Xcel Energy, Colorado’s biggest electricity provider, got the go-ahead to spend $30 million to join a short-term, electricity wholesale market, even though the benefits to customers will be minimal.

The Colorado Public Utilities Commission voted Wednesday 2-1 to approve the utility’s application to join Markets+, a day-ahead market operated by the Southwest Power Pool, a grid operator for all or parts of 14 states from Texas to North Dakota.

Commissioner Megan Gilman voted no. Commissioner Chair Eric Blank and Commissioner Tom Plant voted in favor. Plant switched his vote from a no last week to a yes.

“Do the benefits outweigh the costs?” Gilman asked at last week’s commissioner’s meeting. “I think from the modeling they clearly don’t. … If we are entering a market, it should clearly benefit Colorado consumers.”

Almost all Colorado utilities are joining SPP West as full members of the regional transmission organization, or RTO, which provides energy trading, planning for power plants, and planning and financing of transmission lines.

Integrated wholesale markets can provide the best prices available on the grid, bolster grid reliability, manage variable wind and solar generation, and spread new transmission costs across participating utilities, according to a study done for the PUC by Siemens Power Technology International.

Xcel Energy has said it wants to retain the planning and building of its infrastructure and has indicated it may seek a waiver from the statutory requirement to join an RTO by 2030.

“There are solid reasons to anticipate they are going to submit a waiver,” Gilman said.

A 2021 Colorado law requires utilities with transmission lines to join a wholesale electric market by 2030, and a study done for the PUC estimated that if all Colorado utilities joined an integrated wholesale market it could generate $230 million in annual savings.

Market seeks reliability and better integration of renewable energy

Blank was the main advocate for allowing Xcel Energy to join the SPP day-ahead Markets+.

“I view the regional market opportunity as a continuum,” he said, “… whether we get to a full RTO or not as additional market services become available,” they will create savings.

Allowing Xcel Energy to join Markets+ will keep the process of developing a regional market going. “There is no future dialogue if you terminate this,” he said at the last meeting.

Blank is a member of SPP’s Markets+ state committee, which works to “engage state members in the development and operation of the market” and provides input on Markets+.

The only option other than SPP and Markets+ is the “Extended Day-Ahead Market,” or EDAM, being developed by CAISO, the California Independent System Operator.

Some utilities and states, such New Mexico, are going with EDAM. Some utilities in the Pacific Northwest are going with Markets+.

This, some industry participants fear, will lead to the West being cut up into two or more markets.

An effort to create a Westwide RTO not governed by CAISO, called West-Wide Governance Pathways Initiative, is in its early stages.

“We are disappointed by the commission’s decision to accept the proposal for Xcel to join SPP’s Markets+,” Brian Turner, director of Advanced Energy United, a clean energy trade group, said in a statement.

“This decision threatens to further balkanize the Western grid,” said Turner, whose organization supports the Pathways Initiative. He said his group will file for a commission to reconsider its decision.