Electricity Markets

Xcel Energy ends participation in Mountain West Transmission Group

Investor-owned utility holding company Xcel Energy on April 20 said that it is ending its participation in the Mountain West Transmission Group (MWTG) and in related efforts to form a regional transmission organization in the Rocky Mountain West.

In making the announcement, the company cited a number of issues for its decision, including what it said were limited benefits for the company’s 1.4 million customers in Colorado, who are served by the Public Service Company of Colorado, lack of market expansion opportunities for MWTG and increasing uncertainty over the costs of the RTO.

“Over the past several years, Xcel Energy and other regional electricity service providers have been investigating the potential to join a regional transmission organization,” said David Eves, Xcel Energy’s executive vice president and group president for utilities.  

“Recently, Xcel Energy completed a review of the Mountain West’s proposal to join a regional transmission organization. After much deliberation, Xcel Energy has determined that continued engagement in Mountain West is not in the best of interests of our customers or the company,” he said in a news release.

Xcel Energy noted a variety of interrelated items that drove the company to this conclusion, none of which was the single deciding factor, but collectively resulted in its decision.

It said that some of the considerations include:

  • The overall benefits to Xcel Energy’s customers are limited, given the relatively small size of the MWTG footprint;
  • While previously optimistic, Xcel Energy now sees few opportunities for westward expansion of the RTO, which might have added to the value proposition;
  • While the costs of forming an RTO are generally known, they have recently increased, and the benefits are less certain and highly dependent on both the footprint, generation flexibility and composition of MWTG; and
  • While Xcel Energy continues to believe in energy markets, the company said recent developments with RTOs have introduced an increased risk of more significant changes to state-regulated retail electric service than Xcel Energy had anticipated.

Eves reiterated that the decision was based solely on the collective set of issues identified by Xcel Energy, “which in turn show MWTG membership would not work for the company,” Xcel Energy said in the news release.

He also noted that the effort to look at the potential for a regional RTO has been worthwhile, in that it shows all MWTG members continue to look for ways to best serve their customers.

SPP board advances MWTG integration

The Southwest Power Pool’s board of directors recently approved the next phase of the continuing effort to integrate MWTG into the RTO’s membership.

SPP said the board’s vote was the culmination of more than a year of negotiations related to the terms and conditions of Mountain West’s proposed membership in the SPP RTO and participation in SPP’s wholesale electricity markets.

MWTG includes several utilities and two Western Area Power Administration projects (Loveland Area and Colorado River Storage Projects). Along with the two WAPA projects, the group includes Basin Electric Power Cooperative, Black Hills Energy’s three electric utilities, Colorado Springs Utilities, Platte River Power Authority and Tri-State Generation and Transmission Association.

MWTG announced in September 2017 its intent to pursue SPP membership after both parties completed a months-long period of cost-benefit analyses.