Advanced Energy Perspectives

Just as you wouldn’t set off on a great American road trip using a 50-year-old paper map, Colorado shouldn’t be making decisions about regional electricity markets using 20-year-old assumptions about the western grid. Choosing the wrong market could lead to some very expensive mistakes, burdening ratepayers with higher costs and lower reliability and steering Colorado’s clean energy ambitions into a dead end.

A regional electricity market is among the most powerful tools in the toolbox for lowering electricity costs, improving reliability and resiliency to extreme weather events, and integrating Colorado’s abundant renewable resources into a 100% clean grid. In the next few months, Colorado utilities like Xcel Energy and Tri-State will have the opportunity to join with neighboring states and utilities in a regional market, and the benefits have the potential to be great. Colorado’s participation in a regional market could allow the state to trade electricity across the West, tapping into resources like hydro from the Northwest or geothermal from Nevada. In return, it could sell excess clean energy produced by local wind and solar.

Every three years, Arizona Public Service (APS) and Tucson Electric Power (TEP) conduct a comprehensive study predicting the amount of energy their customers will need in order to determine the energy resources required to meet those needs. This study, known as an Integrated Resource Plan (IRP), is a common exercise that utilities undertake in many states. While different parts of the country have different electricity needs and varying resources available, we at Advanced Energy United (United) believe all IRPs should include a comprehensive assessment of the advanced energy resources available, a competitive procurement process, and full incorporation of any additional policies that will change resource needs or costs.

On Monday, Advanced Energy United sent a letter to state energy offices in the West offering our perspective on a study commissioned by the Western Markets Exploratory Group (WMEG) that compares the benefits of several proposed Western day-ahead market scenarios. The study has been filed in multiple dockets in states across the West, but it offers an incomplete view of the benefits that can accrue to the West in a day-ahead market.

As consumers face the electricity cost hikes and threats of blackouts that come with extreme weather conditions, it’s more important than ever to consider the potential benefits of a West-wide power grid. We already know that a Western regional transmission organization (RTO) could improve power system reliability, but a recent west-wide analysis conducted by Energy Strategies on behalf of AEE confirms that the region would also net major economic gains by establishing this kind of regional power grid. AEE also released three state-specific summaries showing that a Western RTO would generate huge economic benefits in Colorado, New Mexico, and Arizona. And that got people talking. 

For the second time this year, Nevada’s energy leaders are convening to discuss the future of Nevada’s transmission system. Born from bipartisan (and AEE-supported) Senate Bill 448 (2021), the Regional Transmission Coordination (RTC) Task Force is charged with studying issues and policies related to transmission development and regional electricity markets for the Silver State. At the meeting today, the Task Force will hear about several competing efforts to create a more efficient and affordable western grid. There will be presentations from the California Independent System Operator, the Southwest Power Pool, and the Western Power Pool – each vying for Nevada’s attention and consideration. And while the exact contours of the West’s “Grid of the Future” remain to be determined, the benefits of a west-wide power system are becoming increasingly clear.