Electricity Markets

SPP files proposal for Western Energy Imbalance Service market at FERC

The Southwest Power Pool (SPP) has submitted a tariff for the Western Energy Imbalance Service (WEIS) market to the Federal Energy Regulatory Commission, requesting a Commission order by May 21, with an effective date of February 1, 2021. Market trials would begin August 3 under the SPP plan.

SPP last month also submitted for approval the Western Joint Dispatch Agreement (WJDA) that has been executed by seven entities and the Western Markets Executive Committee (WMEC) Charter.

SPP submitted the filing in two parts, under dockets ER20-1059 and ER20-1060, but SPP is asking FERC to consider them as a single filing.

Comments on the SPP proposal are due March 23.

Market participants

The WEIS market would initially include the following market participants who are signatories to the WJDA:

  • Western Area Power Administration Colorado River Storage Project
  • WAPA Rocky Mountain Region
  • WAPA Upper Great Plains Region
  • Basin Electric Power Cooperative
  • Tri-State Generation and Transmission Association, Inc.,
  • Municipal Energy Agency of Nebraska and
  • Wyoming Municipal Power Agency 

These seven entities represent about 89 percent of the generation within two balancing authorities (BAs): Western Area Colorado Missouri Balancing Authority Area and Western Area Power Administration Upper Great Plains West.

Any entity with generation or load within or pseudo-tied into a participating BA would be allowed to participate, and the BA would be the market participant for entities that did not sign the WJDA.

After the market goes live, SPP would onboard additional market participants as part of regular onboarding cycles that generally occur three times per year.

Details on WEIS market

SPP describes the WEIS market as “a narrowly defined service offered by SPP to utilities in the Western Interconnection under a contract. It is important to note that this service is not provided under SPP’s role as an RTO but rather as the market administrator.” 

SPP also said that the WEIS market does not include consolidation of BA operations; or markets for day-ahead unit commitment and energy deployment, operating reserves or transmission congestion rights. “SPP, as the market administrator, does not provide consolidation or administration of transmission tariffs. Participants do not transfer functional control of their generation or transmission assets to SPP.”

Under the WEIS, SPP would operate a real-time centralized, security constrained economic dispatch of the energy imbalances of participating resources. These imbalances would be settled every five minutes using the locational marginal price for the settlement location.

Imbalance energy would be calculated for each five-minute interval as the difference between load obligation and resource supply by the asset owner in the WEIS market. Load obligation accounts for exported energy plus metered load as adjusted for energy received from other entities. Resource supply is equal to the imported energy plus the resource meter value adjusted for energy scheduled to other entities. 

All participating load and generation (excluding behind-the-meter generation of less than 10 megawatts) would be required to be registered with SPP. Participating BAs could also register resources that are not available for economic dispatch and are instead self-scheduled.

Beginning seven days prior to the operating day, market participants would be allowed to submit offer curves for resources and then update those offers up to thirty minutes prior to each operating hour. Energy offers would generally be limited by a cap of $1,000 and a floor of -$500 per megawatt-hour.

Resource adequacy and reliability

BAs participating in the WEIS market would continue to be responsible for ensuring compliance with applicable reliability standards.

Participants in the WEIS market would be required to submit resource plans for each hour of the next operating day that demonstrate they have sufficient generation to meet their expected load and any ancillary service obligations. SPP would assess these plans both one day and one hour ahead of the interval and identify any supply inadequacies -- both over and under-supply. Market participants would then make appropriate modifications to resource plans no later than thirty minutes prior to the operating hour.

SPP is also acting as a Reliability Coordinator (RC) for a number of utilities in the Western Interconnection.

The grid operator said that it “will provide participating BAs and SPP West RC information regarding expected operating plans both day-ahead and in advance of each operating hour…. The sharing of the supply adequacy analysis with participating BAs, the incorporation of relevant data from RCs, and the increased visibility available to the SPP West RC through projected market operations will have a synergistic effect on reliability and efficiency throughout the WEIS Market Footprint.”

SPP also said that the WEIS market would be flexible enough to operate across multiple RC footprints.

Market administration rate and monitoring

Participants would pay a WEIS market administration rate to cover initial implementation costs and ongoing administrative costs incurred such as SPP staff, system implementation and maintenance, debt service for financing capital expenditures, and other costs associated with administering the WEIS Market. Initial implementation costs would be paid over the first eight years of the market. New participants may also be assessed a rate to recover any incremental costs caused by that participant.

Meanwhile, the tariff includes market power mitigation provisions. SPP’s internal independent Market Monitor would perform market monitoring services for the WEIS market and is currently analyzing whether market power may exist based on potential supply and demand conditions and potential transmission congestion, and whether the proposed market power mitigation procedures would be effective in mitigating actual exercise of local market power should it occur. This analysis is expected to be completed prior to the August market trials.

Governance

The WMEC is comprised of a representative from each nonaffiliated signatory to the WJDA. This body initially provided a forum for the determination of the market rules.

Under the operation of the WEIS Market, the WMEC would also have the authority to approve or reject proposed amendments to the tariff, establish market protocols, consult with SPP in determining the administrative rate charged to participants and recommend proposed amendments to the WJDA.  SPP’s Board of Directors would provide oversight of the administration of the WEIS market.

WMEC voting would utilize a “House and Senate” approach where the “House” vote is weighted based on each representative’s Net Energy for Load and the “Senate” vote is equally weighted. Resolutions would pass if they receive 75 percent of both the House and Senate, and do not have any dissenting House votes.

Transmission

Existing transmission service arrangements (both Point-to-Point and Network Integration Transmission Service) would be utilized for WEIS market energy transfers. Additionally, the tariff establishes Joint Dispatch Transmission Service for non-firm, as-available intra-hour transmission service within the WEIS at zero charge.

CAISO EIM launched in 2014

The California Independent System Operator (CAISO) launched its Western EIM in 2014 and the market’s first participant was Oregon-based PacifiCorp. Las Vegas-based NV Energy followed on Dec. 1, 2015, Puget Sound Energy of Bellevue, Washington, and Arizona Public Service of Phoenix, Arizona, on Oct. 1, 2016, Portland General Electric on Nov. 1, 2017, and Idaho Power and Powerex of Vancouver, British Columbia on Apr. 4, 2018. The Sacramento Municipal Utility District, part of the Balancing Authority of Northern California, began participating on April 3, 2019.

For a complete list of active and pending CAISO EIM participants, click here.