December 16, 2016

Southwest Power Pool celebrates 75 years of electric reliability through relationships

On Dec. 7, America commemorated the 75th anniversary of the bombing of Pearl Harbor. Nine days later, an organization in Little Rock, Ark., will likewise celebrate 75 years of existence.

On Dec. 16, 1941, in support of the American war effort, 11 electric utilities agreed to pool their resources to keep power flowing to Jones Mill — an aluminum production facility outside Malvern, Ark. President Franklin Roosevelt’s wartime goal to produce 50,000 airplanes per year had created the need for huge quantities of aluminum, and Jones Mill’s operation would require 120 megawatts of power — exceeding its home state’s installed capacity of 100 MW at the time. From the utilities’ partnership, Southwest Power Pool (SPP) was formed, and the new organization was successful in pooling power to support the plant. After the war, SPP continued as a leader providing safe, reliable power to U.S. homes.

SPP today is a regional transmission organization (RTO): a not-for-profit, federally regulated service organization that ensures the reliable operation of a portion of the nation’s power grid on behalf of its member companies, with more than 50,000 MW in capacity.

SPP describes itself as the air-traffic controller of the power grid. Air-traffic controllers do not own the airports in which they operate or the planes they direct but are responsible for ensuring air travelers depart, fly and land safely. Similarly, SPP does not own the power stations it directs or the transmission lines across which electricity flows in its footprint, but it partners with generators, transmission owners, municipalities, power marketers, state and federal agencies, electric cooperatives and others to ensure the cost-effective and reliable delivery of power across a 14-state region.

Though SPP works at the wholesale level and thus doesn’t directly serve end users and ratepayers, it does benefit them. A recent study conducted by SPP and validated by the Brattle Group showed transmission investments in the SPP region had, on average, a benefit-to-cost ratio of 3.5-to-1. That means every dollar spent to build or upgrade transmission lines throughout SPP’s region will ultimately produce $3.50 in electricity production cost savings and other benefits.

In addition to planning transmission infrastructure, SPP facilitates the sale and purchase of electricity through its Integrated Marketplace, a wholesale electric market. SPP’s marketplace launched in 2014 and has since reduced the cost of electricity in the organization’s region by more than $1 billion.

These and other services provide net benefits to SPP’s members in excess of $1.4 billion annually at an overall benefit-to-cost ratio of more than 10-to-1. For the typical end-use customer using 1,000 kWh per month that means $68 of benefits a year at the cost of just 62 cents monthly. Or, put another way, without the services SPP provides its members, a ratepayer’s $100 electric bill would be $105.65.

Throughout its 75 years, SPP has evolved and grown from an affiliation of 11 companies with a common goal in 1941 to an organization employing about 600 professionals in support of nearly 100 member companies across a region spanning from the Canadian border in the north to Louisiana in the south and from southeastern Missouri to northwestern Montana.

SPP attributes its legacy of success to the strength of its stakeholder relationships. In the foreword to a book published this year chronicling SPP’s history, its President and CEO Nick Brown said, “Reliability is job one for SPP. We exist to help our members keep the lights on, today and in the future. We do so not through hard work, innovation or efficiency, though each is a necessary component of our success. For SPP, reliability is accomplished through strong, healthy relationships with those we serve.”

Because of the strength of those relationships, its legacy of success and deliberate focus on continuous improvement and building consensus among its members, SPP has every reason to think its future is just as bright as its history.

About Southwest Power Pool, Inc.

Southwest Power Pool, Inc. manages the electric grid and wholesale energy market for the central United States. As a regional transmission organization, the nonprofit corporation is mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices. Southwest Power Pool and its diverse group of member companies coordinate the flow of electricity across 60,000 miles of high-voltage transmission lines spanning 14 states. The company is headquartered in Little Rock, Ark.

Derek Wingfield, 501-614-3394,