Federal regulators Thursday approved a bid from Arkansas-based Southwest Power Pool to become the first grid operator to provide transmission services across two of the country’s three major electric grids.
The approval by the Federal Energy Regulatory Commission will allow SPP to integrate seven entities based west of the Rocky Mountains into its existing regional transmission organization (RTO), which sits in the Eastern Interconnection and covers much of the central United States.
“Expanding the RTO into the Western Interconnection is an exciting step in SPP’s growth, bringing value to new and existing members while enhancing reliability in both interconnections,” SPP President and CEO Barbara Sugg said in a statement.
A 2020 study by the Brattle Group found that the expansion would generate approximately $49 million in collective savings each year for SPP’s current and new members by allowing them to draw on a broader fleet of low-cost resources. It is also expected to boost reliability by creating a larger market footprint.
The expected launch of the RTO West proposal is April 2026.
“In 2018, when we outlined our plan to pursue a noncarbon energy portfolio, it was very clear to us that an integral component to this plan was to join a power market,” Jason Frisbie, CEO of Colorado-based Platte River Power Authority, said in a statement. Joining the RTO, Frisbie added, “will help us integrate more renewable energy onto our system and manage our energy costs.”
In addition to Platte River, RTO West will include the Basin Electric Power Cooperative, Colorado Springs Utilities, the Desert Power Electric Cooperative, the Municipal Energy Agency of Nebraska, the Tri-State Generation and Transmission Association and parts of the Western Area Power Administration.
FERC approved the RTO West proposal unanimously, although the order does not address seams issues about how the expanded RTO will interact with neighboring markets. Commenters on the proposal raised concerns about whether the expanded RTO could create friction where it interconnects with other markets, potentially leading to congestion or pricing barriers with different market rules.
In its order, FERC commissioners noted that seams are likely to arise and will require agreements at that time, but there’s not enough information yet to determine how they should be managed. SPP also said that the westward expansion would create more efficient transfers between the Eastern and Western interconnections, which would “inherently reduce seams.”
The RTO West proposal will create an option for utilities and cooperatives in states that require them to join a qualifying RTO. Nevada and Colorado both require that transmission organizations join RTOs by 2030, part of a broader effort to organize Western utilities under a coordinated market structure.
The RTO expansion is separate from SPP’s day-ahead market for the Western Interconnection, which was approved by FERC earlier this year. That effort, known as Markets+, is set to launch in 2027.
A separate day-ahead market is being organized by the California Independent System Operator, creating two potential energy markets across the West.
Speaking to reporters, FERC Chair Mark Christie said more utilities may choose to join the SPP RTO but said the decision on market organization was ultimately up to each entity.
“When I go out West and they ask me what to do, I say, ‘It’s up to you guys,’” Christie said. ”You want an RTO, pick an RTO. You don’t want an RTO, it’s not up to FERC to tell you what to do.”
