Table of Contents

Introduction

I. Background: U.S. Energy Markets and Colorado Senate Bill 72

A. Electric Utility Regulation and Energy Markets in the United States

B. Electric Utility Regulation and Energy Markets in Colorado and the West

C. Overview of Senate Bill 72

1. Organized Wholesale Market Requirement

2. Creation of the Colorado Electric Transmission Authority

II. Motivations and Impact of Senate Bill 72 and Stakeholder Responses

A. Motivations and Impacts of Senate Bill 72

1. Improving Grid Reliability and Resilience Through the CETA

2. Expanded Wholesale Generation Resource Base and Resource Adequacy

3. Meeting Colorado’s Climate Goals

4. Economic Motivations

B. Key Stakeholder Responses

1. Xcel’s Pre-Bill 72 Progress and Response to Proposed Legislation

2. Colorado PUC Response

III. Potential OWM Targets and Western Progress on OWM Participation

A. Overview and Potential OWM Targets: CAISO, SPP, or a new West-wide RTO

B. OWM Progress by Western States: Nevada, Utah, and California

IV. Potential Drawbacks and Shortcomings of Senate Bill 72

A. Existing Barriers to Transmission Buildout Will Continue

B. Loss of Local Price Signals

C. Dependency on Market Footprint and the OWM Opt-Out Provision

D. Loss of Regulatory Autonomy

Conclusion

Introduction

In the summer of 2021, the Colorado Senate enacted Bill 72—a law that will significantly shift the wholesale energy market in Colorado and possibly the entire western United States.^[2] Bill 72 mandates Colorado transmission utilities to join, by 2030, a wholesale electricity market in the region that “coordinat[es] and efficiently manag[es] the dispatch and transmission of electricity among public utilities on a multistate or regional basis.”^[3] This requirement will affect both the process and objectives of key electricity decisions made at the state and regional level, changing the way Colorado plans transmission and ensures resource adequacy for its grid.^[4] Whatever form this new market takes, Colorado has acted definitively with Bill 72 by opening its wholesale electricity regime to a multi-state marketplace, promising increased resource optimization and reliability, and an abundance of new, clean energy sources available at lower costs. Under Bill 72, Colorado and the West will be better able to plan regional transmission lines and to connect remote supply resources (such as desert solar) to populated areas with the highest electricity demand. In short, Bill 72 is an opportunity to “unlock” the fractured electricity transmission planning process in the West, connecting Colorado’s electricity market to the rest of the region.

At the same time, Colorado has already instituted useful governance practices that may not be replicable at the regional level. And existing organized wholesale markets are not without risks and shortcomings. Nonetheless, if other western states join Colorado in regional wholesale market participation, the most optimized form of such a market structure will generate great benefits for utilities and ratepayers alike.

This Note argues that despite the potential loss of some regulatory autonomy in Colorado and the pitfalls and limitations of existing regional markets, Bill 72 manages to address existing limitations in transmission planning in the state; puts the entire region on a path towards lower energy costs and reduced carbon emissions by connecting Colorado with the rest of the West; and “unlocks” its grid by increasing transmission capacity across the region. Despite the progress made by Colorado transmission utilities on infrastructure planning, renewable energy adoption, and participation in more limited wholesale energy markets, this Note contends that an Organized Wholesale Market with a transmission planning mechanism better addresses transmission planning challenges, resource adequacy optimization, and increased renewable energy adoption.

One key to Bill 72’s expected success hinges on the ability of a new centralized transmission planning authority to identify regional transmission corridors and leverage a more streamlined regulatory approval process. Relatedly, Colorado and the West must accelerate the adoption of renewable energy resources and quickly address the climate crisis. By opening itself up to more generation assets in other energy markets, Colorado will not only make significant progress towards these goals but also help lead the West on regional climate progress. Indeed, momentum is building towards West-wide participation in a wholesale energy market that includes transmission-planning services. Colorado has pushed the snowball down the hill with this new legislation.

