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Southwest Power Pool Proposes Electricity Market for the West

Utilities and other customers to help set up energy imbalance market for enhanced reliability.

Southwest Power Pool (SPP) has invited utilities and other customers to help set up a market to serve the Western Interconnection. The market is expected to facilitate more efficient deployment of generation and use of the transmission system.

SPP has been associated with electric reliability since 1941. It has been a certified reliability coordinator (RC) for more than two decades, operated an energy imbalance market from 2007 to 2014 and launched a day-ahead electricity market in 2014 that, the company says, has provided participants more than US$2.7 billion in savings.

"SPP has experience not only building and administering electricity markets, but specifically doing it to meet the needs of a diverse group of customers," said Carl Monroe, SPP's chief operating officer. "There seems to be a growing interest in organized markets in the west, and SPP believes we're uniquely equipped to provide service and benefits no one else can."

Monroe oversaw implementation of SPP's energy imbalance services (EIS) market in 2007. The market's first-year benefits were US$103 million: nearly triple its total implementation costs of US$33 million.

SPP has a long history of providing contract services. The company’s business model and experience make it an attractive choice for utilities looking to make the process of ensuring electric reliability easier and more efficient.

"SPP understands western utilities' system needs and approach to business," said Nick Brown, SPP president and CEO. "Utilities have the daunting task of ensuring electric reliability and affordability for their customers. It's been our experience that energy imbalance markets are a wonderful way to accomplish that."

SPP is on its way to providing other services in the west. The company announced in September 2018 that it would serve as RC for several western utilities starting December 2019.

"Our experience launching this new iteration of our RC service has paved the way for a very logical next step," said Brown. "Our provision of RC services in the west would minimize the work needed to implement a market. Western Interconnection-specific reliability information already available to SPP will help lay the foundation for a seamless transition. SPP is committed to working with utilities to build a western market that will provide them and their customers the savings and reliability we've been providing in the eastern market for years."

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