Eighteen Southeastern utilities and cooperatives, led by Duke Energy, Southern Co. and the Tennessee Valley Authority, announced Friday they will seek FERC approval to launch a 15-minute energy market next year.

The Southeast Energy Exchange Market (SEEM) will be “an overlay to the existing bilateral market to increase efficiency and opportunities for wholesale economic energy purchases and sales,” Duke Energy Carolinas and Duke Energy Progress said in an informational filing to the North Carolina Utilities Commission. The system will provide automated matching, reservation and tagging functions.

“In the existing bilateral market, buyers and sellers have to find each other. The SEEM will increase efficiencies by using an electronic algorithm-based wholesale energy trading platform to match willing buyers and sellers in the Southeast region who are already able to transact under existing power sales agreements and authorizations.”

Duke said the market will be under the sole jurisdiction of FERC and that it will not replace or change existing federal balancing authority or transmission provider reliability requirements.

The agreement is not a pooling agreement or a wholesale power sales agreement, Duke said. It will use otherwise unused transmission capacity, and the transactions matched via SEEM will be consummated under existing bilateral agreements between the buyer and seller, Duke said.

The company’s filing included the SEEM “platform agreement” and other governing documents.

Listed as founding members of SEEM are: Associated Electric Cooperative, Dalton Utilities, Dominion Energy South Carolina, Duke Energy Carolinas, Duke Energy Progress, ElectriCities of North Carolina, Georgia System Operations Corporation, Georgia Transmission Corporation, LG&E and KU Energy, MEAG Power, NCEMC, Oglethorpe Power Corp., PowerSouth, Santee Cooper, Southern Co.’s Georgia Power and Mississippi Power, and TVA.

The companies said an independent third-party consultant estimated the market will provide members a total of $40 million to $50 million in annual savings in the near-term, potentially growing to $100 million to $150 million annually “as more solar and other variable energy resources are added.”

Not an RTO

The companies made it clear that SEEM is not a gateway to an RTO. “Importantly, SEEM members maintain local control of their generation and transmission assets, and participation is voluntary. Many of the member companies operate within state guidelines and directives, so having full control over their respective generation and transmission resources is an important governing requirement,” they said.

“We’re assessing the details released by the utilities today, but we’ve been suspect about this from the beginning,” Frank Rambo, the head of the Southern Environmental Law Center’s clean energy and air program, said Friday. “If your goals are truly to encourage renewables and lower costs, this is not what you propose and not where you stop. You would go much further in reforming the wholesale market.”

“While we are still digesting the filing, the Southeast Energy Exchange Market proposal would benefit from a number of improvements,” said Sean Gallagher, vice president of state affairs at the Solar Energy Industries Association. “The proposal is missing critical details about renewable energy integration as well as a mechanism to prevent price fixing. Both issues will ultimately impact ratepayers and are a hallmark of monopoly utility power. We support a competitive marketplace in the Southeast. Stakeholder input will be a critical part of this effort, and we look forward to engaging with regulators to help improve this proposal and create more opportunities for competition.”

When word of the prospective market broke in July following months of secret negotiations, Maggie Shober, director of power market analytics for the Southeast Alliance for Clean Energy, said it appeared to be an effort to avoid legislative action to create an RTO in the Carolinas. (See Southeast Utilities Talking Regional Market.)

North Carolina House Bill 958, introduced in April 2019, would authorize the North Carolina Utilities Commission to require the state’s investor-owned utilities to establish or join a regional transmission entity after determining such a move would be in the public interest. It was referred to the House Committee on Rules, Calendar and Operations of the House.

South Carolina lawmakers introduced legislation (S. 998 and H. 4940) in January 2020 that would establish an Electricity Market Reform Measures Study Committee to study the benefits of electricity market reforms and whether the legislature should adopt them. In February, H. 4940 crossed over to the Senate.

Shober said her organization is pleased with the utilities’ proposal for SEEM, calling it “a potential stepping stone toward letting clean energy resources compete with existing fossil generation on an even playing field.

“The governance and stakeholder structures matter,” she added. “The settlement method is unique and has not been tested under a similar setup anywhere in the country. I suspect that these will be some of the key discussion points as SEEM moves through the regulatory process.”

Administrator

The market will be run by a Southeast EEM Administrator and overseen by a four-member Operating Committee (two members representing investor-owned utilities and one each from cooperatives and governmental utilities) and a Membership Board.

Each member will get at least one vote on the Membership Board (the “Popular Vote”) plus a number of votes based on its share of the net energy for load (“Net Energy for Load Vote”).

One quarter of the market’s costs will be allocated on a per-member basis with the remainder allocated based on net load shares.

A spokesman for Associated Electric Cooperative said startup costs are expected to be less than $5 million with annual operating costs of $1 million to $3 million.