This Note will first review the background of energy market structures in the United States. It will then review the key elements of Colorado Senate Bill 72 that will transform the wholesale energy market in Colorado, as well as the motivations, consequences, and key stakeholder responses to the legislation. Because of the benefits to be gained by West-wide participation in an Organized Wholesale Market, this Note highlights existing market options and the progress other Western states have made or are planning in this area. The final Section provides an analysis of the concerns and potential drawbacks of the legislation.

 

I. Background: U.S. Energy Markets and Colorado Senate Bill 72

A. Electric Utility Regulation and Energy Markets in the United States

Electricity markets operate at both the retail level and wholesale level. On the latter, “load-serving” entities buy power to resell on the retail market to electricity ratepayers, such as residential, commercial, and industrial energy users.^[5] Although Bill 72 and this Note concern wholesale electricity markets, changes at the wholesale level will impact retail electricity customers; therefore, it is necessary to outline how energy markets are designed and regulated in the United States and Colorado.^[6]

Load-serving entities are often structured as investor-owned electric utilities, or “IOUs,” which serve most electricity customers in the United States. ^[7] About one-third of IOUs in the country operate as state-sanctioned monopolies.^[8] These IOUs participate in so-called “regulated” electricity markets, where state utilities commissions, such as the Colorado Public Utilities Commission (“PUC”), directly regulate the load-serving IOUs.^[9] The most important aspect of this relationship is that the PUC approves the price at which electricity rates are set for customers, who can buy power from the regulated IOU only.^[10] Given the capital-intensive nature of electricity generation and distribution, these regulated monopolies receive a guaranteed rate of return on investments such as power plants, transmission lines, and distribution infrastructure.^[11] Importantly, because the costs and rate of return on investment are borne by ratepayers, the state PUC ensures that electricity rates are fair and justified for both the IOU (looking to recover its costs and to incentivize future investment) and ratepayers (looking to keep rates as low as possible without sacrificing reliability).^[12]

But IOUs can and do operate in both regulated and “deregulated” markets or, perhaps more helpfully named, “restructured” markets. In regulated markets, IOUs are “vertically integrated,” meaning they “own or control the total flow of electricity from generation to meter.”^[13] This is the case in Colorado.^[14] In contrast, a fully restructured energy market generally implies that the IOU has (functionally or physically) “unbundled,” or separated, its generation assets from its distribution business and that the state has introduced generation and supply competition into wholesale generation and retail load-serving markets.^[15] In such a scenario, the IOU retains its monopoly over the physical wires that distribute electricity to customers but ratepayers have the ability to choose their retail electricity supplier, at least in theory.^[16]

Of course, the distinction between “regulated” and “deregulated” ­(or restructured) electricity markets is not so black and white. For one, regulated IOUs with a retail monopoly may participate in competitive wholesale markets (e.g., purchasing competitively priced electricity for resale on an Organized Wholesale Market (“OWM”)). Likewise, utilities in so-called deregulated or restructured retail markets will still be subject to state regulation, i.e., for the retail rates related to their distribution monopoly on the physical wires serving homes and businesses.

Utility restructuring (at both the wholesale and retail levels) took hold in the 1990s in the Northeast, Mid-Atlantic, and the Midwest.^[17] These market constructs naturally lent themselves to the creation of and participation in OWMs, such as the New England Independent State Operator, the Midcontinent Independent State Operator (“MISO”), the Southwest Power Pool (“SPP”), and PJM.^[18] OWMs (and other types of wholesale structures, such as “imbalance” markets) effectively operate as federally-regulated auctions, which allow multiple electricity suppliers to bid into the market in order to offer a certain amount of energy supply at a given price, while “load-serving entities,” such as IOUs, ask for certain amounts of energy in order to meet predicted electricity demand.^[19] In such markets, once demand is satisfied, the market “clears” at the last price offered by electricity suppliers (and all suppliers receive that price for their supply).^[20] These markets are commonly subdivided into day-ahead bidding markets (making up ninety-five percent of energy transactions in the United States) and real-time bidding markets, which typically operate at one-hour intervals and fifteen-minute intervals to account for unforeseen changes in energy demand throughout a given day.^[21] However, unlike a basic “imbalance” markets, OWMs typically include a coordinated transmission planning component.^[22]

