Federal regulators should reject the Southwest Power Pool’s “stop-gap” proposal to make sure it has enough real-time power supplies in its Western balancing authority area, in part because it would stifle power trading between regions, the grid operator’s market monitor said Friday.
The Western Area Power Administration, Basin Electric Power Cooperative and Guzman Energy contend SPP’s proposal for its Western region — mainly covering parts of Colorado and Wyoming — is flawed and requires changes, according to filings at the Federal Energy Regulatory Commission.
“By effectively requiring each market participant to maintain a physically balanced position in real time, the proposal interferes with economic trade of energy between regions, unjustly penalizes participants, is gameable, and results in a lack of clarity for market participants,” SPP’s market monitoring unit said.
The expansion of SPP’s regional transmission operator footprint into the Western Interconnection in April brought this issue to the forefront.
Members of the expanded SPP footprint include Basin Electric, Colorado Springs Utilities, Deseret Generation and Transmission Cooperative, Municipal Energy Agency of Nebraska, Platte River Power Authority, Tri-State Generation and Transmission Association and three WAPA units: the Colorado River Storage Project Management Center, the Rocky Mountain Region and the Upper Great Plains Region.
Under rules FERC approved, the SPP West BAA has no resource adequacy requirement in effect until June 1, 2027, according to the grid operator. Between April and August, SPP issued three energy emerency alerts as well as other warnings in its West BAA, SPP said in a Sept. 4 proposal that aims to address the issue until the mandatory rules take effect.
SPP said it determined that the supply issues in its West BAA were largely driven by market participants failing to bring enough energy into the market. The West BAA contains about 9.2 GW of nameplate capacity, but only 4.7 GW was made available from April through August, according to SPP. The grid operator expected about 6.5 GW would be available, it said.
To address the issue, SPP proposed temporarily requiring two market adequacy evaluations for market participants with obligations in its Western BAA.
The first evaluation will assess whether an asset owner’s “available energy” in a day-ahead “reliability unit commitment” operating hour is less than its obligations for that same operating hour, SPP said.
SPP would conduct a second evaluation 20 minutes before an operating hour starts, according to the proposal.
If SPP declares an energy emergency, asset owners without enough energy to meet their obligations would be charged penalties, according to the proposal. Revenue from the penalties would be awarded to asset owners that had excess energy during the emergency hours.
SPP’s market monitor and the others filing comments said the penalty proposal was flawed.
“The proposal’s energy price-based penalty will lead to inefficient outcomes and likely will result in behavior in conflict with SPP’s stated policy and reliability goals,” the market monitor said.
SPP asked FERC to let its proposal take effect on Nov. 11. The grid operator proposed a tentative sunset date of June 1, but it left open the possibility of extending it, depending on whether the proposed requirements are still needed.
