Three Colorado utilities announced plans to join Southwest Power Pool's Western Energy Imbalance Service market and continue studying long-term solutions to join or develop an organized wholesale market, SPP said Jan. 26.
Xcel Energy-Colorado, Platte River Power Authority and Black Hills Colorado Electricplan to join the WEIS market in April 2023, SPP said in a statement. The agreement to join the WEIS still requires approval through appropriate regulatory processes.
"As we look at opportunities moving forward, this short-term step meets our energy needs to deliver clean, reliable and affordable energy to customers right now," Xcel Energy-Colorado President Alice Jackson said in the statement. "The energy imbalance market allows us to participate in an organized market while giving us the flexibility to explore a more permanent solution that will help us integrate more wind and solar energy onto our system."
An energy imbalance market is a real-time market in which energy generation from multiple power providers is dispatched at the lowest possible cost to reliably serve the combined customer demand of the region.
"We're very active in evaluating and seeking opportunities that lower energy costs and lead to expanded renewable energy options for our customers and communities," Vance Crocker, vice president of Black Hills Colorado, said in the statement. "In addition to our ongoing work with our regional utility partners and by joining the WEIS, we continue to explore avenues that provide benefits to customers."
Xcel Energy-Colorado currently operates under a joint dispatch agreement that enables sharing generation between Platte River Power Authority, Black Hills Colorado Electric and Colorado Springs Utilities within its Balancing Authority Area. SPP launched WEIS in February 2021.
"Joining the WEIS will expand the benefits we gained from the joint dispatch agreement on behalf of our owner communities," Jason Frisbie, general manager and CEO of Platte River Power Authority, said in the statement. "We've created excellent partnerships through the JDA that currently provide great value to our customers. Moving into an energy imbalance market brings Platte River one step closer to a noncarbon energy future."
Federal and state regulators are discussing the potential benefits of having a regional transmission organization in the West to help maintain reliability during the energy transition. SPP is just one of several entities vying to create a market in the West.
SPP plans to expand its regional transmission organization footprint into the Western Interconnection by 2024. Members of SPP's WEIS intend to explore full western RTO participation.
The California Independent System Operator also runs an Energy Imbalance Market in the West, and the grid operator recently launched a process to expand the EIM into the day-ahead market. At the same time, an informal group of electric providers in the West, called the Western Markets Exploratory Group, is also evaluating regional market solutions together.
The three Colorado utilities explored participation in CAISO's WEIM as well as SPP's WEIS, SPP said. Xcel Energy took a step back from joining CAISO's WEIM last year after one of its energy partners joined SPP's WEIS.
After further analysis, the group decided the best interim option was to move into the WEIS due to geographic diversity and existing interconnections, according to SPP. The utilities' participation in the WEIS will replace the JDA and is expected to bring additional production cost savings to customers.
"Southwest Power Pool is very pleased that our Western Energy Services customer base continues to grow," SPP President and CEO Barbara Sugg said. "We're proud that our relationship-based approach and valuable portfolio of services continues to attract utilities looking to modernize and regionalize the way electricity is delivered. And we're confident SPP and our WEIS participants will not only benefit from this expansion but will also help these utilities meet their goals of making power delivery more affordable and reliable."
The three organizations continue to evaluate a longer-term and broader regional market structure that will ensure system reliability and improve the integration of wind and solar energy on the system, SPP said. In October, they announced participation in the Western Markets Exploratory Group and are committed to working with the WMEG to evaluate different market options that reduce costs, increase reliability, and help promote their strategies to create a carbon free electricity system.
Participants in the WMEG will consider market structures that expand on energy imbalance markets and will evaluate broader market designs for the Western region, including a staged approach to new market services, to see if those designs can enhance their ability to provide clean, reliable and low-cost energy service to their customers.