OWMs are organized into what is called a Regional Transmission Organization (“RTO”), such as the SPP, or an Independent State Operator (“ISO”), such as the California Independent State Operator (“CAISO”).^[23] For example, the nearest OWM to Colorado is the SPP RTO, which operates from North Dakota down to Oklahoma and parts of Texas.^[24] The SPP exists on the Eastern Interconnection, connected by only seven high-voltage transmission lines to the Western Interconnection where Colorado sits.^[25] However, the SPP is working to develop an extension of its RTO on the Western Interconnection and currently partners with some Colorado utilities in more limited market capacities.^[26] Although no West-wide RTO exists, this type of market structure serves two-thirds of the country’s electricity load.^[27]

An OWM spreads capacity requirements across several suppliers, rather than a single utility, and likewise gives independent power producers (“IPPs”) access to a much larger base of potential customers, namely load-serving entities such as Xcel in Colorado.^[28] Per the Colorado PUC, “[a]n RTO . . . consolidates reliability obligations, transmission planning, and cost allocation, and transfers functional control of the transmission system to the system operator.”^[29] For example, some generation assets, such as natural gas plants, sit unused for all but the highest demand (i.e., hottest) days of the year. ^[30] By tapping into the increased generation base across the West, Colorado might not require investment in as many costly, dispatchable peak generation plants. And through its central control of the market, an OWM operator can optimize energy flow so that its system’s transmission availability is utilized to its full reliability limit.^[31] As a result, with the complete picture of regional transmission capacity in view, OWM operators ensure that electricity is efficiently distributed to load-serving entities.

B. Electric Utility Regulation and Energy Markets in Colorado and the West

Among other important provisions, Colorado Senate Bill 72 (“Bill 72”) includes two key changes that will dramatically affect how Colorado transmission utilities interact with wholesale energy markets in the West: The Organized Wholesale Market requirement and the creation of the Colorado Electric Transmission Authority (“CETA”).^[32] Specifically, Bill 72 requires any utility in Colorado that owns and controls transmission facilities to join an OWM by 2030.^[33] In the name of fulfilling its stated goal of expanding “electric transmission facilities to enable Colorado to meet its clean energy goals,” Bill 72 will effectively introduce competition and regional coordination (e.g., on transmission planning) to the western wholesale markets in which Colorado utilities participate.^[34]

In addition to twenty-nine not-for-profit, municipally-owned utilities and twenty-two not-for-profit rural electric cooperative utilities, Colorado is served by two regulated IOUs—Xcel Energy (doing business as “Public Service Company of Colorado”) and Black Hills Energy.^[35] Xcel is the largest electric utility in Colorado, providing service to 1.5 million customers in the state, including the Denver metro region.^[36] In total, Xcel is responsible for about fifty-three percent of retail electricity sold in Colorado (to residential, commercial, and industrial customers), while Black Hills accounts for about four percent of such sales and serves about 100,000 customers in Pueblo and other communities.^[37] As regulated monopolies, Xcel and Black Hills are granted a “Certificate of Public Convenience and Necessity” by the state PUC, giving each exclusive access to particular service territories.^[38]

Xcel and other Colorado utilities already participate in wholesale energy imbalance markets (“EIMs”), which operate similarly to OWMs but without a mechanism to plan regional transmission projects.^[39] Although these markets help match supply and demand across a regional footprint, they require fewer commitments from participants and do not fully address the inefficiency that results from fragmented transmission control and planning in a decentralized system.^[40] California, for example, operates a regional EIM that engages in little transmission planning outside of the state.^[41] As of this writing, there are no truly regional RTOs operating west of Colorado.^[42]

