By Tom Kleckner and Hudson Sangree

SPP has raised the stakes in what could shape up to be a long-term competition to win over the Western electricity market one service at a time.

The RTO announced Monday it will launch its Western Energy Imbalance Service (WEIS) market in December 2020, offering to provide real-time services to balancing authorities across the Western Interconnection.

The move will put SPP toe-to-toe with CAISO’s well-established and ever-expanding Energy Imbalance Market (EIM).

SPP said it will administer the WEIS on a contract basis, allowing non-SPP members to participate in much the same way non-CAISO members voluntarily trade in the EIM. Participation would be open to entities with load or generation within — or pseudo-tied into — a participating balancing authority.

SPP said it is building on its previous success with regional markets to offer a variety of services to Western entities. As if to punctuate the point, it has even developed a new logo for its Western energy services.

CEO Nick Brown said the RTO wants to do more than simply launch a wholesale electricity market in the west.

“We want to work with utilities to understand the challenges they face and develop smart solutions that benefit the whole region,” he said. “That’s how we operate as an RTO, and it’s how we plan to administer this and other contract services in the west.”

SPPs’ plans met with a cool reception at a Western EIM Regional Issues Forum carbon workshop Tuesday in Folsom, Calif. Carl Zichella, director of western transmission for the Natural Resources Defense Council, said SPP doesn’t have a lot to offer EIM participants and noted there are limited transmission links between SPP’s territory and EIM states.

“They’re looking at ways to get a toehold in the Western market,” Zichella told RTO Insider. “But when you have a market that’s already delivering more than half a billion dollars in benefits, it’s going to be tough to compete with.”

CAISO rolled out the EIM in 2014 with PacifiCorp as its first member. The market now has eight participants across eight Western states and one Canadian province, with eight other BAs slated to join over the next couple years.

CAISO spokesperson Anne Gonzales said the EIM has grown steadily and has delivered “substantial” cost savings and carbon emission reductions to its participants. She pointed out by May the market had yielded total benefits of more than $650 million, and the $83.5 million in first quarter benefits more than doubled those for the same period a year earlier. (See Cold Forces NW to Dip More Deeply into EIM as Avista Joins.)

“We envision even more expansion of the market, especially since the benefits increase with each new participant,” Gonzales said.

Some EIM participants alluded to lingering unease between California and the Rocky Mountain region that SPP may be trying to capitalize on.

‘Tender Time’

At the carbon workshop, an event intended to explore the integration of carbon pricing into the EIM, Idaho Public Utilities Commissioner Kristine Raper cautioned about using the market as a vehicle to export carbon policies from states such as California and Oregon to states without such policies, such as Idaho.

“I think that adding policy into an economic universe when you’re bringing in more and more states with diverse policy interests, makes the system more fragile,” she said.

Utah Public Service Commissioner Jordan White said it would be unwise to jeopardize the EIM’s efficiency by layering it with complex components such as carbon policy, which could undermine its optimization tool.

“It’s a very tender time as far as the EIM,” White said. “We have really come a long way in gaining trust in the markets.”

He said incorporating policies into the economics of the EIM “could potentially suffocate or erode it.”

White said while he didn’t know the details of SPP’s imbalance market, he approved of “competition among market platforms” and suggested entities should choose whichever market platform is the best fit for them.

SPP spokesman Derek Wingfield said the RTO’s recent launch of Western contract-based services “acknowledges there’s value to be had by both SPP and customers in providing these products on a standalone basis.”

“We’re glad for the chance to do so and prove our worth,” Wingfield said.

SPP is already set to begin managing reliability coordination (RC) services to more than a dozen Western utilities in December. SPP, CAISO and BC Hydro are among those taking advantage of the decision by Peak Reliability, the Western Electricity Coordinating Council’s incumbent RC provider, to go out of business by year’s end. (See SPP on Track for WECC RC Certification.)

SPP already administers the Western Interconnection Unscheduled Flow Mitigation plan, which uses controllable devices to manage congestion along transmission lines, for six western entities: CAISO, NorthWestern Energy, NV Energy, PacifiCorp, Tri-State Generation and Transmission Association and the Western Area Power Administration.

SPP also said it is in the early stages of developing planning coordination services to help utilities study and plan upgrades to the region’s transmission system.

“We’re a stakeholder-driven organization that believes in the power of partnership,” Brown said.

SPP said in April it was seeking interested utilities and customers to help build a real-time market “that will meet the electricity needs of the Western Interconnection.” (See SPP Solicits Interest in Western Real-time Market.)

It plans to operate the WEIS under a Western Joint Dispatch Agreement that SPP said will guarantee “participants a say in the market’s ongoing evolution.” Its central feature will be an intra-hour, centralized dispatch of energy every five minutes from participating resources. The market will provide price transparency of wholesale energy and allow parties to make bilateral trades and hedge against transmission congestion.

SPP operated an EIS market in its own footprint from 2007 until 2015, when it added the day-ahead Integrated Marketplace. That market yielded about $150 million in annual benefits, with one single-year peak of more than $250 million.

“SPP knows markets,” said Bruce Rew, SPP’s vice president of operations. “We [have] designed, built and operated wholesale energy markets that far exceeded participants’ expectations.”