Presentation for Colorado Energy Legislation Review Interim Study Committee

July 29, 2019

Mike RossSenior Vice PresidentGovernment Affairsmross@spp.org(501) 482-2190

2SouthwestPowerPool SPPorg southwest-power-pool

David Kelley

Director

Seams and Market Design

dkelley@spp.org

(501) 688-1671

North American Independent System Operators (ISO) and Regional Transmission Organizations (RTO)

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SPP’s 99 Members: Independence Through Diversity

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16 Investor-Owned Utilities

14 Municipal Systems

20 Generation andTransmission Cooperatives

8 State Agencies

15 Independent PowerProducers

12 Power Marketers

11 Independent TransmissionCompanies

1 Federal Agency

2 Large Retail Customers

July 12, 2019

99 Members

OPERATING REGION

• Service territory: 546,000 square miles

• Population served:17.5 million

• Generating plants: 818*

• Substations: 5,054*

* In SPP’s reliability coordination footprint

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• Miles of transmission: 66,892

69 kV 17,340

115 kV 15,846

138 kV 9,367

161 kV 5,567

230 kV 7,534

345 kV 11,146

500 kV 92

What Kind of Markets Does SPP Operate?

• Transmission Service: Participants buy and sell use of regional transmission lines that are owned by different parties.

• Integrated Marketplace: Participants buy and sell wholesale electricity in day-ahead and real-time.

Day-Ahead Market commits the most cost-effective and reliable mix of generation for the region.

Real-Time Balancing Market economically dispatches generation to balance real-time generation and load, while ensuring system reliability.

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Five Years of SPP’s Integrated Marketplace

• $2.7 billion in cumulative benefits as of Jan 1., 2019

• Average annual savings of $570 million

• Lowest-cost wholesale energy in the nation ($29/MWh) according to calculations by FERC in 3Q2018 and based on year-to-date spot power prices

• Facilitated growth in renewable energy production from 6 GWh in 2008 (3% of annual total) to 65 GWh in 2018 (23 % of annual total)

• Ongoing evolution: Recently implemented changes to shortage pricing, procurement of instantaneous

load capacity in the day-ahead market and forecasting improvements

Currently developing products to accommodate solar and energy storage resources and to reward quickly ramping generators who can provide help mitigate sharp load curves.

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Federal Energy Regulatory Commission • Market Oversight • www.ferc.gov/oversight

$ = Average YTD 2018 monthlyday-ahead on-peak priceSource: RTO/ISO data and SNL Day-ahead Prices

NP 15$40

Palo Verde$40

Mid-Columbia

$34Indiana

Hub$38

SPPNorth$29

ERCOTNorth$42

PJM West$42 NYISO ZJ

$46

Mass Hub

$48

Into Southern

$31

2018 Spot Power Prices ($/MWh)

2018 Energy Production by Fuel Type (275,887 GWh total)

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EVOLVING ENERGY MIX

63%

59%61% 60%

55%

48%46%

42%

24%27%

21%19%

22% 23%

20%

23%

6%8%

11% 12%14%

17%

23% 23%

0

10

20

30

40

50

60

70

2011 2012 2013 2014 2015 2016 2017 2018

Pe

rce

nta

ge

of

Ge

ne

rati

on

Trend By Year

Coal Gas Wind

Installed Wind Capacity by Year

0

5000

10000

15000

20000

25000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Me

ga

wa

tts

Year

12

Wind Energy’s Share of State-by-State Electricity Generation

13Source: EIA

U.S. Total: 6.5%

Renewable Penetration

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• Renewable penetration record: 71.4% 1:25 a.m. on 4/27/19

16072 MW of 22517 MW of load served by renewables

Wind Hydro Waste Coal Gas Nuclear Other

Wind in SPP’s System

• Wind installed today: 21,578 MW

11,031 turbines at 209 wind resources

Largest wind resource: 478 MW

• Wind in all stages of study and development: 50,407 MW

• Forecast wind installation by 2020: ~23 GW (more than SPP’s current minimum load)

