Politics, economics favor SPP’s westward expansion: analyst
The Southwest Power Pool, which has for years served stakeholders far from the US’ Southwest, is likely to expand its market footprint even further afield, as utilities in the Rockies and elsewhere in the West ponder shifting political, reliability and economic realities.
“We believe the benefits of membership speak for themselves and are easily observable,” SPP spokesman Derek Wingfield said in an email Friday. “To that end, we assume others in the West are watching us closely right now, and we welcome conversations with anyone interested in assessing a business decision that may include SPP.”
During the Western Power Trading Forum’s meeting in Houston Tuesday, Caitlin Liotiris, principal at Energy Strategies, an energy market and policy consultancy, gave an update on efforts to organize power markets in the West outside of the California Independent System Operator. Her written presentation included the comment that “SPP expansion across the West appears inevitable.”
California’s legislature appears unwilling to allow utilities/regulators from outside the state to appoint Cal-ISO board members, Liotiris said. At the same time, regulators outside of the state are unwilling to allow their utilities to be controlled by an entity controlled by California politicians/regulators.
Meanwhile, utilities in the West outside of California and its Energy Imbalance Market have been evaluating the benefits of participating in organized markets, Liotiris said.
For example, the Mountain West Transmission Group, which includes entities in the Basin Electric Power Cooperative, Black Hills Energy, Colorado Springs Utilities, the Platte River Power Authority, Public Service company of Colorado, Tri-State Generation and Transmission Association, and the Western Area Power Administration, proposes to join SPP by late 2019.
PROPOSED CHANGES TO SPP STRUCTURE
MWTG has proposed several changes to SPP’s structure, and the two sides are now in negotiation.
Some of the changes pertain solely to the MWTG footprint. For example, SPP has locational marginal prices, but MWTG proposes a zonal construct. Also, MWTG proposes that its utilities maintain authority over their own cost allocation methodology, Liotiris said, while that issue is covered in SPP under its own Federal Energy Regulatory Commission tariff.
Other proposed changes would affect SPP as a whole. For example, the SPP board of directors currently votes by secret ballot, but MWTG proposes open ballots. MWTG also proposes a change in how DC tie costs would be allocated between SPP and MWTG footprints.
SPP’s Wingfield said it would be “premature” to consider any of these proposals problematic, and that studies show that both MWTG members and SPP’s existing members would derive hundreds of millions of dollars in reliability and market efficiency benefits from integrating MWTG.
“SPP has a long history of facilitating consensus-building among a diverse group of stakeholders with varied interests,” Wingfield said. “We’re now addressing Mountain West’s proposals through a stakeholder process that began with public meetings in October.
“It’s through this process that, as a member-driven organization, we’ll give all of our stakeholders — in this case including those in both the eastern and western interconnections — the opportunity to weigh in on matters related to Mountain West’s proposed integration into SPP.” OTHERS EYEING OPTIONS
Another group, Southwest Market Alternatives Group has also been quietly evaluating market alternatives. SMAG includes Tri-State and WAPA, plus Arizona Electric Power Cooperative, El Paso Electric, Public Service Company of New Mexico and Tucson Electric Power.