Many — but not all — electrical utilities in Colorado joined a new regional market called an RTO. Among the happiest CEOs is Durango’s Chris Hansen.
by Allen Best
Yawn you may when informed that a bunch of electrical utilities in Colorado and other states will formally join the Southwest Power Pool on Wednesday, April 1.
So why is Chris Hansen so jazzed? “April 1 is a big darned day for the state and for (electrical) cooperatives in particular. We will have access to new resources, new options that we have never had. It’s really exciting, a new chapter for us,” said Hansen, the CEO of La Plata Electric Association in southwestern Colorado.
Hansen was a state legislator from 2017 to 2024. He was a prime sponsor of perhaps several dozen bills having to do with Colorado’s effort to transition from energy that produces greenhouse gas emissions.
Before that he had been a consultant who had worked around the world. His academic career had stretched from nuclear engineering to a Ph.D. in economic geography, the latter awarded by Oxford. Oh, and he grew up in Kansas and frequently says things like “gosh” and “darn.”
One of the bills that Hansen drafted, SB21-072, bears the influence of his work in resource economics. Adopted into law, it told Colorado utilities that they would have until 2030 to join a regional transmission organization, or RTO. An RTO is best understood as a market mechanism for sharing electricity across a broad region.
A 2021 study by the Public Utilities Commission staff estimated annual benefits from all utilities in Colorado participating in an RTO could yield $230 million in savings irrespective of whether Colorado look west to join an RTO or east to SPP or created something new in the middle working with neighboring utilities.
Hansen, when he explains the concept to people who don’t live in the world of electricity, likens it to grocery store chains. A town with just one grocery store has no competition. “People very clearly understand that competition helps keep prices lower.”
The concept of SPP and other organized markets is that electricity and transmission can be shared in ways to produce lower or even lowest costs. The creation of an RTO involves significant financial investment in creation of computer models that automatically make the choice of what resource to tap, always motivated by choosing the lowest-cost option. That option usually, but not always, is renewable energy or stored energy from renewable sources. There is the matter of getting the electricity to where the demand exists. Again, what is the lowest-cost of transmission. The models are fixated in all cases on lowest cost alterntives.
Participating utilities in Colorado include: Colorado Springs Utilities, Platte River Power Authority, Tri-State Generation and Transmission Association, and the Western Area Power Administration, Fountain Power, Guzman Energy, United Power, Delta-Montrose and La Plata Electric. Other participants in the SPP RTO are in several other Western states.
Just as important may be who is not joining SPP. Xcel Energy, the state’s largest utility, has chosen to take a more tepid step, joining Markets+, an SSP offering with more limited day-ahead scope than an RTO. See the PUC debate as reported by the Denver Post in August 2025.
Some other utilities — including Sedalia-based CORE Electrical Cooperative and Glenwood Springs-based Holy Cross Energy — depend upon Xcel for transmission or for balancing loads. Hence, they will not participate in SPP’s RTO.
In a statement, Pam Feuerstein, the CEO of CORE, said open access to transmission allows for increased competition, more efficient use of resources, and greater integration of renewable energy, which in turn helps drive down costs and improve reliability for our communities.
However, as CORE operates within the balancing authority of Xcel Energy, CORE’s options are limited by Xcel’s decisions regarding RTO participation. “We are exploring all alternatives to take advantage of RTO efficiencies in the future,” she said.
At some point, however, CORE will be part of an RTO, as the state law imposes the 2030 deadline.
“I see it as one of the most important pieces of legislation that I worked on during my eight years in the Legislature,” said Hansen. The creation of a market for electricity will pay dividends, he said, in terms of lower rates.
Colorado has been best understood as an island of electricity. Oh, there are bridges — transmission lines — beyond this island, even to the east, which is on a different grid. But there is relatively little sharing of electricity.
A broader market for shared resources that encompasses more than one time zone or one weather system will be more efficient. That was true when nearly all electricity was generated by combustion of fossil fuels, but it’s even more true now with the arrival of renewables at scale. SPP will provide that in its Western expansion.
What might seem altogether odd about this new market is that SPP is based in Little Rock, Ark. Its work has been in the Eastern Interconnection Grid, which operates at a different frequency than the Western Interconnection Grid. The two grids are not synchronized. Power can be transmitted between the two at only a few locations, one of them the May Valley Ranch north of Lamar and two others in the panhandle of Nebraska.
