Could WEIS lead to a full RTO?

The launch of the Western Energy Imbalance Service begs the question, “Could this lead to a full regional transmission organization (RTO)?” The answer is yes. 

In fact, Southwest Power Pool (SPP) has already received letters from five western utilities, including Basin Electric, Class A member Tri-State Generation and Transmission Association, and the Western Area Power Administration, committing to evaluate membership in such a market. 

A recent SPP study found that a full RTO could produce $49 million a year in savings to its members, compared to present operations. Additionally, SPP anticipates its wholesale electricity market, resource adequacy program, and other regionalized services could help western members reinforce system reliability; leverage new opportunities to buy, sell, and trade power; and achieve renewable energy goals. 

Southwest Power Pool has already received letters from five western utilities committing to evaluate membership in a full RTO. 

If the interested utilities pursue membership, they would become the first members of the RTO to place facilities in the Western Interconnection under the terms and conditions of SPP’s full RTO market. This would extend the reach and value of SPP’s services — including day-ahead wholesale electricity market administration, transmission planning, reliability coordination, resource adequacy and more — and the synergies they provide when bundled under the RTO structure. 

Basin Electric, Tri-State, and WAPA are already members of SPP, having joined the RTO in 2015 when they placed their respective facilities in the Eastern Interconnection under SPP’s tariff. 

“We are extremely excited to pursue this opportunity to bring increased value to our membership,” says Paul Sukut, Basin Electric’s CEO and general manager. “Our experience with SPP with our east-side operations has been overwhelmingly positive and proven to Basin Electric the value of a full RTO membership and specifically the value of SPP’s stakeholder process. In addition, the involvement of state regulatory commissions, specifically with their authority in cost allocation and resource adequacy, has proven invaluable in SPP’s ability to reliably integrate diverse resources and keep wholesale prices the lowest of any RTO in the country.” 

The $49 million in annual savings consists of $25 million a year in adjusted production cost savings and revenue from off-system sales in the Western Interconnection, and $24 million in savings to the existing SPP’s market on the Eastern Interconnection. SPP’s prior calculations of the value of RTO membership suggest that these benefits are only a portion of those current and new members will derive. 

“We’ve enhanced electric reliability while integrating more renewable generation than many in our industry ever thought possible, modernized the grid, built and operated a dependable and economic market, and equitably allocated the costs and revenues associated with these and other services,” says Barbara Sugg, SPP’s president and CEO. “What’s more, we’ve done it all while staying true to our collaborative and member-driven business model, and now we’re excited for the opportunity to bring the value of RTO membership to new customers in the west.”

Imbalance market vs. Full RTO

Imbalance Market

•    Real-time market only
•    Market economically dispatches committed generation above minimum loads
•    Provide market a daily and hourly resource plan, which meets sales and loads

Full RTO
•    Both day-ahead and real-time market
•    Market commits and dispatches generation
•    Provide market with all available generation
•    Market absorbs and manages unit trips and outages