Straddling the eastern and western interconnections, three multistate public power entities have decided to participate in the Southwest Power Pool's energy imbalance market in the West.
The Western Area Power Administration, or WAPA; Tri-State Generation and Transmission Association Inc.; and Basin Electric Power Cooperative on Sept. 9 announced that they will join SPP's Western Energy Imbalance Service, or WEIS, market when it is launched in February 2021.
SPP plans to provide its energy imbalance services to those entities and potentially other electric utility providers in competition with the California ISO's already operating Western Energy Imbalance Market, or WEIM. CAISO boasts that its WEIM already is saving utilities hundreds of millions of dollars through coordinated exchanges of power and integration of renewable energy resources.
According to a joint news release, SPP will become the market administrator for WAPA, Tri-State, Basin and potentially other power providers in the West in order to centrally dispatch energy from these participants throughout their region every five minutes. That will enhance reliability and make electricity delivery more economical for participants and their customers.
In its capacity as a regional transmission organization, SPP manages the electric grid and wholesale energy market across 14 central U.S. states. But it is making efforts to expand its reach into the Western Interconnection by offering energy imbalance and reliability coordination services there.
Meanwhile, CAISO has expanded its WEIM and has nearly 20 active and prospective participating utilities across the western U.S. and Canada.
WAPA, Tri-State and Basin are members of the SPP RTO in the Eastern Interconnection and also operate in the Western Interconnection, most of which is not yet served by a centralized grid operator. Both CAISO and SPP have long-range aims to establish or expand their RTO services in the West, and they see offering energy imbalance and reliability coordination services as interim steps toward their goals. Utilities do not have to be members of CAISO or SPP to take energy imbalance service.
In a separate development, Xcel Energy Inc., Black Hills Corp. subsidiary Black Hills Energy, Colorado Springs Utilities and the Platte River Power Authority have commissioned an extensive evaluation of the benefits and costs of both SPP's and CAISO's markets with the aim of determining which imbalance service to take.
A big step into the West
SPP President and CEO Nick Brown stressed that the arrangement is a partnership in which his company will work with utilities to develop "smart solutions that benefit the whole region."
Energy imbalance service is one of several components of a "family of contract-based products" SPP offers, according to the release. The service will be offered across the Eastern and Western Interconnections under a joint dispatch agreement, which is a contractual arrangement to provide participating entities with centralized, coordinated dispatch of their generating resources.
"SPP has a proven track record in operating energy imbalance and full day-two markets," Basin CEO and General Manager Paul Sukut said. "SPP's experience makes them an excellent choice for operating a market. Adding to the advantage of SPP is their independent board of directors, a proven stakeholder process, and a governance structure that specifically includes commissioners from state regulatory commissions."
Obtaining energy imbalance service from SPP will quickly increase market efficiencies, reduce expenses for Tri-State's members and their electric customers, and support the association's move to cleaner energy, Tri-State CEO Duane Highley said.
"Tri-State will continue to work towards the development a fully organized market that benefits our members and electricity consumers across the West," Lee Boughey, a spokesman for the association, said in an email.
WAPA Administrator and CEO Mark Gabriel said his federal power marketing and transmission agency within the U.S. Energy Department is seeking mutually beneficial partnerships because the electric industry is rapidly changing. Presumably alluding to the expansion of renewable energy, he said evolving generation options require balancing of operations to meet WAPA's electric service load commitments.
SPP said its WEIS market will provide price transparency of wholesale energy and allow parties to trade bilaterally and hedge against costly transmission congestion.
