How The Power of the Electric Marketplace Stays Wired

The new transmission markets being implemented at Arkansas’ electric utilities have been called “two-day” markets, “day-ahead” markets, “integrated” markets and other terms.

In essence, a transmission market lets a transmission operator monitor the costs of energy from several sources at once and determines where the cheapest source would be.

In Southwest Power Pool’s current market, each participant decides which generation it will run that day to meet its own needs, based on knowledge of its own system.

This may result in inefficiency when, for example, a high-cost generator is switched on and kept running at a minimum capacity.

The day-ahead market will let participants make bids and offers for the next day’s demand, or load, and generating resources, or supply.

The market can reimburse power generation owners — such as Arkansas Electric Cooperative Corp. — if electricity flow is impaired due to physical limitations from storm damage or other issues. It can also result in more usage of alternate energy sources such as wind.

Dispatchers at AECC work 24/7 to monitor the cooperatives’ load at various locations throughout the state and make sure all power plants are working at optimum capacity. They measure how efficient lines are from one point to another and decide which energy to purchase from the wholesale market.

“We’ve done business the same way since before I’ve started here: That is, we own the generation, and we use that generation to serve our load,” said Keith Sugg, vice president of integration at AECC. “We try to make transactions in the wholesale market if somebody is selling cheaper than we can sell.”

The difference, Sugg said, is that AECC’s generation will be offered into the market, and other entities may purchase that generation.

The end result is that the market organically determines what would be the cheapest solution for users.

The Midwest Independent Transmission Operator’s day-ahead market is similar in most ways to SPP’s market, but MISO has already been using it for several years.

This was one of the main reasons that Entergy Corp. chose to move its transmission business to MISO rather than SPP.

Kurt Castleberry, director of resource planning for Entergy Arkansas, said MISO’s system has its members offering its generators every hour of every year; MISO examines the load bids and then determines which generators will operate and which don’t.

“Then they make that determination based on economics,” he said. “They also get to maintain the reliability of the electrical system.”

AECC must be ready for MISO’s transition into Entergy Arkansas’ transmission business by Dec. 19. SPP will roll out its market on March 1.