SPP announces expansion into the Western Interconnection Power Grid

In September, the American RTO Southwest Power Pool (SPP) announced the latest phase of their mission to leverage geographic, time zone, and resource diversity – an expansion of their regional transmission organization services to the Western Interconnections, which will take effect as early as 2026.  

With this development, SPP becomes the first RTO to bridge the gap between the two major power bulk systems and offer undisrupted services across the interconnection line.  

To understand why this development is as significant as it is, let us take a closer look into SPP’s mission and the functionality of the North American power grid:

How does the North American power grid work in simple terms?

Currently, the power grid in the continental USA is divided into three major interconnections, sometimes referred to as bulk power systems: The Western, The Eastern, and The Texas Interconnections (ERCOT).  

The Western Interconnection supplies wholesale power west of the Rocky Mountains and the Great Plains to the Pacific coast, operating in 12 states.  

The Eastern bulk power system covers the states east of the Great Plains to the Atlantic coast, excluding most of Texas, operating in 35 states.  

The Electric Reliability Council of Texas (ERCOT) supplies power to most of the territory of Texas.  

These power systems function as independent power grids with few cross-border interconnectors, where power can be exchanged.

How is the wholesale power market in North America organized?

There are two types of wholesale electricity markets in the continental USA: traditionally regulated and restructured competitive markets with unique functions and processes.

Traditionally Regulated Markets

Traditionally regulated wholesale power markets own the generation, transmission, and distribution systems that serve electricity customers. In their organizational structure, the vertically integrated utilities are responsible for the entire flow of electricity to consumers.  

The states, comprised of traditionally regulated markets, span across the Western Interconnection (California being the exception) and Alaska, Kentucky, Tennessee, Mississippi, Alabama, Florida, Georgia, and North and South Dakota.

Restructured Competitive Markets

The Northeast, Midwest, Texas, and California’s wholesale power markets are competitive markets operated by independent system operators (ISO) or regional transmission organizations (RTO). These markets allow independent power producers and generators to trade power.  

The main difference between the two wholesale markets is that, in restructured competitive markets, utilities usually do not own generation and transmission resources, as they are responsible for retail electricity service.

Who Is the Southwest Power Pool (SPP)?

Southwest Power Pool (SPP) has 110 member companies across 14 states and is one of the nine regional grid operators of the wholesale energy market in North America. Since being founded in 1941, SPP has consistently focused on expanding its operational area, following its mission to develop into the western interconnection and provide regional transmission services across the power bulk systems.  

SPP’s focus on expansion has resulted in a few specifically designed services, which all aid their mission. Some of their most notable efforts are the RTO West concept and the Markets+ initiative.

RTO West

RTO West refers to the seven organizations scheduled to join SPP in 2024. Due to this expansion, the grid operator projects close to 50 million dollars of savings for new and existing members.

Markets+

Markets+ is perhaps SPP’s most significant initiative of developing a new real-time and day-ahead market together with Western parties, which is set to replace the Western Energy Imbalance Service (WEIS) market, their current wholesale energy market.  

After the westward expansion, the area that SPP will service, together with the markets that will be a part of Markets+, has a peak demand of over 119GW.

Who are the entities joining SPP?

The entities joining the Southwest Power Pool (SPP) are three regions of the Western Area Power Administration (WAPA) and seven western utilities:  

• The Colorado River Storage Project (CRSP)  
• The Rocky Mountain Region (RM)  
• The Upper Great Plains-West (UGP) region  
• The Basin Electric Power Cooperative  
• Colorado Springs Utilities  
• The Deseret Generation and Transmission Cooperative  
• The Municipal Energy Agency of Nebraska (MEAN)  
• The Platte River Power Authority,  
• The Tri-State Generation and Transmission Association  

These entities are preparing to join the Regional Transmission Organization (RTO) SPP in early 2026.

What does the SPP westward areal expansion mean?

This expansion will provide economic and reliability advantages to SPP's members by granting access to a more extensive generation fleet, wider geographic diversity, and increased trading opportunities within SPP's energy markets.  

The move aligns with SPP's strategy for RTO and market growth, enhancing sustainability, reliability, and energy market optimization across three DC ties. This development represents a significant milestone in SPP's history and signifies a transformation in the Western Interconnection's energy market landscape.  

We at Time2Market follow market developments closely, intending to support our customers' market access. Follow along to get our point of view on any new developments in the SPP expansion case and beyond.  

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