Western utilities are looking to Southwest Power Pool for potential savings in electricity transmission, the not-for-profit Little Rock regional transmission organization said this week in a news release.
SPP, which manages the electric grid across 17 central and western U.S. states and provides energy services on a contract basis to customers in both the Eastern and Western Interconnections, could be joined by five western utilities who have indicated their interest by letter.
Those utilities — Basin Electric Power Cooperative, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska (MEAN), Tri-State Generation and Transmission Association, and Western Area Power Administration (WAPA) — say membership could produce $49 million a year in savings. They also see benefits in SPP’s wholesale electricity market, resource adequacy program and other regionalized services, in achieving energy goals, enhancing system reliability and leveraging new chances to buy, sell and trade wholesale power.
The five utilities would become the first members of SPP’s regional transmission organization (RTO) to place facilities in the Western Interconnection under the terms and conditions of SPP’s Open Access Transmission Tariff, the news release said.
In evaluating whether to join SPP, WAPA will consider the participation of its Upper Great Plains-West (UGP-West) region and Loveland Area Projects. “This would extend the reach and value of SPP’s services — including day-ahead wholesale electricity market administration, transmission planning, reliability coordination, resource adequacy and more — and the synergies they provide when bundled under the RTO structure,” the release said.
SPP’s outreach to the five utilities is a continuation of a westward push over the past several years.
Basin Electric, MEAN, Tri-State and WAPA’s UGP-East Region are already SPP members, having joined the RTO in 2015 when they placed their respective facilities in the Eastern Interconnection under SPP’s tariff. Along with Deseret, they are customers of at least one of SPP’s contract-based Western Energy Services, which offers reliability coordination and a real-time market launching in February 2021. The companies’ letters indicate they will now work with SPP to evaluate the terms, costs and benefits of putting western facilities under the RTO’s tariff.
Tri-State’s CEO, Duane Highley, was previously CEO of Arkansas Electric Cooperative Corp. of Little Rock and is highly aware of SPP’s operations.
“Tri-State’s participation in a Western Interconnect RTO is essential to advance our members’ reliability, affordability and clean energy goals,” Highley said. “With our western utility peers, we will take the time necessary to evaluate the expansion of SPP’s RTO into the West. While the issues are complex, we remain optimistic that together we are on a path that can capture the full benefits of an organized market in the West.”
“Participating in SPP’s exploratory effort for the Loveland Area Projects and Upper Great Plains-West is consistent with our commitment to evaluate alternative ways of doing business that will retain and increase the value of WAPA for customers,” said Mark A. Gabriel, administrator and CEO of WAPA. “We have explored every market option and construct in our footprint for nearly 30 years, and we look forward to contributing to this next chapter of the energy industry in the West. As always, we are committed to collaborating with our customers and stakeholders as we assess this opportunity. If it continues to show promise, we will work through our formal processes with customers and others before any decisions are made.”
A recent study found that participating in the SPP RTO would produce approximately $49 million in savings annually for SPP’s current and new members. The western utilities joining SPP would receive $25 million a year in adjusted production cost savings and revenue from off system sales, and SPP’s members in the East would benefit from $24 million in savings resulting from the expansion of SPP’s market, transmission network and generation fleet, the news release said.
“We’ve enhanced electric reliability while integrating more renewable generation than many in our industry ever thought possible, modernized the grid, built and operated a dependable and economic market, and equitably allocated the costs and revenues associated with these and other services,” said Barbara Sugg, SPP president and CEO. “What’s more, we’ve done it all while staying true to our collaborative and member-driven business model, and now we’re excited for the opportunity to bring the value of RTO membership to new customers in the West.”
SPP has set numerous North American records for renewable integration, serving as much as 75% of its total system’s demand with wind and solar power at times. SPP also expects wind to be its No. 1 fuel source for the first time in 2020. It first began serving customers in the West in December 2019 when it launched its Western Reliability Coordination service on a contract basis. SPP is awaiting FERC approval to implement a western energy imbalance service market that it plans to launch in February 2021.
“We’ve seen a pattern of incremental growth and ever-increasing value among our customer base in the East,” Sugg said. “We launched a small, real-time market in 2007 that immediately exceeded expectations regarding the savings it would provide. That led us to develop a day-ahead market, the value of which earned us the trust and business of new customers that helped us grow our service territory. We’re now seeing that pattern repeat itself in the West in fast-forward. Many of our western reliability coordination customers will soon become the first participants in the WEIS market, and the trust we’ve earned in that process has now led many of those customers to consider RTO membership. We’re grateful for their partnership and look forward to providing continually more savings, value and reliability to the West.”
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