Southwest Power Pool expands offerings to western utilities with launch of new electricity market
Little Rock, Ark. — Southwest Power Pool (SPP) launched its Western Energy Imbalance Services (WEIS) market at midnight Feb. 1. The real-time balancing market is the latest of SPP’s contract-based Western Energy Services to be implemented in the Western Interconnection and is expected to lower wholesale electricity costs, increase price transparency, and mitigate congestion on the transmission system for market participants.
"This is an exciting step for SPP and our new market participants in the west. Our electricity markets have played a big role in lowering costs, integrating renewables and enhancing reliability in the east, and we're excited to see a new part of the country begin to see similar benefits,” said SPP President and CEO Barbara Sugg. “I'm hopeful this is just the beginning of valuable partnerships between SPP and western utilities that will help them and the customers they serve meet their financial, reliability and renewable-energy goals."
Several regional utilities are participating in the market. Basin Electric Power Cooperative, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska (MEAN), Tri-State Generation and Transmission Association, the Western Area Power Administration (WAPA), and the Wyoming Municipal Power Agency announced in 2019 their intent to join the WEIS. WAPA’s agreement includes the firm electric service loads and resources of Pick-Sloan Missouri Basin Program–Eastern Division in the Upper Great Plains Western Area Balancing Authority (WAUW) footprint and the Loveland Area Projects and Salt Lake City Area Integrated Projects, in the Western Area Colorado Missouri Balancing Authority (WACM) footprint.
“Joining the WEIS real-time market brings us a step closer to attaining a secure and reliable energy future,” said WAPA Administrator and CEO Mark A. Gabriel. “The advances we are experiencing today in generation, energy demand and transmission are fundamentally changing and complicating the day-to-day operations of the electric grid beyond what the current system was designed to accommodate. We have said for years that markets are coming to the West. We are now realizing those predictions across the interconnection first in the form of energy imbalance markets, which will benefit our customers and their consumers by meeting real-time fluctuations in demand with diverse, reliable and affordable energy delivered as efficiently as possible. We greatly appreciate the assistance, commitment and strong partnerships with SPP and our fellow WEIS participants that made this ambitious and monumental venture possible.”
As the WEIS market’s administrator, SPP will support the reliability of the region’s transmission system and meet demand with the most cost-effective generation available, reducing wholesale electricity costs for participants. Like SPP’s previous markets, the WEIS will provide price transparency of wholesale energy, allow parties to trade bilaterally and hedge against costly transmission congestion.
“With a low cost of entry, immediate economic benefits and greater market experience for Tri-State, the WEIS delivers real benefits to our members,” said Duane Highley, Tri-State CEO. “Importantly, the five-minute WEIS intra-hour market will greatly aid in the integration of more renewable resources that empower Tri-State’s clean energy transition. This is an important first step toward a full RTO in this region to help Tri-State meet its clean energy goals.”
SPP currently holds the record for the highest one-hour and point-in-time wind penetration ever recorded by the Energy Information Administration. It recently set a SPP wind peak record of 19,848 megawatts on Jan. 14 and was the first U.S. regional transmission organization (RTO) to see wind as its main fuel source in 2020. SPP’s existing markets and other services, like transmission planning and balancing authority administration, have been credited with helping the SPP RTO achieve such a high degree of reliable wind integration.
Looking ahead, many of the WEIS participants are now evaluating full membership in the SPP RTO. A 2020 SPP Brattle study found RTO membership could produce an annual savings of $49 million for both SPP and western entities. If Basin Electric Power Cooperative, MEAN, Tri-State Generation and Transmission Association and WAPA pursue membership in SPP, SPP can extend the reach and value of its services and the synergies they provide when bundled under the RTO structure.
“The startup of the energy imbalance market by SPP in the western interconnection is exciting,” said Paul Sukut, Basin Electric CEO and general manager. “Coupled with SPP’s proven stakeholder process, success in operating markets and providing reliability coordination services gives us the reliability and economics in the near term and for the longer term also provides a realistic pathway to a full RTO in the western interconnection.”
The real-time imbalance market is one of many services SPP offers to western utilities under its Western Energy Services umbrella. In 2018, SPP became the administrator of the Western Interconnection Unscheduled Flow Mitigation Plan. In 2019, SPP launched its Western Reliability Coordination service, through which it ensures the reliability of the bulk electric system in the west on behalf of 12 entities across seven states. In 2020, SPP was hired by entities in the Northwest Power Pool to be the program developer for its regional Resource Adequacy Program.
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.