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Grid operators pitch Colo. regulators on options for Mountain West utilities

Colorado regulators on March 20 discussed various options that the Mountain West Transmission Group has for reliability coordination and power markets but said more comparable cost-benefit information is needed despite the group's announced intent to join the Southwest Power Pool.

The Colorado Public Utilities Commission conducted a daylong hearing with speakers from Mountain West, SPP, the California ISO, the PJM Interconnection and Peak Reliability, a provider of reliability coordinator services in the western U.S.

Mountain West utilities serve about 6.4 million customers in parts of Arizona, Colorado, New Mexico, Utah and Wyoming.

On March 13, SPP announced that its board of directors had approved policies that would govern the integration of the Mountain West utilities into SPP, which had been negotiated confidentially with Mountain West's members over several months. Mountain West members indicated in September 2017 their intent to join SPP, but they must obtain various regulatory bodies' approval.

On Feb. 23, Mountain West participants provided revocable notice of withdrawal from Peak Reliability, the Western Interconnect's reliability coordinator, effective Sept. 1, 2019, said Dan Kline, director of transmission and planning at Black Hills Energy, a Mountain West member. Black Hills Corp. utility subsidiaries including Black Hills Colorado Electric Utility Co. LP operate under the name Black Hills Energy.

In order to file governing document tariff revisions at the Federal Energy Regulatory Commission by the end of August, SPP needs commitments from Mountain West participants beforehand, Kline said, and the federal process is expected to continue into early 2020. Transmission owner tariff filings would be expected to occur by the end of April 2019, Kline said.

Black Hills and Xcel Energy Inc.'s Public Service Co. of Colorado plan to file for Colorado PUC approval separately so they can "go live" with SPP integration by the middle of 2020, Kline said.

Colorado PUC Chairman Jeffrey Ackermann said the decision about which avenue to pursue for the Mountain West members in Colorado resembles a "procurement" process, which would entail standardized proposals from various potential suppliers, but each of the entities vying for the Mountain West utilities' membership offers a different set of services and costs.

For example, SPP offers full integration into its markets for day-ahead and real-time power and financial transmission rights, with reliability coordination services also provided by SPP. Mountain West studies concluded that integrating into SPP would generate annual savings of $80 million to almost $154 million.

Proposing a market 'by and for the West'

Peak Reliability has offered to join with the PJM Connext market service to provide reliability coordination with a path to creating a separate power market in the West, including reduced reliability coordinator costs and enhanced market services that could be phased in as market participants become more comfortable.

In addition to providing reliability coordination, the Peak Reliability-PJM Connext proposal includes voluntary participation in market services such as day-ahead, power markets, financial transmission rights, credit monitoring and administration, and centralized counterparty settlements. The offering would exclude a capacity market, consolidated open access transmission tariffs, transmission service provider functions and regional planning for reliability, public policy, market efficiency or interconnection.

One of the advantages of the Peak Reliability-PJM Connext proposition, said Stu Bresler, PJM senior vice president for operations and markets, would be "responsive and flexible governance by and for the West," while SPP proposes, in general, to integrate the Mountain West utilities and their regulators into SPP's existing governance structure.

Bresler said PJM plans to release a "business case" for Mountain West Transmission Group's opting for the Peak Reliability-PJM Connext proposal by March 30.

CAISO offered to provide reliability coordination services, tariff administration, transmission and generation interconnection planning, and participation in the Western Energy Imbalance Market. CAISO submitted its notice of intent to withdraw from Peak Reliability in January, and plans to offer by August 2019 a full range of reliability coordinator services for Western entities that choose its services.

Furthermore, the Western EIM is considering extending the current real-time imbalance market into a day-ahead market, with "gross benefits expected to be significant," according to a written presentation by Mark Rothleder, CAISO's vice president for market quality and renewable integration. If the Western EIM opts to pursue the day-ahead market, it may be implemented by mid-2020, Rothleder said.

Colorado Public Utilities Commissioner Frances Koncilja, who chaired the March 20 meeting, said she "learned a huge amount" from the discussion, but without further analyses comparing the SPP, CAISO and Peak Reliability-PJM Connext proposals, the subject "merits further discussion."

"Stay tuned," she said.

Mark Watson is a reporter for S&P Global Platts which, like S&P Global Market Intelligence, is owned by S&P Global Inc.