Additional utility joins evaluation of RTO expansion to the west; study anticipates $49M in annual savings for current and new members
LAKEWOOD, Colo. — Southwest Power Pool (SPP) received a letter from Western Area Power Administration’s (WAPA) Colorado River Storage Project (CRSP) expressing interest in evaluating membership in the organization.
CRSP is the sixth electric service provider in the West to publicly commit to exploring RTO expansion in the Western Interconnection. On Nov. 12, 2020, Basin Electric Power Cooperative, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska (MEAN), Tri-State Generation and Transmission Association, and WAPA’s Upper Great Plains-West and Loveland Area Projects notified SPP of their intent to evaluate membership in the regional transmission organization (RTO). The entities’ letters indicate they will work with SPP to evaluate the terms, costs and benefits of putting western facilities under the RTO’s tariff.
If these utilities pursue membership, they would become the first members of SPP’s RTO to place facilities in the Western Interconnection under the terms and conditions of SPP’s Open Access Transmission Tariff. 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 above interested parties in this initiative currently receive at least one of SPP’s contract-based Western Energy Services in the Western Interconnection. CRSP participates in two: Western Reliability Coordination and the Western Energy Imbalance Service Market. Basin Electric, MEAN, Tri-State and WAPA’s UGP-East Region are already members of SPP, having joined the RTO in 2015 when they placed their respective facilities in the Eastern Interconnection under SPP’s tariff.
“Having CRSP join SPP’s exploratory effort is a logical next step as we evaluate how to remain valuable and relevant to our customers and the communities that rely on federal hydropower and electric services now and in the future,” said Tracey A. LeBeau, interim administrator and CEO of WAPA. “As always, we are committed to collaborating with our customers and stakeholders as we assess this opportunity. Any decision to move forward with final negotiations for SPP RTO membership for CRSP or any WAPA region will be consistent with our statutory requirements and involve the appropriate public processes.”
A Brattle study commissioned by SPP found that the move would be mutually beneficial and produce $49 million a year in savings 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. SPP’s prior calculations of the value of RTO membership suggest that these benefits are only a portion of those current and new members will derive. There is additional value not considered by the Brattle study in five-minute real-time economic dispatch, achievement of public policy goals, lowered reserve-margin requirements, consolidation and regionalization of planning and other processes and more.
Additionally, SPP anticipates its wholesale electricity market, resource adequacy program and other regionalized services can help western members achieve renewable-energy goals and reinforce system reliability.
“SPP already has a strong partnership and history of successful collaboration with WAPA, and we’re greatly encouraged by the interest from them and other western utilities in potential RTO membership,” said Barbara Sugg, SPP president and CEO. “This expression of interest from their CRSP is a welcome affirmation of our belief that the Western Interconnection stands to gain tremendous value through services like those we can provide them. We look forward to the process of formally evaluating the possibility of their membership in our organization and look forward to the results of those discussions.”
In the Eastern Interconnection, SPP formed in 1941, implemented operating reserve sharing in 1991, became a certified reliability coordinator in 1997, and earned its RTO designation from the Federal Energy Regulatory Commission (FERC) in 2004. It launched its first real-time balancing market in 2007 then transitioned to a day-ahead market and became a single, consolidated balancing authority in 2014. This experience and toolset has enabled SPP to operate reliably even as it has set numerous North American records for renewable integration, serving as much as 84% of its total system’s demand with renewable generation at certain points in time. Wind was SPP’s number-one 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 and successfully expanded its services in the West in February 2021 with the successful launch of the Western Energy Imbalance Services market.
About WAPA: About WAPA: Western Area Power Administration annually markets and transmits more than 25,000 gigawatt-hours of clean, renewable power from 57 federal hydroelectric powerplants owned and operated by the Bureau of Reclamation, U.S. Army Corps of Engineers and International Boundary and Water Commission in 15 western and central states. It is part of the Department of Energy. Follow us on Twitter @WesternAreaPowr or visit the website at www.wapa.gov.
About SPP: Southwest Power Pool, Inc. is a regional transmission organization: a not-for-profit corporation mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices on behalf of its members. SPP 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. The company’s headquarters are in Little Rock, Arkansas. Learn more at SPP.org.