In addition to EIMs, many IOUs engage in “bilateral” wholesale markets, trading electricity directly with other utilities when needed.^[43] But bilateral agreements are inherently limited and poorly integrate intermittent resources, such as wind and solar power, because of the fixed nature of such agreements and the limited number of “market” participants that could otherwise increase competition and reduce market clearing prices.^[44] For example, because of the intermittency of wind and solar resources (absent storage capacity), a larger market is more likely to match wind and solar supply with demand. Furthermore, although there are many EIMs and bilateral agreements between various utilities across the West, there is limited coordination between these distinct EIMs and bilateral agreements. ^[45] Therefore, putting aside even the potential benefits from regionally focused transmission planning, the West is not operating as efficiently as it might from a market perspective alone.^[46]

With Bill 72, Colorado is one of only two Western states to fully commit to OWM participation, as of this writing.^[47] The move will significantly shift the region’s wholesale energy market regime and signal to the West that the state is prepared to engage in regional decision-making related to transmission planning, resource adequacy, and renewables adoption. The 2030 statutory deadline will allow Colorado to work with other states on the best OWM solution for the region, including getting ahead of and addressing risks and drawbacks with existing RTOs.

C. Overview of Senate Bill 72

Bill 72, enacted in the summer of 2021, will require any transmission-owning and -controlling utility in Colorado (such as Xcel) to join an OWM by 2030.^[48] Although Xcel has participated in EIMs, Bill 72 will significantly deepen Colorado’s participation in regional wholesale markets. Specifically, the transmission-planning requirement of the OWM will help Colorado and the West reap the full benefits of regional coordination. Relatedly, Bill 72 creates a new independent transmission-planning entity, the Colorado Electric Transmission Authority.^[49] The OWM requirement and the creation of CETA are the two most impactful changes from this bill, as outlined below.

1. Organized Wholesale Market Requirement

Under the new law, any “transmission utility” (a utility that owns and controls at least one transmission facility) must join an OWM by the year 2030.^[50] Bill 72 defines an OWM as a Federal Energy Regulatory Commission (“FERC”) approved RTO or ISO, “established for the purpose of coordinating and efficiently managing the dispatch and transmission of electricity among public utilities on a multistate or regional basis.”^[51] Bill 72 further mandates that the OWM “[e]ffects separate control of transmission facilities from control of generation facilities” and must itself operate independently of any transmission ownership.^[52] This requirement means that the OWM and generation participants would have neutral positions with regards to new transmission infrastructure projects, so long as such projects facilitate an efficient market.

Moreover, utilities cannot simply check the box: the target OWM must be of “sufficient scope” or operational size to “increase economical supply [of electricity] options for customers.”^[53] Thus, joining an EIM that lacks a transmission planning component, or the full range of market capabilities, would not satisfy Bill 72. Lastly, in addition to regional goals, Bill 72 requires that the OWM, “[i]mproves, to the extent possible, service reliability within Colorado.”^[54]

Of course, there are off-ramps: if a transmission utility cannot, despite making “all reasonable efforts,” find a “viable and available” OWM, the Colorado PUC may delay or waive the OWM requirement for that utility.^[55] In such a case, the PUC must also find that it is not in the “public interest” for the transmission utility to join an OWM, considering factors such as whether the targeted OWM has sufficient “tracking and reporting” of emissions, whether the OWM fails to adequately “promot[e] load flexibility and demand-side resources,” whether the OWM fails to “promot[e] the integration of clean energy resources,” and whether joining the OWM would fail to “reduc[e] the costs and inefficiencies between balancing areas and between market constructs.”^[56] In short, transmission utilities must justify a request to avoid joining an OWM, but any target OWM must likewise be robust enough to satisfy the standards of Bill 72. Importantly, administrative costs will not pose a significant obstacle to OWM participation: Bill 72 states that any participating utility may be able to recover “OWM subscription fees and other prudently incurred costs of participation” from its ratepayers, if allowed by the CETA.^[57] Thus, to the extent a target OWM adequately addresses the legislative concerns above, the transmission utility will be required to join that OWM.

