A utility-only exploration of options risks falling short of the urgency of the moment and failing to provide all the benefits that would come with a full-blown regional electricity market
SAN FRANCISCO, Wednesday, October 6—National business group Advanced Energy Economy (AEE) is calling on electric utilities in the West to support the development of a regional transmission organization (RTO) for Western states. Several energy companies recently announced plans to explore market options in response to state momentum for a regional solution to energy resilience challenges, a process AEE says should be done expeditiously and lead to the creation of a western RTO.
“It’s good to see these utilities publicly acknowledge the benefits of regional markets and collaboration but, as described, this announcement by utilities falls short of the urgency of the moment,” says Amisha Rai, managing director at AEE. “The stakes are too high for slow and small steps. An RTO is needed to achieve truly reliable, affordable, and expanded clean energy in the region. Utilities and state leaders should not delay any longer in moving away from the status quo toward real, meaningful change.
“Regional markets create substantial carbon reduction, improve grid reliability, and reduce costs for consumers, but only a full RTO will maximize those benefits. Incremental steps would not meet the requirements of recent legislation in Colorado and Nevada and would fail to maximize benefits to consumers,” added Rai, referring to bills signed into law this year in Nevada and Colorado that require utilities in those states to join an RTO by 2030. “Development of a wholesale electricity market should be a collaboration of state leaders, utilities and members of the stakeholder community. It otherwise risks coming up short of the potential benefits.”
A West-wide RTO could result in nearly $1.3 billion in annual savings for participating states in 2030 relative to a real-time energy market, according to an independent, state-led market study of RTOs published in July. These benefits are primarily driven by the more efficient dispatch of low-cost generation resources over a broader geographic footprint.
Many of the companies in the group are currently participating in, or preparing to join, the California Independent System Operator’s Western Energy Imbalance Market. A recent statewide representative poll of California residents found majority support (64 percent) for California to join neighboring western states in developing a solution to improve electricity reliability; 67 percent of Californians say their state should expand its ability to receive power from neighboring states.