Like any utility executive worth his salt, Tri-State Generation and Transmission CEO Duane Highley enjoys looking at LMP contour maps.
“It’s just a fascination of mine,” he said during a virtual press conference Tuesday to discuss SPP’s new Western Energy Imbalance Services (WEIS) market.
The only drawback for Highley these days is that WEIS’s contour map is staying a cool blue, an indicator of low prices. No swatches of orange or red, signs of congestion and high prices.
“It’s been non-exciting,” he said. “Every time I’ve looked at it, it’s all been blue. That tells me the market is working right now.”
Bruce Rew, SPP’s senior vice president of operations, interjected to say the infant market’s prices have been averaging around $24/MWh since the Feb. 1 launch of the five-minute, real-time balancing exchange. (See SPP Successfully Launches Western Market.)
“Price transparency. We didn’t have that before,” Highley said. “We’ll be able to develop financial tools that help us manage that price. Just lots of benefits like that coming this way.”
In addition to lower wholesale prices, those benefits include greater access to renewable energy, reduced congestion, elimination of rate pancaking and better reserve margins.
For Tri-State, the WEIS market’s most attractive attribute is the access it offers to more renewable resources. Under the cooperative’s 20-year, $21.3 billion Responsible Energy Plan, it will reduce its CO2 emissions by 80% from 2005 levels by 2030 by adding more than 1.8 GW of renewable capacity, more than double its currently contracted solar and wind resources.
“We don’t believe it’s possible to get there without integrating these massive amounts of renewables across our footprint,” said Highley, who led a group of Arkansas cooperatives before taking over the reins at Tri-State.
“I’m very familiar with SPP’s governance model. … It’s very similar to the cooperative model. It’s member-driven with member input,” he said. “Sometimes it’s been described as painfully collaborative, but it gets results.”
Highley was joined by Mark Gabriel, the Western Area Power Authority’s (WAPA) CEO, and Tom Christensen, Basin Electric Power Cooperative’s senior vice president of transmission, engineering and construction, in extolling the benefits of the WEIS market. WAPA and Basin Electric’s Eastern systems are both full members of SPP’s Integrated Marketplace.
“We’ve certainly seen benefits as well. Those savings and economics have benefited us and our membership,” Christensen said. “There are better economics with day-ahead congestion management [and] coordinated [transmission] planning processes. But some of SPP’s best work is what they’ve done with resource adequacy. They’ve got a method, with increasing levels of wind at 32% [of the fuel mix], yet they run a reliable system.”
All three men referred to the WEIS market as just a preliminary step to full RTO membership. Highley said Tri-State is projecting $2 million in benefits, net of cost, in the market’s first year of operation. A Brattle Group study says an expanded SPP RTO under a single tariff would result in $49 million in annual savings for current and new members. (See SPP Stakeholders Dig into WEIS Market Study.)
The WEIS market is offered on a contract basis, as is the RC service SPP also provides in the Western Interconnection. Most of the market’s members have indicated to the grid operator that they are interested in pursuing full RTO membership.
“We think [this WEIS market] is the first step,” Christensen said. “We would like to, and we believe we need to, advance to a full RTO in the West. The governance model, the stakeholder process all leads to a logical choice for us. It’s a realistic path forward.”
“The fact we’re talking about markets in the West is a major change,” Gabriel said. “Markets are coming to the West hard and fast. It’s necessary for reliability, resilience and the ability for power to flow back and forth much more freely. The WEIS market is really just the first step in what we’re going to see over the next two to three years.”
SPP is currently working with the prospective members in evaluating potential changes to the RTO’s governing documents. Assuming board approval of the changes, it would be another two years from the entities’ commitment to becoming full members, Rew said.
“This is just the beginning of these partnerships in the West,” SPP CEO Barbara Sugg said. “We have an opportunity to partner with these entities to help them, and help their customers, to meet their financial and renewable goals. I know things are a little different in the West, but we’re highly confident the benefits we provide the entities in the East are available in the West.”
CAISO’s Western Energy Imbalance Market continues to add members, with El Paso Electric announcing on Feb. 1 that it would join in 2023. (See Texas Utility Plans to Join CAISO EIM)
But Sugg expressed confidence in SPP’s ability to compete in the West.
“The key to more entities having an interest in SPP is seeing the success their neighbors have,” she said. “They say if you build it, they will come. Well, we’ve built several things for smaller groups. The more people that come, the more everyone benefits from it.”
