SPP Market Monitor’s Annual State of the Market

LITTLE ROCK, Ark., May 11, 2018 (GLOBE NEWSWIRE) -- The Southwest Power Pool (SPP) Marketing Monitoring Unit (MMU) has released its 2017 Annual State of the Market Report. The report presents an overview of market design and market outcomes, assesses market performance and provides recommendations for improvement.

“SPP’s markets are very competitive,” said executive director of the SPP market monitoring unit Keith Collins. “The report highlights opportunities to increase efficiencies and enhance flexibility of the system.”

Highlights from the report include:

• Market results were workably competitive, with infrequent mitigation of offers and high resource participation levels.
• Total wholesale market costs — including energy, operating reserve and uplift payments — averaged around $24/MWh in 2017, which was about 7 percent higher than in 2016. This was primarily caused by increases in energy costs.
• The incidence of negative prices doubled in 2017 to about 7 percent of all real-time intervals, up from about 3.5 percent of intervals in 2016.
• Wind generation peaked at 15.7 GW and peak wind penetration was almost 57 percent of load in December. Wind capacity increased to almost 17.6 GW in 2017, up about 9 percent from 2016.
• SPP continues to have significant excess capacity at peak loads. The MMU estimates that capacity at peak is 30 percent higher than the peak demand level in 2017.
• Combined operating reserve costs totaled $80 million last year, an increase of 28 percent over 2016. This was driven by a combination of factors including higher spinning reserve requirements and prices.
• Market prices themselves do not signal new investment in generation. Furthermore, MMU analysis shows that market revenues do not support going forward costs for coal resources.

Recommendations from the report this year can be categorized in two areas: 1) increasing market flexibility and 2) improving market efficiency. The MMU emphasizes that economics and reliability are inseparable and that an efficient wholesale electricity market provides the greatest benefit to the end user both presently and in the years to come.

For more details, the entire report can be found at https://www.spp.org/spp-documents-filings/?id=18512

For additional information, contact sppmarketmonitoring@spp.org .

About Southwest Power Pool: Southwest Power Pool, Inc. manages the electric grid and wholesale energy market for the central United States. As a regional transmission organization, the nonprofit corporation is mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices. Southwest Power Pool and its diverse group of member companies coordinate the flow of electricity across 66,000 miles of high-voltage transmission lines spanning 14 states. The company’s headquarters are in Little Rock, Arkansas. Learn more at  www.spp.org .

About the SPP Market Monitoring Unit: SPP's independent market monitor is responsible for monitoring the organization’s markets and services. The group's primary purpose is to ensure SPP's markets are efficient and fair. Specific duties include obtaining objective information about SPP's markets and services; assessing the behavior of market participants; and assessing the behavior of other markets and services that impact SPP. The market monitor is also responsible for detecting structural problems and design flaws in the operating rules, standards, procedures and practices in SPP markets. It assesses the mechanism that governs the transmission markets independently or as a result of complaints or requests for an inquiry.

Contact: Keith Collins (501-482-2160, kcollins@spp.org)