Study on possible SPP RTO expansion shows promise, informs next steps

Expanding the Southwest Power Pool Regional Transmission Organization into the Western Interconnection could produce a net total of $55 million to $73 million per year in savings depending on hydrologic conditions, according to a new Brattle study commissioned by prospective SPP RTO participants in the Western Interconnection.

The 2022 Brattle study evaluated adjusted production cost savings and reported potential market benefits for expanded SPP RTO participation. The study estimates adjusted production cost savings of $71 million per year under average hydrology conditions. The savings increase to $89 million per year under severe drought conditions.

There are also potential operational and reliability benefits provided by RTO participation that are not quantified in the adjusted production cost study.

“This study, including the specific impacts across WAPA customers, will help inform our next steps and potential future as we adapt to the changing climate and generation mix. We greatly appreciate the effort dedicated to this study from Brattle and other study participants,” said Western Area Power Administration Administrator and CEO Tracey A. LeBeau. “As always, we are committed to collaborating with our customers and stakeholders as we assess this opportunity. Any decision to move forward with final negotiations for SPP RTO membership will be consistent with our statutory requirements and involve the appropriate public processes.”

Prospective SPP RTO participants included in the study are Basin Electric Power Cooperative, Colorado Springs Utilities, Deseret Power Electric Cooperative, Tri-State Generation and Transmission Association and the Municipal Energy Agency of Nebraska along with the WAPA Upper Great Plains region, Rocky Mountain region and Colorado River Storage Project.

Each of these entities is currently participating in the SPP Western Energy Imbalance Service and receives Reliability Coordinator services from SPP. Tri-State, WAPA UGP region, Basin Electric and MEAN are already members of SPP in the Eastern Interconnection.

Although not included in the study, Platte River Power Authority announced in August its intention to join the SPP RTO.

“The most critical thing we do for our members and consumer-owners is to provide reliable, affordable and responsible electricity. We are pleased that the savings outlined in the study align with what our experience has shown so far — participation in regional transmission organization markets brings increased value to our membership through greater reliability, new opportunities to optimize our members’ assets through trading energy and other products in the market, and access to more economic renewables,” said Todd Telesz, Basin Electric CEO and general manager. “This expanded partnership in the regional transmission organization will help ensure efficiencies essential to keeping our members’ wholesale rates among the lowest in the nation.”

“The savings identified in the study demonstrate how expanding the SPP RTO into the Western Interconnection can provide tremendous benefits for our member distribution cooperatives and the communities they serve,” said Tri-State CEO Duane Highley. “With the additional savings and efficiencies driven through a regional transmission organization, we remain confident that participation in SPP can deliver the greatest market benefits in the most expeditious timeframe, while reliably and affordably advancing Tri-State's clean energy transition.”

As potential benefits, the SPP RTO expansion could increase the portfolio of tools available to support reliability in the Western Interconnection. This includes consolidated balancing authority operations, coordinated resource adequacy and a fully integrated wholesale market that would optimize real-time, day-ahead and ancillary services. Additionally, the established SPP RTO transmission processes could improve transmission planning and development needed to support growing electricity demand and addition of more generation resources, including renewables.

“We’re pleased that the study reinforces the promise of an organized power market and our partnership with the Southwest Power Pool,” said Colorado Springs Utilities CEO Aram Benyamin. “For our customers, the benefits are clear – millions of dollars in annual savings by having access to regional energy producers and the reliable and cost-effective integration of additional carbon-free energy resources into our system. The future is exciting. We look forward to the next steps with our regional partners.”

This study builds on previous evaluations of the benefits of SPP RTO expansion into the Western Interconnection, including a 2020 study commissioned by SPP. The new 2022 study uses updated modeling assumptions about the participant footprint, generation portfolios, natural gas prices and projected hydrology conditions.

The study is not a decision by participants to join the SPP RTO. Each of the participating organizations will continue their internal review and approval processes to determine if they will proceed to the next steps for SPP RTO membership. The 2022 Brattle study results, along with other factors, will help inform those processes.

Brattle study presentation: https://www.wapa.gov/About/keytopics/Documents/2022-spp-rto-brattle-study.pdf.