Meanwhile, another RTO does exist to the west. It’s called the California Independent System Operator, or CAISO. In Colorado, utilities and others were long leery of CAISO, because it was governed by the California legislators.
California legislators last year ceded authority over CAISO. That would seem to make it a more attractive proposition. But by then, SPP had been busy laying out the imprint for what has come to fruition today.
Still, the question lingers of which direction Colorado utilities should go. This isn’t entirely settled. You can find proponents in Colorado pointing their fingers in opposition directions.
Brian Turner, of Advanced Energy United, an organization that has become heavily involved in advocacy in Colorado, has simple advice: go west. He’s leery of even mentioning CAISO. He calls it something else. But his argument has remained intact for the last two years. The far larger market will exist to the west, and that’s where Colorado’s renewable energy, particularly its wind, will interplay best with markets in California and Arizona.
Turner concedes that joining the SPP RTO represents an improvement for the Colorado utilities. “But I don’t think that they’ve consider what else is an option for them.”
Colorado utilities, he contends, have not altogether gotten the message that the RTO that originated in California will have different governance – possibly including somebody from Colorado.
Turner’s argument is partly rooted in how he sees transmission: While Colorado’s transmission to the west is limited, there are opportunity to make it viable. He points to a potential 40-mile connection in northwest Colorado to PacificCorp’s new 345-kV line from Wyoming to Utah and then Oregon as a viable option. The Colorado Electric Transmission Authority has also identified it as a high priority. And he sees transmission development through New Mexico and Arizona.
Looking to the east, Turner sees a wall. One high-voltage direct-current intertie between the two grids exist in Colorado, at May Valley, northeast of Lamar. Seven other interties exist in other states and in Canada.
Turner describes the limitation as huge and reports that it would cost a billion per portal to enlarge the capacity of an intertie. The result would be access to more Midwestern wind – and Colorado already is blessed (or cursed) with abundant wind on its eastern plains.
The SPP RTO will provide limited opportunities to grow. “It’s not going to the east, because of those HVDC interties. They are an airlock, a door, a one-way door. “
The opportunities lie in a market that embraces the intermountain West and West coast, insists Turner.
Mark Gabriel, the CEO of United Power, has a completely different take. He began investigating an RTO in 2013, when he was overseeing the Western Area Power Administration from an office in Lakewood. Gabriel had spent time in California earlier in his career, but he became convinced that SPP provided the better opportunity, in part because of the difficulty of building transmission. And he does not see the HVDC ties being the barrier that Turner does.
Markets, said Gabriel, have their own challenges. “There is no perfect market. We are always trying to correct imperfections in how the market operates.”
And Gabriel also wants it understood how difficult it has been to create the SPP RTO. “It doesn’t take a village. It takes an Army.”
As it is, he is almost as excited as Hansen to see the RTO arrive in Colorado. “It’s terrific.”
In Montrose, Jack Johnston, the CEO of Delta-Montrose Electric, said he and his board weighed the short-term costs against the long-term benefits of joining SPP. The long-term benefits won out. Helping steer the decision, too, was the fact that Guzman as well as Tri-State and WAPA had all chosen to participate in SPP.
Does this mean that Delta-Montrose will forevermore be looking east to Little Rock, headquarters for SPP? Not necessarily, says Johnston.
“We should allow SPP to evolve to its maximum potential before considering expanding in the other direction,” he said. “However, it may make sense in the future to consider going in a different geographic direction.”
Hansen has much the same viewpoint. There may be a third option somewhere in the future, perhaps a “seams agreement” between SPP and the California-based RTO.
“What I can say is that the status quo is terribly inefficient with 37 different balancing authorities in the Western grid,” said Hansen. “Two is definitely better than 37.”
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Tear down this wall! http://www.threecornersconnector.com
Good piece Allen! Thanks for sharing the different perspectives on RTOs.
From RTO Insider:
SPP has opened an office in Denver, giving it a physical presence in the Western Interconnection as it seeks to open two different markets in the West.
Maybe Allen can drive to Denver and talk with SPP West folks there for insights on another article regarding future market expansion…
Would be interested in hearing what expansion they expect with Markets+ eventually folding into SPP West?