Colorado utilities consider regional market to buy, sell wholesale power

Xcel Energy, Blacks Hills Energy and Tri-State Generation and Transmission are among the utilities in Colorado participating in the initial phase of developing a regional marketplace for wholesale electricity.

The Southwest Power Pool, a regional transmission organization, said Tuesday that 31 utilities and organizations have signed agreements to explore creating the marketplace in the West. If the marketplace is established, companies could buy or sell power a day before it’s needed.

Antoine Lucas, SPP’s vice president of markets, said in a statement that the diverse group of participants will benefit the process as utilities look to improve reliability and to cut energy costs.

A so-called “day-ahead” energy market is considered a step toward a regional transmission organization, or RTO, whose goal is to make electricity available where and when it’s needed at the cheapest cost possible. About 60% of the nation’s electric power supply is managed by RTOs, according to the U.S. Energy Information Administration.

However, most of the regional organizations are in the East. The California Independent System Operator is the only regional network in the West.

A Colorado law requires public utilities providing electricity to join an organized wholesale market by 2030 unless there are no viable options or regulators determine it’s not in the public interest. The Colorado Public Utilities Commission is writing rules for the review process.

In 2018, Xcel Energy, Colorado’s largest utility, pulled out of the Mountain West Transmission Group, which formed to look at joining the Southwest Power Pool. At the time, Xcel said joining the pool wasn’t in its customers’ best interest.

Southwest Power is based in Little Rock, Ark., and oversees the bulk electric grid and wholesale power market in 17 states.

“A regional transmission organization is what we would like to see in the West,” said Vijay Satyal, deputy director of regional energy markets for Boulder-based Western Resource Advocates.

An RTO would improve efficiency and promote more renewable energy on the system, Satyal said. Electricity generated by the sun and wind can be transmitted to the system when areas without a lot of sun or wind need more power.

The proposal by the Southwest Power Pool, which it calls Markets+, is a step in that direction, Satyal said. Western Resource Advocates is among the environmental and other public interest organizations that are part of the group negotiating how the marketplace will be organized.

Satyal said his organization is concerned that the process is moving too quickly and doesn’t want to see rules conflict with states’ clean-energy policies.

“We recognize that Southwest Power Pool is making an effort to give public interest groups a voice and voting rights, but will the process be transparent on the deciding of issues?” Satyal asked.

Tri-State, headquartered in Westminster, is in the Southwest Power Pool RTO in part of its territory, Tri-State spokesman Lee Boughey said in an email.