Seven transmission owners – including investor-owned utilities, municipally-owned utilities, cooperatives and federal power projects – have formed the Mountain West Transmission Group to develop a strategy to adapt to the many changes in the electricity market since 2013.
This group is conducting the necessary analysis to determine the costs and benefits of entering the Southwest Power Pool (SPP), a regional transmission organization (RTO) located east of Colorado. Such a move would bring Colorado, Wyoming and parts of neighboring states into a large regional electricity market and would be one of the most significant developments in the history of Colorado’s electric utility industry.
An RTO is defined by the U.S. Energy Information Administration as an “independent, membership-based, non-profit organization that ensures reliability and optimizes supply and demand bids for wholesale electric power.” RTOs allow generators and utilities to sell and purchase excess power in exchanges, which helps stabilize and lower costs and provides a market for excess renewable energy production during times of low demand and high output.
RTOs also enable utilities to move power across the region without having to pay the multiple tariffs often associated with moving electricity among and across transmission systems owned by multiple parties. An RTO also can allow utilities to reduce the amount of reserve capacity they maintain because they have access to additional power from sources within the RTO. The wide-area view and real-time situational awareness of an RTO allows it to monitor and manage reliability and optimize resource use. Of course, there are administrative and other costs associated with an RTO, and all parties are evaluating the costs and benefits of the idea. Interconnection between SPP and the area served by the Mountain west Transmission Group also is not optimal at this time, as it is limited to four direct current ties.
SPP was founded in 1941, when 11 regional power companies decided to pool their resources to keep the Jones Mill in Arkansas powered consistently in support of national defense needs. It was determined that the organization could still serve to maintain electric reliability and coordination after the war. SPP now spans 14 states from northern Texas to North Dakota. The addition of the Mountain West Transmission Group would expand the SPP footprint.
SPP and the Mountain West Transmission Group have been discussing the terms and conditions of an SPP expansion and are expected to decide this fall whether the proposed expansion should proceed. If so, agreements could be signed by early 2018, with April 2019 the target date for joining SPP. Any expansion would require approval by some municipalities, state regulators and the Federal Energy Regulatory Commission.
Though IREA is not currently part of the Mountain West Transmission Group, we have monitored its discussions and are evaluating the pros and cons of the RTO. Should the RTO proposal move forward, we will evaluate the costs and benefits to our customers in considering our position.
We will continue to keep you apprised via Watts & Volts of the progress of this proposal.