• Forecast wind installation in 2025: 28-33 GW

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Wind Penetration

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• Maximum wind output: 16,524 MW (5/17/2019)

• Minimum wind output (last 12 mos.): 146 MW (8/9/18 @ 10:47)

• Maximum wind penetration: 67.3% (4/27/19)

• Average wind penetration (2018): ~25%

• Max wind swing in one day: >13 GW(14.8 GW to 1.8 GW in 18 hours)

• Max 1-hour ramp: 3,700 MW

The Difference a Day Makes

Dec. 20 @ 07:40 Approx. 24 hours later

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Wind

48%Coal

33%

Gas

10%

Nuclear

6%

Hydro

3%

On Dec. 20, 2018 at 07:40, a record output of 16,283 MW of wind power served 48

percent of our load. A day later, wind shrank to 17 percent of our generation mix, and

other sources like coal and gas ramped up to serve load. This illustrates the value of

a diverse fuel mix able to accommodate a wide variety of operational circumstances!

Wind

17%

Coal

53%

Gas

20%

Nuclear

6%

Hydro

4%

TOP 10 CORPORATE BUYERS OF CLEAN ENERGY IN SPP’S MARKET

1135

320

320

220

200

178

153

145

125

120

0 200 400 600 800 1000 1200

Google

T-Mobile USA

Facebook

AT&T

Royal Caribbean Cruises

Microsoft

Anheuser-Busch InBev NV

Iron Mountain

Equinix

Kimberly-Clark

MW in Power Purchase Agreements

MW in Purchased-Power Agreements

18Source: Bloomberg NEF data as of November 6, 2018

New Electricity Generation in U.S. RTOs

190 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

NY

NE

SPP

CAISO

MISO

ERCOT

PJM

Non-renewable Sources

Renewable Sources

Source: NRDC analysis of S&P Global Market Intelligence data

75%

31%

37%

30%

16%

37%

36%

69%

25%

63%

70%

84%

63%

64%

CO2 REDUCTION IN SPP’S MARKET

16.8

21

27.8

33.5

38

0

5

10

15

20

25

30

35

40

2014 2015 2016 2017 2018

MIL

LIO

NS

OF

TO

NS

/M

WH

YEAR

CO2 reduction by year

Tons of CO2 per MWh

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Since it’s launch in March of

2014, wind in SPP’s Integrated

Marketplace has displaced

137.1M tons of CO2 per MWh,

resulting in an emissions

reduction of 27%

27%

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• Solar in service: 215 MW

• Solar in all stages of study and development: 29,056 MW

SOLAR IN SPP’S SYSTEM

GENERATOR INTERCONNECTION REQUESTS UNDER STUDY (BY FUEL TYPE):86,730 MW TOTAL

58%

34%

7.63%

0.39%0.00%

Wind (50,722 MW)

Solar (29,056 MW)

Storage (6,616 MW)

Gas (336 MW)

Other (0 MW)

22June 19, 2019

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THE VALUE OF SPP• Transmission planning, market

administration, reliability coordination, and other services provide net benefits to SPP’s members in excess of more than $2.2 billion annually at a benefit-to-cost ratio of 14-to-1.

• A typical residential customer using 1,000 kWh saves $7.63/month because of the services SPP provides.

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SOUTHWEST POWER POOL’S

WESTERN ENERGY SERVICES

www.spp.org/WEIS

WESTERN ENERGY SERVICES

• Western Energy Services is a family of contract-based products offered to new customers in the Western Interconnection Western Reliability Coordination Services

Western Energy Imbalance Service Market (WEIS)

Planning coordination

Unscheduled Flow Mitigation

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Customers

• Arizona Electric Power Cooperative, Inc.

• Black Hills Energy’s three electric utilities: Black

Hills Power, Inc., Cheyenne Light, Fuel and

Power Company, and Black Hills Colorado

Electric, Inc.