2. Creation of the Colorado Electric Transmission Authority

Bill 72 also creates a new “independent special purpose authority,” the Colorado Electric Transmission Authority.^[58] The CETA is “authorized to select a qualified transmission operator to finance, plan, acquire, maintain, and operate eligible electric transmission and interconnected storage facilities.”^[59] In doing so, the CETA may issue tax-exempt revenue bonds to finance transmission projects, identify and establish intrastate corridors for transmission, exercise the power of eminent domain to acquire eligible facilities, and collect payments of fees and other charges from persons making use of the transmission facilities.^[60] At a high level, the CETA will “coordinate, investigate, plan, prioritize, and negotiate with entities within and outside Colorado” in order to identify transmission corridors that would facilitate OWM participation, although such corridors are still subject to “siting and land use approval by the local government.”^[61] Nonetheless, the CETA will be empowered with similar eminent domain authority as other governmental entities, including the power to “acquir[e] any property or rights-of-way” for the purposes of “necessary” transmission projects (that are not owned by an electric utility or belonging to a local government).^[62] To the extent the CETA exercises this power, any “[o]wnership of eligible facilities . . . may not exceed the extent and duration necessary or useful to promote the public interest.”^[63]

Importantly, Bill 72 aligns judicial review with the goals of the CETA, stating that courts shall consider “the transmission system as a whole,” when deciding whether a given transmission project is in the public interest.^[64] Ideally, this instruction will encourage courts to consider not only the individual impacts of that project but also the broader goal of expanding transmission across state borders to alleviate bottlenecks, bring down costs, and help the state reach its clean energy goals. Outside of regional transmission-planning powers, the CETA can also engage in such planning and coordination as necessary to increase Colorado’s intrastate grid reliability and resilience, to meet clean energy goals, and to evaluate alternatives to traditional transmission, such as storage and “advanced transmission technologies.”^[65]

For better or worse, the CETA will be able to address these regional and state goals relatively unimpeded—Bill 72 also contains significant regulatory independence protections for the Authority.^[66] For example, Bill 72 states that “[n]either the [CETA] nor any eligible facilities acquired by the [CETA] are subject to supervision, regulation, control, or jurisdiction of the [Colorado PUC].”^[67] Additionally, Bill 72 allows the CETA to operate under less stringent open-records and open-meetings requirements.^[68] For example, the Authority can withhold confidential information related to costs of production and transmission, transmission service agreements, detailed power models, financing statements, and other closely held information related to a given transmission project.^[69]

On the other hand, the CETA applications are still subject to both PUC and local government approval—though failure by either to respond within a certain statutory deadline would allow the project to proceed.^[70] Overall, the CETA is likely to operate relatively efficiently on transmission projects as a result of fewer regulatory barriers, albeit with less oversight.^[71] Bill 72 prioritizes efficiency and greatly empowers this new Authority, both integrating it into the existing regulatory framework and giving it streamlined operational latitude beyond even incumbent governmental entities involved in Colorado transmission planning.

In summary, because of Bill 72’s OWM mandate, Bill 72 will significantly deepen Colorado’s participation in regional wholesale markets in the West. Likewise, the CETA will oversee and ideally streamline the transmission planning process vital to the success of any OWM. Although relatively discrete and simple, the advent of these two regulatory changes will have far-reaching climate, economic, and reliability impacts on Colorado and the West.

