Southwest Power Pool starts energy balancing market in West

Little Rock-based regional transmission organization Southwest Power Pool (SPP) announced Monday (Feb. 1) it launched its Western Energy Imbalance Service (WEIS) market at midnight as the participants consider full organization membership.

The real-time balancing market is the newest contract-based Western Energy Services to be implemented in the Western Interconnection and is expected to decrease wholesale electricity costs, increase price transparency and mitigate congestion on the transmission system for market participants. The WEIS includes parts of Arizona, Colorado, Montana, Nebraska, South Dakota and Wyoming.

“This is an exciting step for SPP and our new market participants in the West,” said SPP President and CEO Barbara Sugg. “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. 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, including 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. The utilities announced in 2019 their intent to join the WEIS. The 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 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 customers 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.”

SPP, as the WEIS market administrator, 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 in previous SPP markets, the WEIS will provide price transparency of wholesale energy, allow parties to trade bilaterally and hedge against costly transmission congestion, according to a news release.

“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 (regional transmission organization) in this region to help Tri-State meet its clean energy goals.”

SPP holds the record for the highest one-hour and point-in-time wind penetration recorded by the Energy Information Administration, the release shows. On Jan. 14, SPP set a wind peak record of 19,848 megawatts and was the first U.S. regional transmission organization to have wind as its main fuel source in 2020. The organization’s existing markets and other services, such as transmission planning and balancing authority administration, have been credited with helping the organization achieve the high degree of reliable wind integration, according to the release.

Many of the WEIS participants are evaluating whether to become members of the regional transmission organization. A 2020 SPP Brattle study showed that if they were to become members, this could produce an annual savings of $49 million for both the SPP and western entities. If Basin Electric Power Cooperative, MEAN, Tri-State Generation and Transmission Association and WAPA seek to become members, SPP can extend the reach and value of its services and the benefits they provide as part of the RTO structure.

“The startup of the energy imbalance market by SPP in the western interconnection is exciting,” said Paul Sukut, CEO and general manager of Basin Electric. “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, the release shows. 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 in 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.

The nonprofit SPP ensures reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices on behalf of its members. SPP manages the electric grid in 17 central and western U.S. states and provides energy services on contract to customers in the Eastern and Western Interconnections.