The Southwest Power Pool (SPP) oversees the bulk electric grid and wholesale power market in the central US on behalf of utilities and transmission companies in all or parts of14 states: Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. While coal and natural gas are the two major thermal sources used for the generation of electricity, wind is the biggest contributor of renewable energy.
How is the market structured?
The Southwest Power Pool (SPP) is structured as a competitive wholesale market with energy transacted on a day-ahead and real-time (5 minute) basis. SPP also operates a reserve market. There is no capacity market in SPP.
What are the geographic boundaries of the market?
SPP covers all or a portion of Arkansas, Kansas, Iowa, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming.
What are the relevant price and delivery zones?
The main pricing hubs in SPP are the North Hub and South Hub, located in Nebraska and Oklahoma, respectively. Nodal pricing exists throughout SPP with pricing varying with local supply/demand conditions as well as transmission considerations more generally. Nodal pricing is aggregated to calculate energy prices for separate energy zones, as well as the energy price at interconnection points with neighboring regions.
Can I buy long-term power in the traded markets?
Buyers and sellers can hedge their exposure in the forward market within a ~5 year window via over the counter trading platforms.
Who do I need to contract with to buy power?
Many consumers receive power from their local utility (the utility covering the geographic area in which the load is located). Consumers can also opt to buy power directly from a generator, or through a retailer (in states where competitive retail markets exist) though the utility will continue to charge certain fees (i.e. transmission/distribution/other system fees).
Retail choice is not available in SPP.
How are system costs and other social charges levied?
In general, a bill can be broken into three components: generation, transmission and distribution. Generation costs are broadly correlated with wholesale energy prices, transmission costs are socialized across all consumers, and distribution costs vary based on the local cost of each utility. Other system and social charges (such as to support energy efficiency programs) are generally socialized across consumers and are also reflected on the bill from the local utility.
How do I prove I've bought renewable power?
In the US, renewable generation is certified and tracked using RECs (Renewable Energy Certificates). One REC is issued for every MWh of eligible renewable energy that is delivered to the electric grid. A REC contains unique identifying details of the energy generated, including the renewable fuel type, project name and location, the vintage of the project and the generation, and serial number.
Within SPP, the Western Renewable Energy Generation Information System (WREGIS) and Midwest Renewable Energy Tracking System (M-RETS) are primarily used to track generation ownership and attributes, including RECs. Generators located in states that do not participate in the aforementioned tracking systems may register with the North American Renewables Registry. Renewable generation may also be eligible for certification and tracking in regions outside of the SPP.
How are RECs (Renewable Energy Certificates) procured? TMarket transactions or long-term contracts. Kansas, Iowa, Minnesota, Missouri, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, and Texas have adopted renewable energy goals.
Are renewable Power Purchase Agreements (PPAs) available? Yes
Are Green Tariffs available? Yes, Green tariffs are available in Minnesota, Missouri, Nebraska, New Mexico, and Wyoming.
What are the key institutions?
Key Government Departments:
- State energy departments which oversee policy related to power markets within their state.
- Public Service/Utility Commissions which regulate and oversee the electricity industry in their state.
- The Federal Energy Regulatory Commission (FERC) is the federal agency that regulates the transmission and wholesale sales of electricity in interstate commerce.
- The North American Electric Reliability Corporation (NERC) is a not-for-profit international regulatory authority whose mission is to assure the reliability and security of the bulk power system in North America.
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