Southwest Power Pool’s (SPP) board of directors and its strategic planning committee approved the submitted policy-level terms and conditions for regional transmission organization (RTO) expansion in the Western Interconnection during its quarterly joint stakeholder meeting in late July.
Arkansas-based SPP manages the electric grid across 17 central and western U.S. states and provides energy services on a contract basis to customers in both the Eastern and Western Interconnections.
Prospective western participants include Basin Electric Power Cooperative, Colorado Springs Utilities, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska, Tri-State Generation and Transmission Association, Wyoming Municipal Power Agency and the Western Area Power Administration (WAPA).
WAPA’s evaluation of full RTO participation in the Western Interconnection includes its Upper Great Plains-West region, Colorado River Storage Project and Rocky Mountain region.
All these organizations, except Colorado Springs Utilities, joined SPP’s Western Energy Imbalance Service (WEIS) market upon its Feb. 1, 2021 launch before announcing their intent to explore full western RTO participation. SPP said that Colorado Springs Utilities anticipates joining the WEIS market in 2022 and is also exploring RTO membership as part of this group of entities.
“WAPA anticipates additional value in increasing energy transfers between the East and West through the SPP RTO, providing benefits and mitigating risk for existing and prospective RTO members along with our customers,” said WAPA Interim Administrator Tracey LeBeau in a statement.
If the utilities join or add additional facilities in SPP, they will become the first members of SPP’s RTO to participate in SPP’s Integrated Marketplace in the Western Interconnection. This would extend the reach and value of SPP’s services -- including day-ahead wholesale electricity market administration, transmission planning, consolidated balancing authority, resource adequacy and more -- and the synergies they provide when bundled under the RTO structure, SPP said.
A recent SPP Brattle study found that WEIS participants’ membership in the SPP RTO would produce approximately $49 million in savings annually for SPP’s current and new members. 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.
In the Eastern Interconnection, SPP, which formed in 1941, implemented operating reserve sharing in 1991, became a certified reliability coordinator in 1997 and earned its RTO designation from the Federal Energy Regulatory Commission (FERC) in 2004. It launched its first real-time balancing market in 2007 then transitioned to a day-ahead market and became a single, consolidated balancing authority in 2014.
SPP began serving customers in the west in October 2015. SPP subsequently expanded its services in the west in December 2019 when it launched its Western Reliability Coordination service on a contract basis and in February 2021 with the successful launch of the WEIS market.
SPP said that the next step to expand the RTO into the Western Interconnection is resolving the outstanding terms and conditions, including cost allocation for the direct-current ties between the Eastern and Western Interconnections. The remaining terms and conditions are expected to be resolved by the October 2021 SPP board of directors meeting. Prospective participants will also need to complete stakeholder processes.
Once accomplished, prospective participants plan to execute a financial commitment agreement in April 2022 to initiate the western RTO expansion. SPP then plans to file tariff modifications with FERC in October 2022 with approval expected sometime in early 2023.
Once approved, SPP anticipates extending its RTO into the west in early 2024.