II. Motivations and Impact of Senate Bill 72 and Stakeholder Responses

Surely, the OWM requirement and the creation of the CETA represent significant changes to Colorado’s electricity regulatory regime. But the state legislature was motivated to take this leap because of the powerful potential of Bill 72 to generate great benefits for ratepayers and utilities alike. This Section will examine these motivations and benefits, as well as Xcel’s and the PUC’s criticisms and ultimate support of Bill 72.

A. Motivations and Impacts of Senate Bill 72

Key motivations behind Bill 72 include: Colorado’s desire to improve its grid reliability and resilience; to save money and reduce electricity costs; and to reduce carbon emissions with transmission projects that match supply and demand across the region. This interregional coordination will “unlock” Colorado’s grid and connect it with the rest of the West. In short, because of the OWM mandate, Bill 72 will reshape how Colorado’s transmission utilities engage with wholesale energy markets in the West. At a minimum, Colorado will gain new access to renewable energy resources from the region, more transmission infrastructure focused on the regional energy market, and better reliability and resource adequacy in the state itself. This Subsection analyzes Bill 72’s motivations and expected impacts related to transmission infrastructure and system reliability, resource adequacy, Colorado’s climate goals, and, lastly, economic and cost saving considerations. First, this Subsection discusses regional and Colorado concerns with grid reliability and resilience and how the CETA will improve transmission planning to address these and other concerns.

1. Improving Grid Reliability and Resilience Through the CETA

Grid reliability (i.e., avoiding outages) and grid resilience concerns (i.e., the ability of the grid to withstand strain) require addressing the quality and amount of transmission in a service area.^[72] The concepts are related because poor grid resilience leads to reliability issues when there is an insufficient amount of transmission feeding a given load center. Therefore, as with the other motivations described below, the CETA’s newly enshrined transmission planning authority is key to addressing these issues in the West and Colorado.^[73] To tackle these important concerns head on, Bill 72 gives Colorado the opportunity to build more transmission infrastructure more quickly.

As an initial matter, the CETA is empowered to plan and coordinate transmission to address grid reliability within Colorado itself.^[74] Although the PUC currently requires Colorado’s utilities to undertake planning that addresses transmission bottlenecks (that can worsen grid strain), the CETA is the first governmental body narrowly dedicated to this task and other transmission mandates. Instead of relying only on IOUs to push for new transmission investments, the CETA is empowered to independently identify transmission-poor areas of the state and to facilitate the development of transmission in these areas, both through state and regional coordination and through its statutory eminent domain power.^[75] Additionally, CETA’s reduced regulatory oversight and significant power of eminent domain may speed up the approval process for transmission projects within the state—although it remains to be seen how much transparency and interest-group participation the CETA will seek to facilitate or how readily the CETA would lean into its eminent domain power.^[76] Likewise, the new standard of judicial review that includes consideration of “the transmission system as a whole, including . . . benefits occurring . . . at a regional level,” widens the range of acceptable justifications for new transmission projects and perhaps lowers a previous barrier to building beneficial infrastructure.^[77] Thus, Bill 72 and the CETA aim not only to increase transmission deployment but also to accelerate it.

As with many states, Colorado surely has transmission weaknesses that require investment and updating. A key example is the San Luis Valley transmission system, which serves customers in Saguache, Mineral, Rio Grande, Alamosa, Costilla, and Conejos counties.^[78] Because of the limited availability of lines in this system, a single line outage could result in widespread power loss across the region.^[79] As of 2020, efforts to evaluate transmission improvements in this area stalled before they even started: according to Xcel, the subcommittee assigned to the region concluded that “the potential costs, environmental impacts, and permitting and construction challenges . . . did not justify the effort required to model and analyze [the construction of new transmission lines across rugged mountainous regions].”^[80] Given the Valley’s location relative to New Mexico, it is possible that this area would be cited as a transmission corridor for development by the CETA.

