By Tom Kleckner
SPP’s dream of operating an energy market in the Western Interconnection came closer to reality Friday with its Board of Directors’ approval of start-up funding for the Western Energy Imbalance Service (WEIS) market.
The board accepted staff’s recommendation to budget $9.5 million to develop and stand up the market. The Members Committee supported the recommendation, with only Xcel Energy’s Southwestern Public Service abstaining from the vote during a conference call.
Committee members peppered SPP staff with questions about the proposal’s costs to existing members and whether the RTO will maintain a division between Eastern and Western members. Staff assured members there will be no increase to corporate overhead.
Asked how the market will help “East-side members,” Senior Vice President of Operations Bruce Rew said current members would benefit from the “additional use of the SPP system.”
“That will provide additional revenue through corporate overhead costs and reduce the SPP administrative fee accordingly,” Rew said.
Staff said they have been tracking expenses to develop the market proposal and will continue to do so. The RTO said it will add 13 employees to perform the WEIS functions and will begin the hiring process “as soon as practical.”
“We have a 16-month schedule, and there’s a lot of work to be done,” Rew said.
SPP says it will finance the costs during the implementation period by issuing debt. It will then recover the costs from the WEIS participants over eight years, beginning in December 2020, using a formulized rate that includes projected annual production costs, start-up principal and interest charges, and current net energy for load.
Market participants who terminate WEIS services within the first eight years are obligated to pay their portion of the remaining implementation costs. Additional participants who enter the market within that period will be allocated a portion of the original implementation costs.
The WEIS will operate similarly to SPP’s imbalance market, which ran from 2007 to 2014, centrally dispatching energy on a five-minute basis under a Western joint dispatch agreement. Members will operate under a separate tariff and market protocols from SPP’s Eastern Interconnection members. Should a WEIS member decide to join the RTO as a transmission owner, the balance of its implementation costs would be spread out among the market’s remaining participants.
SPP has long explored offering market services in the Western Interconnection and seeking new members. An effort to integrate the Mountain West Transmission Group fell apart last year, but the grid operator’s attempt to provide reliability coordination services to 12% of the region’s load is on schedule to meet a December timeline. (See SPP Western Reliability Briefs: Week of Sept. 16, 2019.)
The WEIS market will become the West’s second, joining CAISO’s Western Energy Imbalance Market.
SPP says the WEIS will go live in February 2021. It already has five market participants in Basin Electric Power Cooperative, Tri-State Generation and Transmission Association, and three Western Area Power Administration entities: Colorado River Storage Project, Rocky Mountain Region and Upper Great Plains. All five organizations signed contracts in September to fund the market’s development. (See WAPA, Basin, Tri-State Sign up with SPP EIS.)
The grid operator said it will accept additional participants through Oct. 25. Market participants who want to join the WEIS after that date will be onboarded through SPP’s normal processes.
Xcel, Colorado’s largest load-serving entity, and three partners — Black Hills Energy, Colorado Springs Utilities and Platte River Power Authority — have announced they are evaluating both the WEIS and the EIM. (See Colorado Utilities Examine Market Membership.)
SPP made the WEIS public in June, distributing a proposal to 19 interested parties in the interconnection.
It expects to file a WEIS Tariff with FERC early next year. Legal staff said they were not aware of any necessary state regulatory filings.
