Xcel, 3 other Colorado utilities choose California's imbalance market over Southwest Power Pool

Dive Brief:

Xcel Energy and three other electric utilities in Colorado announced Tuesday they will join the California ISO's Western Energy Imbalance Market (WEIM) beginning in 2021 to improve renewables integration and cut customer costs.
Xcel, Black Hills Colorado Electric and Platte River Power Authority already balance demand through a joint dispatch agreement. Colorado Springs Utilities will join them in March 2020, before all four shift to the WEIM.
The utilities said they also considered joining the Southwest Power Pool's (SPP) Western Energy Imbalance Service (WEIS), but a Brattle Group study concluded California's larger market offered more savings.

Dive Insight:

California's imbalance market continues to pick up momentum, and is using its growing scale to snag new market participants.

The imbalance market helps participants manage their systems regionally and in real time, while incorporating more renewables.

CAISO's WEIM has been operating for five years and in that time says it has generated $736 million in benefits to nine participating entities and has more preparing to join. In September, the grid operator also announced it was also working to create a regional day-ahead market, building on the existing imbalance market's capabilities.

SPP announced development of the WEIS market in June, but it is not expected to launch for more than a year.

CAISO's four new participants said the Brattle analysis concluded that "as the larger of the two markets, the WEIM offers greater potential to lower production costs due to the size of its market footprint and the diverse resources available."

California's market also offers lower administrative costs, Brattle found.

SPP defended its nascent market, and an official told Utility Dive "we are on track to launch the WEIS in Feb. 2021, and a number of western utilities have already expressed interest in joining it."

"We’re confident the WEIS’s performance will prove its value in lowering the cost of wholesale electricity and enhancing reliability, and that our roster of market participants will continue to grow over the next several years," SPP said in an email.

Over the next few months, the utilities say they will work with CAISO to finalize the implementation agreement and settle on a potential date to join the market, with a target of 2021.

For Xcel, joining the California market is a way to help control customer bills and provide more carbon-free energy, according to Alice Jackson, president of the utility's Colorado operations.

“We are pleased to continue this regional collaboration of investor-owned utilities and public power agencies to benefit our customers, the environment and support the state of Colorado in achieving its clean energy goals," Jackson said in a statement.

WEIM current participants include, along with CAISO: PacifiCorp, NV Energy, Arizona Public Service, Puget Sound Energy, Portland General Electric, Idaho Power, and Powerex, the marketing arm of BC Hydro, and BANC Phase 1. And there is significant expansion ahead.

New members poised to begin participating include: Salt River Project and Seattle City Light in 2020, followed by the Los Angeles Department of Water and Power, NorthWestern Energy, Turlock Irrigation District and the Public Service Company of New Mexico in 2021; and Tucson Electric Power, Avista and Tacoma Power in 2022.