New power accord likely to be struck
Mountain states might join utility alliance that stretches from North Dakota to Texas
Utilities in the mountain states are edging closer to joining forces with electricity providers stretching from North Dakota to northern Texas in a move that backers say could save Colorado households $68 a year on average.
“From my perspective, it is highly likely,” Southwest Power Pool president and CEO Nick Brown said of the highlanders joining forces with the lowlanders.
An informal alliance of utilities in the region known as the Mountain West Transmission Group, which includes Xcel Energy Colorado, Black Hills Energy, and Tri-State Generation & Transmission, began evaluating whether to join the Southwest Power Pool in January.
A formal application is still pending, but more signs are pointing toward the mountain utilities joining the SPP, a regional transmission organization, or RTO, that handles the power grid in part or whole in 14 states.
“While we can only speak for Xcel Energy as one of seven utility services providers in the Mountain West Transmission Group, we can state that we believe we have made some positive progress with SPP in our efforts to evaluate if an RTO is right for our
customers in Colorado,” said Mark Stutz, a spokesman for the state’s largest utility.
A key benefit to joining an RTO is that it eliminates the tariffs charged when power moves across service territories, said Brown, who was in Denver on Monday for a quarterly board meeting with 200 stakeholders of the non-profit association.
Members in the SPP also have access to a wholesale power market where they can trade electricity on a day-ahead or real-time basis. That market would keep utilities in the region from having to turn on more expensive generation sources or manually calling up neighbors to buy power through bilateral contracts.
Automation and attaching a market signal helps with reliability, Brown said. Power can quickly be dispatched to where it is needed most, reducing the likelihood of outages. And the more generation sources a utility in Colorado or Wyoming has to draw on, the less likely it will be gouged, or even worse, left short, in a pinch.
“Regional optimization is what it is all about,” Brown said.
The SPP manages the transmission grid in its territory and will make capital investments that provide a return for the network. For every dollar invested in grid improvements between 2012 and 2014, the SPP estimates $3.50 in value for the network was generated.
And because about 15 percent of the generation capacity in the SPP’s region is tied to wind, utilities in the mountain region could tap a large pool of renewable power. In the early morning hours of Feb. 12, the SPP had a record 52.1 percent of the power on its system coming from wind.
Colorado households could end up saving $68 a year on their electricity bills if utilities in the state join the Southwest Power Pool, said Mike Ross, senior vice president of government affairs.
But the benefits are not one sided. The SPP serves a population of about 17.5 million and could boost that by more than a third if it added Colorado and most of Wyoming, along with sections of Arizona, New Mexico, Nebraska and other territories looking to join.