Dive Brief:

• Duke Energy, Southern Company and other electric utilities are discussing the creation of a Southeast energy imbalance market, utility spokespersons confirmed.
• Energy companies are exploring a "centralized, region-wide, automated intra-hour energy exchange"  that would be called the Southeast Energy Exchange Market (SEEM), according to Southern Company. Other utilities confirmed that discussions regarding SEEM have taken place over the last several months.
• Duke confirmed the discussions in a stakeholder meeting in North Carolina on Monday. Stakeholders were surprised by the plan and are awaiting more information on potential steps forward.

Dive Insight:

Duke and other utilities had discussed opportunities in the past for a Southeast regional transmission operator (RTO) or independent system operator.

"This isn't a regional transmission organization, nor does it prohibit the ability for any of the companies to form or join an RTO in the future," Erin Culbert, Duke spokesperson, told Utility Dive.

Instead, the utilities are considering a voluntary, enhanced 15-minute energy wholesale market — as opposed to capacity market — wherein participants could buy and sell power "close to the time electricity is consumed," offering "real-time visibility across neighboring electric grids" for system operators, she said.

The U.S. grid operator map has two gaps in the Northwest and the Southeast, although the Western Energy Imbalance Market, which has been growing since 2014, is set to integrate most major utilities in the region by 2022, according to Jesse Jenkins, macro-scale energy systems engineer and assistant professor at Princeton University.

The SEEM proposal is most similar to the Western Energy Imbalance Market, from the limited details discussed, Jenkins said. Establishing such a system would take several years and involve a lot of stakeholders, he added.

Large investor-owned utilities like Southern and Duke "run their own internal balancing market," but those programs are not transparent and "not as large as it could be if they were to extend trading across the whole Southeast," Jenkins told Utility Dive.

"It's not clear from the reports we have right now that there will be transparency," Eddy Moore, energy program director from the South Carolina Coastal Conservation League, told Utility Dive. If utilities "have agreed to streamline some amount of their transactions with each other, that doesn't necessarily mean that other people who are not utility companies will get a lot of insight into pricing."

For utilities in the region, a regional energy market could "improve how we can jointly operate growing solar resources on our systems," Culbert said, adding that stakeholders had already expressed interest in an energy market in Carolinas.

North and South Carolina legislatures both studied impacts of energy market reform and efficiencies under a system operator. A study published by Duke University this spring also highlighted the proposition of a Southeast energy imbalance market.

"I know there have been a lot of discussions about market reform and research in the Carolinas, but beyond what the legislatures were discussing, this is the first I've heard of any sort of voluntary effort," Simon Mahan, executive director of the Southern Renewable Energy Association, told Utility Dive.

Mahan said a recent legislative filing by South Carolina-owned public utility Santee Cooper may have led to conjecture about utilities planning for a new regional energy imbalance market. In March, Santee Cooper mentioned the implications of joining an RTO, but spokespersons emphasized no recent filings implicate the utility in the ongoing discussions for SEEM.

"Conservation groups and other stakeholders, we've been cut out of this process while it was hatched in secret over the last few months," John Tynan, executive director of the Conservation Voters of South Carolina, told Utility Dive. "We obviously are interested in learning more, but I'm skeptical of the whole intent of this given, again, the secretive nature of the process."

The discussions remain in early stages, or the "learning phase," according to Duke. Further steps could lead to stakeholder and regulator discussions and filings with the Federal Energy Regulatory Commission, according to Culbert.

"If we determine that partnering with our neighbors makes sense, we’ll certainly take the appropriate steps to describe that more fully for regulators and stakeholders," Schuyler Baehman, spokesperson with Southern Company, told Utility Dive.