HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/10/2017 - FORT COLLINS AND ORGANIZED ENERGY MARKETSDATE:
STAFF:
October 10, 2017
Tim McCollough, Light and Power Operations Manager
Kevin Gertig, Utilities Executive Director
Lisa Rosintoski, Utilities Customer Connections Manager
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Fort Collins and Organized Energy Markets.
EXECUTIVE SUMMARY
The purpose of this item is to provide an update to Council on the potential of Platte River Power Authority (Platte
River) entering an organized energy market. Platte River is actively participating with a group of six other regional
utilities, the Mountain West Transmission Group, examining the benefits and risks of forming an organized market
in a region that would cover most of Colorado and portions of Arizona, New Mexico, Wyoming, and South Dakota.
This potential market would include a common regional transmission tariff and market rules that would facilitate
buying and selling electricity across the region.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff is seeking feedback on what additional information Council needs regarding the formation of an Organized
Energy Market.
BACKGROUND / DISCUSSION
Mountain West Transmission Group
In early 2013, seven electric service providers formed the Mountain West Transmission Group to evaluate several
future options including considering membership in an organized energy market. Organized energy markets
are commodity markets that deal specifically with the trade and supply of energy from all types of fuel sources,
including renewables.
Table 1.0: Mountain West Transmission Group Members
Entity Revenue ($) Peak (MW) Energy (MWh)
Public Service Company of Colorado (PSCo or Xcel) 220,662,842 5,680 33,024,691
Western Area Power Administration (WAPA)
Colorado River Storage Project (CRSP) 69,097,743 1,424 5,185,539
Loveland Area Projects (LAP) 65,198,148 710 2,534,139
Tri‐State Generation and Transmission Association 117,460,625 1,934 12,607,330
Black Hills Corporation’s three electric subsidiaries:
Black Hills Power (BHP) 30,899,530 859 4,892,644
Black Hills Colorado Electric Utility Company (BHCE) 8,203,959 110 638,352
Cheyenne Light Fuel & Power Company (Cheyenne) 6,848,030 193 1,330,174
Colorado Springs Utilities (CSU) 24,025,218 661 4,374,955
Platte River Power Authority (Platte River) 39,923,267 510 3,251,514
Basin Electric Power Cooperative (BEPC) 8,203,959 110 638,352
In early 2017, the Mountain West Transmission Group announced consensus on holding discussions with the
existing Southwest Power Pool (SPP).
On September 22, 2017, the group announced it had completed initial discussions with the Southwest Power
Pool’s management team concerning membership in the SPP Regional Transmission Organization (RTO).
October 10, 2017 Page 2
The Mountain West Transmission Group will next commence negotiations with SPP through a public stakeholder
process. The months-long process by which SPP stakeholders must approve changes needed for the addition of
new members will involve the RTO’s nearly 100 member companies working through SPP’s organizational group
structure.
If the outcome of the negotiations is a decision to move forward with joining the SPP, the Mountain West
participants would expect to make filings with the Federal Energy Regulatory Commission in mid-2018.
Integration into SPP, if pursued by the group, may occur in late 2019.
Platte River Power Authority, by consensus of its member owner municipalities, will ultimately need to evaluate
whether potential membership is beneficial to the four cities owned by Platte River.
Benefits and Risks
The identified benefits and risks of Platte River joining the Southwest Power Pool are reflected below. However,
a comprehensive study will be managed to quantify as part of the decision making process.
Benefits
Reliably integrate a greater amount of renewable energy resources
Potentially reduce the output of coal generation regionally
Reduce wholesale energy costs
Reduce planning margins (15% --> 12%)
Reduce reserve costs
Create market transparency
Risks
Participants must give up some planning control
Participants will incur greater FERC regulation
Transmission Cost Allocations
Public Outreach
Platte River Power Authority has presented details on the benefits and risks in becoming a member of an energy
market to the Fort Collins Energy Board and the Fort Collins Chamber of Commerce. Thus far key feedback has
been generally positive based on the anticipated benefits of joining an Organized Energy Market.
Utilities staff will continue to partner with Platte River on reaching key stakeholders in the Fort Collins community,
including boards and commissions.
ATTACHMENTS
1. Powerpoint presentation (PDF)
1
Fort Collins and Organized Energy Markets
Tim McCollough, Light & Power Operations Manager
October 10, 2017
ATTACHMENT 1
Energy Markets Today
2
3
Mountain West Transmission Group
4
New Potential Market
How It Works Today
5
Organized Energy Market
How it Would Work
6
Potential Wholesale Benefits
7
• Increased Renewables
Opportunity
Potential Wholesale Benefits
8
• Increased Renewables
Opportunity
• Reduce Coal Generation
Regionally
Potential Wholesale Benefits
9
• Increased Renewables
Opportunity
• Reduce Coal Generation
Regionally
• Reduce Wholesale
Energy Costs
• Reduce Planning
Margins
• Reduce Reserve Costs
(Spinning, Non-
spinning, Wind)
Potential Wholesale Benefits
10
• Increased Renewables
Opportunity
• Reduce Coal Generation
Regionally
• Reduce Wholesale
Energy Costs
• Reduce Planning Margins
• Reduce Reserve Costs
(Spinning, Non-spinning,
Wind)
• Market Transparency
Potential Risks
11
• Give up some
planning control
• Future cost
allocation
Mountain West Timeline
12
Timeline
13
2017
2017/
2018 Public outreach
Mid
2018
Mid
2018
Platte River Federal Energy
Regulatory Commission filing
Platte River
Board decision
Council Feedback
14
• What additional information does Council need regarding
the formation of an Energy Market?
Electric Interconnections
in North America
15