Colorado’s investor-owned utilities must compare available alternatives when asking regulators for approval to participate in an RTO or ISO, under a decision by the Colorado Public Utilities Commission.
The comparison must include “sufficient modeling and other analytical support” showing the expected net benefits of participating in a particular RTO or ISO are similar to, or greater than, net benefits from other available options.
But such a comparison is not required when utilities seek approval to join a day-ahead market, the PUC said in its decision, issued Aug. 22.
The decision comes as CAISO’s extended day-ahead market (EDAM) and SPP’s Markets+ are in a heated battle for day-ahead market participants across the West. Colorado utilities have a choice among EDAM and Markets+, as well as SPP’s RTO West, a proposed extension of services offered in the Eastern Interconnection.
The PUC decision, which adopts rules regarding utility participation in organized electricity markets, was prompted in part by Senate Bill 21-072 from the state’s 2021 legislative session. The bill requires transmission utilities to join an organized wholesale market by Jan. 1, 2030.
The PUC’s new rules list factors the commission will consider in evaluating a utility’s request to join an RTO, ISO or day-ahead market.
PUC Chairman Eric Blank, who was the hearing commissioner in the case, issued a recommended decision in June.
Ten groups then filed a joint request to modify the decision to include a comparison of alternatives in evaluating a request from investor-owned utilities to join an RTO, ISO or day-ahead market. They asked that the comparison of benefits be based on “a nodal mapping of the Western Interconnection and at least three years of simulated market operations.”
“We believe that it is impossible for the commission to determine that utility participation is in the public interest without an analysis of the market options that are available to a utility,” the commenters said in their joint filing.
The groups that jointly commented include Advanced Energy United, Clean Energy Buyers Association, Interwest Energy Alliance, Western Grid Group and Western Resource Advocates.
Loss of Control
In explaining its decision, the commission said utility participation in RTOs or ISOs raises more concerns than participation in less-integrated offerings such as day-ahead markets.
In an RTO, utilities give up control of their transmission assets and much of their decision-making to a regional governance process, the PUC said. The PUC also cited the need for “timely review” of day-ahead market applications.
The PUC adopted the requirement for a comparison of alternatives in an RTO request but left out the need for nodal mapping that the commenters requested. That way, the commission said, utilities will have “more flexibility in the type of modeling or analytical support that may be used.”
In a statement after the decision, Western Resource Advocates said it was pleased with the commission’s decision to require a comparative analysis of options for joining an RTO, but disappointed the requirement didn’t extend to day-ahead market participation.
The joint request from WRA and other groups noted that “the landscape of Western market footprints is rapidly evolving” as utilities evaluate EDAM, Markets+ and SPP’s RTO.
“Because of the highly dynamic nature of market footprints, and the significant impact of these footprints on benefits and risks to Colorado consumers, neither the IOUs nor the commission can truly understand the potential costs and benefits without a comparative analysis of alternative market participation under different footprint scenarios,” the groups said in their filing.
Utility Requirements
The decision keeps in place other requirements from Blank’s recommended decision for utilities that want to join an RTO, ISO or day-ahead market.
The RTO, ISO or day-ahead market that an investor-owned utility wants to join must have a greenhouse gas tracking and accounting system.
Detailed modeling must show that benefits of joining, such as production cost decreases, reliability improvements and emission reductions, will be greater than the expected costs.
And there must be a plan for efficient dispatch and exchange of energy if there is more than one regional market construct operating or proposed to operate in Colorado.
Additional requirements apply when the request is to join an RTO. For example, the RTO must have a regional resource adequacy construct and a plan for new transmission.
The requirements are simplified for a request from a cooperative electric generation and transmission association