Lisa Goodman	Corporate Communications
(505) 241-2160	(505) 241-2743

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release for TXNM Energy, Inc. ("TXNM"), Public Service Company of New Mexico ("PNM"), or Texas-New Mexico Power Company ("TNMP") (collectively, the "Company") that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies, including the unaudited financial results and earnings guidance, are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. TXNM, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements. TXNM's, PNM's, and TNMP's business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company's Form 10-K, Form 10-Q filings and the information included in the Company's Forms 8-K with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

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SOURCE TXNM Energy, Inc.

FAQ

What is the expected annual benefit of PNM joining CAISO EDAM?

PNM's participation in CAISO EDAM is projected to provide $20 million in annual benefits to New Mexico customers.

When will PNM start participating in CAISO EDAM?

PNM hopes to begin participation in CAISO EDAM as early as 2027.

How much benefit has the WEIM provided to New Mexico customers since 2021?

The Western Energy Imbalance Market (WEIM) has provided nearly $125 million in benefits to New Mexico customers since 2021.

What is the significance of PNM joining CAISO EDAM?

Joining CAISO EDAM is expected to enhance reliability, economic, and environmental benefits for PNM customers by improving coordination and leveraging renewable energy resources.