Extreme weather events also exasperate transmission weaknesses. In addition to their vast destruction of homes and natural habitats in Colorado, forest fires have damaged or destroyed transmission infrastructure itself.^[81] For example, in 2018, a fire near Basalt damaged three of the four electricity lines feeding Aspen, nearly de-electrifying the area.^[82] This type of concern is particularly acute in Colorado, where a mountainous topography and frequent wildfires can easily lead to grid failure for isolated communities.^[83] Ideally, the CETA will increase transmission redundancy on a regional level, such that a single weather event would not wipe out the only transmission access routes in the state. Threats to Colorado’s grid are most acute in rural areas, but system reliability impacts all Coloradans.^[84]

And although discrete transmission-damaging weather events are, of course, devastating to system reliability, a 2016 study shows that the greatest outage impact on Colorado electricity customers between 1992 and 2009 came not from such weather events but instead from transmission line faults and overloads (perhaps due to poor grid resiliency).^[85] In particular, high-demand events (i.e., hot days) put additional strain on the grid, therefore increasing the likelihood of grid failure and power outages.^[86] As climate change fosters more intense and extended high-demand events, adequate transmission and centralized market management to optimize supply and demand across states will become even more important to avoid such outages.

Although the CETA’s independent focus on Colorado-specific transmission issues is important, regional coordination will also be key. In the past, such planning in Colorado has occurred largely without focus on interactions with other Western states.^[87] Soon, Colorado utilities and the CETA will make transmission-planning decisions in the context of such a multistate marketplace.

At the moment, the West relies on utilities and “merchant transmission developers,” who must secure both power suppliers and energy off-takers to earn revenue and take on the risk of building transmission across state borders.^[88] What is more, transmission-building utilities must gain approval from regulators in each state through which they pass, including approval for the costs that each state’s customers will bear as a result of the project.^[89] The CETA does not eliminate these concerns, but its consolidated authority will help to significantly streamline the approval process for new transmission and grid upgrades—namely, to address grid resilience (such as updating infrastructure to increase grid capacity) and reliability (such as through wire redundancy). Unlike the current amalgamation of merchant developers and utilities pursuing interstate development, the CETA can take a top-down approach to regional transmission planning.^[90] Hypothetically, the CETA could alleviate asymmetry of information issues between transmission developers and help reconcile different state needs and unique regulatory or geographic obstacles. And given the likelihood that non-Colorado transmission developers and utilities will want to build interstate transmission through the state, the CETA can now act as a central coordinator with the PUC and utilities across the West. In short, Bill 72 seeks to overcome both the interstate and Colorado-specific regulatory hurdles that accompany a fractured transmission planning regime.

On the other hand, a regional planning regime may leave cost-effective projects on the table that yield immediate benefits to Colorado.^[91] To the extent that resources are limited, state transmission projects that only alleviate bottlenecks and improve local reliability but do not necessarily facilitate regional electricity flow might get deprioritized compared to more regionally beneficial projects, at least on the margins. As the Colorado PUC has noted, “transmission expansion [e.g., in the SPP RTO] often depends on the resolution of difficult-to-solve regional cost allocation issues and other disputes among competing interests,” which presents a new barrier to transmission planning that does not currently exist in Colorado’s PUC-approval process for intrastate projects.^[92] Nonetheless, there will also be immediate benefits to the state because of centralized transmission planning.^[93]

Despite its regional focus, the CETA (and the OWM transmission operator) will likely improve Colorado’s grid infrastructure and address regional bottlenecks in the long run. Additionally, the CETA is empowered to identify both regional transmission corridors for interstate electricity transactions as well as areas of need for Colorado-specific projects.

2. Expanded Wholesale Generation Resource Base and Resource Adequacy

Another major motivation for Bill 72’s OWM mandate is to address electricity resource adequacy, or the concern that a dearth of generation leads to reliability issues or, at a minimum, higher electricity costs. Bill 72 helps address resource adequacy by “unlocking” Colorado’s grid and opening it to an expanded generation base, supported by power producers across the OWM. Built on new regional transmission infrastructure and managed centrally by the system operator, an OWM will serve as the basis for a broad marketplace connecting new supply resources and load centers with Colorado and states across the West.

