Revamped Western grid on the horizon?

Source: Benjamin Storrow, E&E News reporter • Posted: Wednesday, March 21, 2018

Visions for a new Western grid are beginning to come into focus.

The board of the Southwest Power Pool last week endorsed a proposal to integrate eight Rocky Mountain power companies into the 14-state regional transmission organization.

The vote paves the way for the Rocky Mountains to join the Great Plains in a single market for wholesale electricity. Advocates say a merger would lower consumers’ bills and help utilities to bring increasing amounts of renewable energy online.

“This is one step closer for the Mountain West utilities really becoming market participants in SPP,” said Jennifer Gardner, an attorney at Western Resource Advocates, an environmental group. “Until we saw the SPP board approval, there was no way of knowing whether this would go forward or not.”

Westerners have long contemplated integrating their power sector under the umbrella of a single regional transmission organization (RTO) charged with balancing power flows and ensuring reliability.

The rise of renewables has injected those conversations with new urgency. Renewables are often constrained by geography. California, for instance, sees a surplus of solar in the middle of the day.

Expanding California’s market would allow the state to send its excess solar to other consumers during the daylight hours, while receiving wind power generated at other times of day by its neighbors.

“Expansion of markets is a necessity for the energy transition we’re seeing in this country,” said Mark Dyson, an analyst at the Rocky Mountain Institute.

There are three competing proposals for uniting parts of the western United States in a single RTO. California continues to ponder the expansion of the California Independent System Operator. Peak Reliability, the company that now ensures reliability of the region’s power flows, has proposed expanding its services to include the sale of electricity.

The SPP merger with the Mountain West Transmission Group, a collection of eight power companies from the Rockies, is the third. Advocates say the merger could boost the influx of cheap wind power from the Great Plains to the growing communities along Colorado’s Front Range.

Talks between SPP and Mountain West have proceeded in private for much of the last year. But those negotiations resurfaced publicly last week, when the SPP board approved what amounts to a series of recommendations for how to bring the Mountain West power companies into its fold.

The proposal establishes the terms of membership and outlines how transmission rates would be set for the region. SPP and Mountain West’s utilities now need to agree to the final details.

The Mountain West power companies are Basin Electric Power Cooperative, Black Hills Energy, Colorado Springs Utilities, the Platte River Power Authority, Xcel Energy, the Tri-State Generation and Transmission Association, the Loveland Area Projects and the Colorado River Storage Project.

Xcel hailed the SPP vote in a statement, saying, “Xcel Energy is gratified that process of examining the potential for a regional transmission organization in the Rocky Mountain West has moved another, positive step forward.”

Advocates say the merger would lead to more efficient electricity service in the West. Today, the region’s utilities each charge their own rate for transmission service, a phenomenon known as pancaking. By joining SPP, they would effectively set one rate for transmission. A study by the Brattle Group estimated that an SPP merger would generate $88 million in annual savings for Rocky Mountain utilities.

“The intent of SPP organization is to provide value to its member. The value comes from reduced energy cost or reduced administration costs,” said Carl Monroe, SPP’s chief operating officer.

A series of hurdles remain. Some question whether the race to expand could compromise reliability services. SPP is part of the Eastern Interconnection, while the Rockies utilities operate in the Western Interconnection. There are some concerns about an eastern RTO providing reliability services and managing power flows to the west.

Any final deal would be subject to approval of the Federal Energy Regulatory Commission, as well as state regulators in Colorado and Wyoming.