GRID LOCKED?
Utility withdraws from regional grid operator’s expansion plan
Plans to integrate an informal group of Rocky Mountain electricity service providers and power generators in the western U.S. into the Southwest Power Pool may have dimmed.
In promoting the deal, both the Mountain West Transmission Group and the Southwest Power Pool had stated the expansion would have boosted affordability and reliability of electricity provided across the Great Plains and Rocky Mountain grids.
But the private owner of Public Service Co. of Colorado, a utility that serves 1.4 million Denver area customers, recently announced it was backing out of the plan because it still questions whether the move would benefit its customers.
Now, remaining members of the Mountain West Transmission Group and representatives of the Southwest Power Pool, which manages the grid that serves Oklahoma utilities, other power distributors and their customers, must sort out whether or not pursuing the expansion still makes sense.
A resolution could be reached this month.
The players
The biggest member of the Mountain West Transmission Group is the Western Area Power Administration, one of four power marketing administrations within the U.S. Department of Energy.
The administration markets and transmits wholesale electricity from 56 multiuse water projects across a 15-state region of the central and western U.S. and the Navajo Generating Station coal-fired plant near Page, Arizona.
It sells power across a grid of 17,000 miles of line within the Mountain West Transmission Group area, which takes in the eastern two-thirds of Wyoming, all of Colorado and parts of New Mexico and Arizona.
Its customers include federal and state agencies, cities, towns, rural electric cooperatives, public utilities, irrigation districts and American Indian tribes that serve millions of consumers.
Public Service Co. of Colorado, an Xcel Energyowned utility that provides electricity to 1.4 million customers in the Denver area, is the group's largest utility.
Other members include Basin Electric Power Cooperative, Black Hills Energy, Cheyenne Light Fuel & Power, Colorado Springs Utilities, the Platte River Power Authority and the Tri-State Generation and Transmission Association.
The Southwest Power Pool — a regional transmission organization that provides reliable, affordable electrical power to customer utilities and other distributors, including those in Oklahoma — spans all or parts of 14 states in the U.S. Great Plains.
The process
Mountain West formed its association in 2013 with the intent of looking at whether or not it should join an regional transmission organization, and asked for proposals from neighboring grid operators in 2016.
In early 2017, it entered into negotiations with the Southwest Power Pool to join its system.
In making that announcement, the Western Area Power Administration stated in a release that Mountain West members could see improved system
reliability and affordability through expanded electricity markets, improved grid access and improved planning for generation and transmission across multiple states and systems.
The Southwest Power Pool, meanwhile, estimated the deal could help its members hedge against future increased electricity prices by increasing its access to diverse, reliable and affordable fuel sources.
Southwest Power Pool officials stated those diverse sources include low-cost coal-fired generation, which could act as a buffer
against future natural gas price spikes whenever wind generation isn't available. Also, they stated the diverse portfolio could free up renewable generators to make additional off-system sales to other consumers.
The Southwest Power Pool had predicted the net benefit in present value (total revenues, minus total expenses for facilities) during the next decade from the expansion could have ranged from at least $265.7 million to optimistically as much as $394.6 million. Customers of Oklahoma utilities and other power providers would have shared in the benefit.
In March, the Southwest Power Pool's board of directors approved terms and conditions for the Mountain West Transmission Group to join the regional transmission organization.
Then, Xcel Energy announced its withdrawal.
Statements released
Xcel Energy stated it decided to abort the potential deal for numerous reasons.
David Eves, Xcel Energy's executive vice president and group president of its utilities, said those included what it saw as limited benefits for the company's Colorado customers, a lack of market expansion opportunities for Mountain West; and increasing uncertainties about costs that might be involved.
"We deeply appreciate the collaborative spirit, professionalism and dedication of all of Mountain West's utility services providers and the Southwest Power Pool as we have worked together through this process," Eves stated in a release about Excel's decision. "We have a shared focus on reliability and efficiency to deliver benefits for our electricity customers."
In a statement on its website, the Western Area Power Administration said Excel Energy's announcement leaves it assessing next steps.
The administration "appreciates the strong collaborative partnerships within the Mountain West Transmission Group and remains committed to working with neighboring entities across its 15-state footprint to develop strategies to adapt to the evolving electricity industry," it reads, adding, "WAPA will continue to evaluate and pursue opportunities to optimize the use of generation and transmission resources across multiple utility systems. "
Derek Wingfield, a spokesman for the Southwest Power Pool, said its leadership hopes remaining members of the Mountain West group intend to proceed.
"Southwest Power Pool has spent significant time and effort attempting to bring organized wholesale markets and their many benefits to the west, and we’re hopeful there will still be opportunities to do so," an emailed statement from Wingfield read.
"Our intention now is to work with the remaining Mountain West entities to pursue an agreement that is beneficial to all parties involved."