FERC Accepts SPP Energy Imbalance Market Proposal

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On December 23, 2020, FERC accepted Southwest Power Pool, Inc.’s (“SPP”) proposal to implement the Western Energy Imbalance Service Market (“WEIS Market”), a voluntary market providing for security-constrained economic dispatch to balance supply and demand every five minutes. SPP’s proposal consisted of a Tariff to implement the WEIS Market, a joint dispatch agreement executed by eight participating entities, and the Western Markets Executive Committee Charter to establish the WEIS Market’s governance structure and procedures. The December 23rd order follows FERC’s rejection of SPP’s WEIS Market proposal in July 2020.

FERC’s July 2020 order included instructions for SPP to modify its proposal as related to supply adequacy and market power mitigation, among other issues. SPP’s subsequent filing in October 2020 addressed each of the issues FERC identified. For example, with respect to supply adequacy, SPP proposed to activate constraints to limit the delivery of imbalance energy to balancing authorities that are supply deficient in order to prevent market participants from leaning on others to maintain adequate supply. The SPP Market Monitoring Unit, SPP’s internal, independent market monitor, will provide market monitoring services for the WEIS Market.

In accepting SPP’s proposal, FERC concluded that the WEIS Market will improve energy imbalance management by making a broader pool of resources available to serve load; enabling participating utilities to meet their energy imbalance needs at lower cost; and improving reliability by managing resources that could relieve transmission constraints by leveraging a larger, more diverse set of resources. FERC also concluded that the WEIS Market may help integrate and manage increasing levels of variable energy resources by pooling variability over a larger area and redispatching resources to help manage imbalance energy caused by variable energy resources. In addition, FERC agreed that a centralized imbalance market can deliver significant reliability benefits, and can enable participating utilities to meet their energy imbalance needs at a lower cost, while better integrating increasing levels of variable resources.

The WEIS Market initially will consist of: the Western Area Power Administration (“WAPA”), separately and individually as WAPA Colorado River Storage Project, WAPA Rocky Mountain Region, and WAPA Upper Great Plains Region; Basin Electric Power Cooperative; Tri-State Generation and Transmission Association, Inc.; Deseret Generation & Transmission Cooperative; Municipal Energy Agency of Nebraska; and Wyoming Municipal Power Agency. SPP plans to begin WEIS market operations in February 2021.

FERC’s December 23 order is available here. Commissioner Clements did not participate in FERC’s decision.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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