SPP takes steps to expand RTO footprint into Western Interconnection by 2024

The Southwest Power Pool, or SPP, board of directors and members committee approved July 27 terms and conditions to expand its regional transmission organization footprint into the Western Interconnection by March 1, 2024.

SPP plans to file tariff modifications with the Federal Energy Regulatory Commission in October 2022, with approval expected sometime in early 2023.

"This is one of the pivotal first steps to bringing the benefits of regionalization to utilities in the Western Interconnection, and we're excited to work with both existing and potential new members to create a safer, more reliable grid and provide increased cost savings and benefits to members in both interconnections," said Bruce Rew, SPP vice president of operations.

Resolving outstanding terms and conditions, including cost allocation for the direct-current ties between the Eastern and Western Interconnections, is the next step to expand the RTO into the Western Interconnection, and will come before the board at its October meeting. Prospective participants plan to execute a financial commitment agreement in April 2022 to initiate the western RTO expansion.

"It's going to be an important foundation to lay if there's going to be additional expansion in the West," Steve Gaw, SPP senior vice president of infrastructure and markets, said during the meeting.

SPP has been jockeying with the California Independent System Operator's Western Energy Imbalance Market to offer energy imbalance services across the Western US.

"It gives us a great opportunity to establish a foothold ... in RTO West," Larry Altenbaumer, SPP board chair, said during the meeting.

SPP western members

Prospective western participants include Basin Electric Power Cooperative, Colorado Springs Utilities, or CSU, Deseret Power Electric Cooperative, the Municipal Energy Agency of Nebraska, Tri-State Generation and Transmission Association, Wyoming Municipal Power Agency and the Western Area Power Administration. WAPA's evaluation of full SPP RTO participation in the Western Interconnection includes its Upper Great Plains-West region, Colorado River Storage Project and Rocky Mountain region.

With the exception of CSU, these organization joined SPP's Western Energy Imbalance Service Market on its Feb. 1, 2021, launch before announcing their intent to explore full western RTO participation. CSU anticipates joining the WEIS Market in 2022 and is also exploring RTO membership.

"WAPA anticipates additional value in increasing energy transfers between the East and West through the SPP RTO, providing benefits and mitigating risk for existing and prospective RTO members along with our customers," WAPA Interim Administrator Tracey A. LeBeau said in an SPP statement. "We greatly appreciate the collaboration with SPP to work toward this critical milestone and look forward to continuing discussions around cost allocation for the direct-current ties and federal participation. We believe RTO membership is a viable option to enable continued reliable and economic electric delivery in this dynamic energy industry."

These utilities will become the first members of SPP's RTO to participate in SPP's integrated marketplace in the Western Interconnection, which would extend the reach and value of SPP's services, such as day-ahead wholesale electricity market administration, transmission planning, consolidated balancing authority and resource adequacy, and the synergies they provide when bundled under the RTO structure.

"Pursuing this opportunity has the potential to bring increased value to our membership," Basin Electric CEO and General Manager Paul Sukut said in the SPP statement. "Our experience with SPP with our east-side operations has been 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 shown the value of SPP's ability to reliably integrate diverse resources and keep wholesale prices the lowest of any RTO in the country."

SPP has served as much as 84% of its total system's demand with renewable generation at times and in 2020 wind was SPP's lead fuel source for the first time.

IG backlog

One source of frustration has been the generation interconnection backlog, which the board addressed July 26 by directing staff to develop revision requests that follow recommendations from the Strategic and Creative Re-engineering of Integrated Planning Team, or SCRIPT. The backload, which totals 100.3 GW from 533 requests mostly in wind and solar generation, has impacted Western Interconnection entities, Rew said.

The goal is to reduce restudies through development milestones, increase financial commitments, and simplify and reduce study timelines, Antoine Lucas, SPP vice president of engineering, said.

SPP expects revision request approval in October, with plans to file at FERC in November, Lucas said. Once approved, SPP expects the enhancements to the three-phase process to clear the backload by mid- to late-2024.

Background

SPP formed in 1941 in the Eastern Interconnection, implemented operating reserve sharing in 1991, became a certified reliability coordinator in 1997 and earned its RTO designation from FERC in 2004. SPP launched its first real-time balancing market in 2007, then transitioned to a day-ahead market and became a single, consolidated balancing authority in 2014.

SPP began serving customers in the west in October 2015 when the Integrated System joined SPP which placed transmission facilities in the Western Interconnection into SPP. SPP launched its Western Reliability Coordination service in the west in December 2019 on a contract basis and in February 2021 launched its WEIS Market.

SPP 's footprint spans 14 states, including Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming.