Mark Jaffe, August 3, 2016
On the 10th floor of Xcel Energy’s downtown Denver office building, energy traders sit before banks of screens filled with flickering, colored digits, buying and selling electricity for the utility’s sprawling service areas. In one corner, a trader monitors the Midwest wholesale market and in another, the Southwest Power Pool — an odd name given that it actually covers the Great Plains, not the Southwest.
On a recent day, an electronic map showed North Dakota in blue, for the price of the state’s wind power was near zero, while southern Indiana was burnt orange, with the price of a kilowatt-hour near 8 cents. Five minutes later, Ohio turned pale green as the price dropped to 5 cents.
Meanwhile, on the other side of the room, the trader handling Colorado had no fancy, color-coded price map. When he needed to buy or sell, he had to get on the phone and call around to other utilities to find out what they had at what prices. Then he had to fix the price, coordinate the dispatch of the electricity and file the paperwork — all things being done automatically across the room by the Midwest Independent System Operator, or MISO, and the Southwest Power Pool, which covers all or parts of seven states.
There in a nutshell is the state of affairs when it comes to Western electricity markets. While 60 percent of the nation’s electricity is handled through computerized regional markets, the West is stuck in the 1980s.
Electricity sales in the West are Balkanized among 38 “balancing authorities” or local markets. “It is a bus with 38 drivers,” says Carl Zichella, director of Western transmission for the Natural Resources Defense Council, an environmental group. “It is tremendously inefficient.”
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