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Sixth utility joins evaluation of RTO expansion in the Western Interconnection

Highlights

Five utilities signed letters of interest in November

WAPA's CRSP becomes the sixth to show interest

Currently, SPP is an RTO in the Eastern Interconnection

Western Area Power Administration's Colorado River Storage Project is the sixth electric service provider to announce interest in exploring membership in the Southwest Power Pool, which would expand the regional transmission organization into the Western Interconnection.

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After the successful implementation of the Western Energy Imbalance Service market and preliminary consideration of SPP RTO participation, CRSP commits to evaluating the SPP RTO, according to an April 9 letter from CRSP to SPP.

"Having CRSP join SPP's exploratory effort is a logical next step as we evaluate how to remain valuable and relevant to our customers and the communities that rely on federal hydropower and electric services now and in the future," Tracey A. LeBeau, WAPA interim administrator and CEO, said in the April 9 news release. "Any decision to move forward with final negotiations for SPP RTO membership for CRSP or any WAPA region will be consistent with our statutory requirements and involve the appropriate public processes."

On Nov. 12, 2020, Basin Electric Power Cooperative, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska, Tri-State Generation and Transmission Association, and WAPA's Upper Great Plains-West and Loveland Area Projects notified SPP of their intent to evaluate membership in the RTO. The entities' letters indicate they will work with SPP to evaluate the terms, costs and benefits of putting western facilities under the RTO's tariff.

"If these utilities pursue membership, they would become the first members of SPP's RTO to place facilities in the Western Interconnection under the terms and conditions of SPP's Open Access Transmission Tariff," according to an SPP news release. "This would extend the reach and value of SPP's services -- including day-ahead wholesale electricity market administration, transmission planning, reliability coordination, resource adequacy and more -- and the synergies they provide when bundled under the RTO structure."

All of the above interested parties currently receive at least one of SPP's contract-based Western Energy Services in the Western Interconnection, according to SPP. CRSP participates in two: Western Reliability Coordination and the WEIS market. Basin Electric, MEAN, Tri-State and WAPA's UGP-East Region joined the RTO in 2015 when they placed their respective facilities in the Eastern Interconnection under SPP's tariff.

"SPP already has a strong partnership and history of successful collaboration with WAPA, and we're greatly encouraged by the interest from them and other western utilities in potential RTO membership," Barbara Sugg, SPP president and CEO, said in the news release. "This expression of interest from their CRSP is a welcome affirmation of our belief that the Western Interconnection stands to gain tremendous value through services like those we can provide them. We look forward to the process of formally evaluating the possibility of their membership in our organization and look forward to the results of those discussions."

Brattle study

WEIS participants' membership in the SPP RTO would produce $49 million in savings annually for SPP's current and new members, according to a Brattle study. The western utilities joining SPP would receive $25 million a year in adjusted production cost savings and revenue from off-system sales, and SPP's members in the east would benefit from $24 million in savings resulting from the expansion of SPP's market, transmission network and generation fleet.

SPP anticipates its wholesale electricity market, resource adequacy program and other regionalized services can help western members achieve renewable -energy goals, reinforce system reliability and leverage new opportunities to buy, sell and trade power.

RTO vs WEIS

SPP operates as an RTO in the Eastern Interconnection to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices on behalf of its members. It administered a separate energy imbalance service market before launching its integrated marketplace for that region in 2014. SPP's footprint spans 14 states, including Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming.

The WEIS market balances generation and load regionally and in real time for participants in the Western Interconnection without those participants having to be SPP RTO members. 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. WEIS participation can be a pathway to full RTO membership for utilities in the western grid.

In addition to the WEIS market, SPP's Western Energy Services is a family of contract-based products offered to utilities in the Western Interconnection that includes reliability coordination, planning coordination and Western Interconnection Unscheduled Flow Mitigation Plan.