• City of Farmington, NM

• Colorado Springs Utilities

• El Paso Electric Company

• Intermountain Rural Electric Association

• Platte River Power Authority

• Public Service Company of Colorado (Xcel

Energy)

• Tri-State Generation and Transmission

Association

• Tucson Electric Power

• Western Area Power Administration (WAPA)

Desert Southwest Region, WAPA Rocky

Mountain Region, and WAPA Upper Great

Plains – West

WESTERN RELIABILITY COORDINATION SERVICESSPP-provided RC services will go live in December 2019

WEIS OVERVIEW

• Contract-based energy imbalance service market that will: Balance generation and load regionally and in real time

Centrally dispatch energy from participating resources every five minutes

Respect existing resource-adequacy and transmission service constructs

Enhance reliability and affordability of electricity delivery

Provide price transparency of wholesale energy

Allow parties to trade bilaterally and hedge against transmission congestion

Take advantage of synergies by leveraging existing SPP systems and processes

• Separate and distinct from SPP’s role as a Regional Transmission Organization (RTO) and operating under separately filed WEIS Tariff

• Design leverages best practices from SPP’s administration of an EIS market 2007-2014 and foundational constructs already in place in the west

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SPP EIS MARKET HIGHLIGHTS

• SPP’s EIS market operated from 3/1/2007 until 3/1/2014 when the Integrated Marketplace went live.

• $103 M benefit to members in its first year

• Began with 12 Balancing Authorities NPPD, OPPD and LES in 2009

City of Springfield Utilities in 2011

• 50 Participants

• 627 Generating Resources

• 46.3 GW coincident peak load

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EIS Market Trade Benefits

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WIND AND SOLAR IN THE SPP REGION

WIND BY SPP CONTROL ZONE

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Date Recorded Control ZoneWind

DispatchActual Load Wind Penetration

4/21/2019 SECI 1833.6 368.1 498.1%

5/27/2019 OKGE 6857.2 2984.4 229.8%

10/13/2017 WFEC 1285.0 793.0 162.0%

3/17/2017 WR 4163.4 2791.5 149.1%

10/18/2017 WAUE 2927.4 2255.5 129.8%

10/4/2016 NPPD 1178.0 1106.3 106.5%

5/8/2017 MPS 864.6 816.3 105.9%

3/17/2017 EDE 457.6 473.2 96.7%

5/14/2017 SPS 2635.8 3032.4 86.9%

5/10/2015 KCPL 707.8 1545.0 45.8%

4/12/2015 CSWS 1646.6 3720.2 44.3%

3/17/2017 INDN 29.8 76.4 39.0%

10/13/2017 OPPD 286.2 880.7 32.5%

5/14/2017 KACY 45.6 185.4 24.6

10/18/2017 GRDA 99.3 534.9 18.6

WEIS ADMINISTRATION

• Operated under Western Joint Dispatch Agreement (WJDA) that defines the terms of the market administration Unaffiliated with SPP’s role as an RTO and membership in SPP RTO not required for

participation in WEIS

• Implementation and ongoing costs to be paid by WEIS participants based on proportional share of Net Energy for Load (NEL)

• SPP expects initial four-year commitment from WEIS participants with no long-term commitments after its first four years

• WJDA guarantees participants a say in the market’s ongoing evolution through representation on the Western Markets Executive Committee (WMEC)

• Market Monitoring provided by SPP’s Market Monitoring Unit

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IMPLEMENTATION SCHEDULE

Requires commitment from critical mass of western market participants by September 3, 2019

Project Implementation begins September 15, 2019

WEIS market “go-live” February 1, 2021

Additional market participants may be added at approximate 6-month intervals after go-live

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Project Implementation Commencement

September 15, 2019

RC Go-Live

December 3, 2019

Imbalance Market Go-Live

February 1, 2021

SOUTHWEST POWER POOL’S

WESTERN ENERGY SERVICES

www.spp.org/WEIS