April 30, 2019

Southwest Power Pool leaders talk western expansion, holistic change and market performance at quarterly meetings

LITTLE ROCK, AR — Southwest Power Pool’s (SPP) Regional State Committee of state regulators and Board of Directors and Members Committee convened in Tulsa on April 29-30. President and CEO Nick Brown reported SPP’s preparations to provide reliability coordination services in the Western Interconnection are proceeding as planned toward a December 2019 launch date. That effort also has led to the opportunity to provide additional services in the west on a contract basis. Brown said SPP will take a strong leadership role in providing a model for western markets.

“Multiple entities have asked us to put very specific proposals on the table based on our experience operating successful energy imbalance service and day-ahead markets,” Brown said. “Expanding our markets into the west is a wonderful opportunity for western utilities, SPP and its stakeholders.”

Tom Kent, Nebraska Public Power District’s vice president and chief operating officer, briefed attendees on the Holistic Integrated Tariff Team’s (HITT) work, which board chair Larry Altenbaumer called “an example of the very best of SPP.” SPP’s board tasked the HITT, chaired by Kent, to develop recommendations for holistic improvements related to reliability, markets, transmission planning and cost-allocation methodologies for new transmission. The team comprises 15 representatives of SPP’s diverse stakeholder segments and is finalizing a report that contains 21 recommendations.

“The industry is changing as rapidly as we’ve ever seen it, and we must prepare for major changes coming in the next five to 10 years,” said Dennis Grennan, team member and Nebraska Power Review Board commissioner. “We want to make improvements that will provide end-use consumers with benefits and show the value in being part of SPP.” The report will be presented to the board in July.

The benefits and value of SPP’s wholesale electricity market, the Integrated Marketplace, came up throughout the two-day meeting. Bruce Rew, SPP vice president of operations, reported on the market’s cumulative benefits since launching five years ago. The Integrated Marketplace has provided participants nearly $3 billion in cumulative benefits since March 1, 2014, and provides average annual savings of $570 million.

Keith Collins, executive director of the SPP Market Monitoring Unit (MMU), also addressed the Integrated Marketplace’s performance in a summary of findings to be published in his group’s Annual State of the Market Report. Overall the independent market monitor found SPP’s markets are competitive with low energy prices. Over past years, the frequency of real-time negative prices has declined, and market participants have shown increased effectiveness in hedging against high energy prices. The addition of new generation — primarily wind, but also solar and natural gas — continues to outpace generation retirements, primarily retiring nuclear, coal and natural gas. Load in the SPP region increased by 6% in 2018.

SPP’s efforts to cost-effectively modernize the region’s transmission system also received praise from members. Transmission upgrades directed by SPP have alleviated three frequently constrained areas of transmission congestion in the Texas panhandle and Western Oklahoma — areas where congestion historically made it difficult to deliver electricity economically to customers. Investment in transmission around the Woodward substation allowed trapped low-cost wind energy to be moved east toward Oklahoma City.

“We couldn’t be more pleased that some congested areas have seen significant improvements at the lowest possible cost,” said Mike Wise, senior vice president of commercial operations and transmission at Golden Spread Electric Cooperative.  

Also at the meeting, SPP published its 2018 annual report titled “Balance.

“Maintaining balance is critically important in managing real-time operations, reliability, compliance, financials and the development of more carbon-free resources,” Brown said. In his summary of 2018, he also highlighted SPP’s ability to reliably manage operations on “one of the most difficult days I’ve seen in my 35 years” and the addition of SPP’s first large retail customer, Walmart, noting that “more large retail customers are expressing interest in joining SPP.”

The annual report is posted in PDF and as an interactive website.

About SPP: 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 66,000 miles of high-voltage transmission lines spanning 14 states. The company’s headquarters are in Little Rock, Arkansas. Learn more at www.spp.org.

Derek Wingfield, (501) 614-3394, dwingfield@spp.org