A Utah-led study funded by the U.S. Department of Energy took a look at how teaming up to form a shared energy transmission system in the region could benefit 11 Western states, and the savings look to be potentially huge.
The utility providers in those states could realize as much as $2 billion a year in savings by 2030 and for Utah, those savings could be as much as $99 million annually.
Savings like that could trickle down to consumers as utilities in those states pool their resources when it comes to energy grid management and investment in new transmission infrastructure.
Think about it as a huge swap meet, where buyers and sellers trade for goods, but in this case deals are made over the electric grid and how it is managed.
Wyoming wind energy ends up in Nevada. Utah solar powers portions of Washington state.
To a large extent that already happens with PacifiCorp, which serves Utah and five other states through swapping power resources on the grid.
Energy produced through hydropower on the Pacific Coast may very well end up in Utah, while electricity generated by coal in this state gets put on the grid for other member states.
PacifiCorp is part of a group of utilities in the western United States that formed an exploratory group to conduct a more thorough investigation into how a centralized approach for the delivery of electricity might boost grid reliability through additional investment in transmission and boosting resource diversity.
Vijay Satyal, regional energy markets manager for Western Resource Advocates, said a West-wide system would allow Utah to tap into more renewable energy resources at a cheaper cost and foster improved grid connections through more transmission capacity.
“What is best in the Northwest? What is best in Utah? What is best in Montana? What is best in the Southwest? If you have a regional market, you can leverage this all in ways that creates multiple buyers and multiple sellers,” he said. “So that will harness the strength of resource diversity across the West.”
But Utah leaders and PacifiCorp are a bit cautious over this proposal and say it will only make sense if it improves grid reliability and keeps rates low for consumers.
“The ultimate bottom line is that Utah has a good system that is affordable and provides reliability for electric service,” said Thad LeVar, chairman of the Utah Public Service Commission that regulates utilities in the state.
With that said, LeVar acknowledged that anything that could be an improvement should be considered and evaluated thoroughly.
Everyone agrees that the success of a regional transmission organization for the West depends on how it is structured.
Once the initial study was released, state officials from Utah, Idaho, Colorado and Montana released a statement noting the importance of the evaluation but expressed some concern that non-coastal states could be roped into an actual “power” agenda that does not further their interests.
“Utilities in the West operate in different climates — natural, economic and regulatory — and study findings pertinent to one entity might make little difference for another,” the letter read.
The letter went on to emphasize that while some observers accuse Western electricity markets as being “Balkanized,” the long-held tradition is cooperation.
A West-wide consolidated transmission organization is not meant to prevent a shutdown like the one earlier this year when a deep freeze hit Texas, cutting off power for days. Texas is its own operational island when it comes to the delivery of electricity.
But Satyal said even a highly integrated system like Utah’s Rocky Mountain Power could benefit because it brings more resources to the table to boost capacity by pooling the capital investments of utility companies in participating states. It also works toward national goals of becoming carbon free by relying on renewable energy.
He added that the organizational structure of any West-wide governance has to be transparent and beholden to all states, not just big coastal players with those mandates on clean energy already in place.
That potential “power grab” is what has Thom Carter, energy adviser to Utah Gov. Spencer Cox and the director of the Utah Office of Energy Development, a bit worried.
“It seems like we are in a pretty good position already,” he said, noting that other states have multiple energy providers while Utah relies on PacifiCorp, which owns most of the power generators, the transmission and the distribution lines.
“We have among the lowest electricity rates in the nation,” Carter said. “I think this conversation is around one of durability and having that West-wide durability is fascinating.”
He said the key factor is to find common ground among states like Utah, Colorado and Montana when it comes to dealing with California and other coastal states with renewable energy mandates.
“That starts with the governance structure,” he said.
Satyal said his group and other advocacy organizations are working hard to ensure public interests are at the forefront as this new dynamic may come into play, with assured equity among states that could move to a different way of balancing energy needs.
“The governance structure is doable,” he said, and each state will have cost savings depending on its regulatory structure. The Public Service Commission in Utah, for example, would not give up regulatory control.
Carter stressed that Utah is excited to be part of the movement for the possibility of forming this West-wide transmission organization, but literally the “politics of power” needs scrutiny and caretaking of ratepayers.
“People don’t think about energy until it is not there or if it costs more. We want to make sure that people are focused on other things and this is not a big concern to them.”