As opposed to grid resilience and reliability, resource adequacy concerns the amount of generation supply a state has access to and how expensive it is to access that supply. States can address resource inadequacy either by building more generation within its borders or by purchasing it from generators outside the state.^[94] Bill 72 targets the latter by mandating that utilities join a marketplace where such wholesale transactions take place and by improving regional transmission planning to facilitate such transactions (i.e., connecting supply and demand).^[95] This second benefit is key because a state’s inability to generate its own electricity or rely on its own reserves during high-demand events will require it instead to reduce demand (voluntarily or involuntarily) or to rely on other states’ generation resources. If a state cannot easily and readily purchase electricity from another state (i.e., due to the lack of an established marketplace or limited interstate transmission infrastructure), electricity prices could skyrocket or grid managers could be forced to implement rolling blackouts (i.e., to shut off demand) to keep the grid in balance (regardless of the quality or amount of intra-state electricity transmission infrastructure).^[96]

For example, as one of Bill 72’s sponsors, State Senator Chris Hansen, has explained, the power outages on Texas’s grid in the winter of 2021 highlighted the risks of operating a relatively isolated electricity system.^[97] By opening Colorado’s grid to additional suppliers on the wholesale market, the new scheme may reduce the high costs of importing energy during high-demand events or, worse, during instances of generator failure. In Texas, key generators froze during abnormally cold weather in the South, and the isolated Electric Reliability Council of Texas system was left without alternatives to meet energy demand.^[98] During this same cold snap, Colorado faced lesser but similar issues, including the freezing of a wind farm in northern Colorado and the curtailment of natural gas for electricity to preserve fuel for residential heating.^[99]

But outside of life-threatening cold spells, resource inadequacy is particularly dire in Colorado during extensive drought.^[100] Specifically, projections from the Western Electricity Coordinating Council highlight that Colorado, Utah, California, and Arizona are extremely “import dependent” during cases of high demand and low-hydro supply (i.e., because of drought).^[101] Indeed, much of the West experienced low hydropower availability as a result of drought in the fall of 2021.^[102] Because climate change will worsen such scenarios (while also likely increasing demand for air conditioning), the ability to continuously match electricity supply and demand with low-cost generation resources is key to system reliability and cost efficiency.

In sum, a fully-optimized OWM would de-isolate Colorado such that generation resource adequacy is improved through access to an expanded base of assets across the region—a growing concern as climate change exasperates extreme weather events that both decrease supply (e.g., because of low-hydro) and increase demand (e.g., because of additional energy usage on hot days). However, even though an OWM will help address resource inadequacy by expanding Colorado’s access to generation, existing RTOs are not perfect and have encountered resource adequacy issues of their own during high-demand events.^[103] Ultimately, RTOs and OWMs are only as efficient as the quality and availability of their physical transmission assets and the rules that govern how supply assets are onboarded and matched with demand. But, assuming OWM participation will foster increased access to more and cheaper power supply, Colorado ratepayers and utilities alike will enjoy lower costs for electricity and greater system reliability.

3. Meeting Colorado’s Climate Goals

In addition to transmission planning and resource adequacy, Bill 72 will help Colorado meet its climate goals by securing better access to existing renewable energy capacity in other Western states and lowering transmission-access costs for new remote generation assets coming online. Per a state-led study (funded by the Department of Energy), a Western OWM, as compared to other wholesale market structures, most efficiently and cheaply integrates and dispatches “zero and low marginal cost resources” (i.e., wind and solar).^[104] Despite Colorado’s rich abundance of sun and wind potential, the impact of a regional OWM on renewable energy adoption will be significant: Unlike traditional fossil fuels, solar and wind resources are “non-dispatchable” (without sufficient storage), meaning they are only available for use when the sun is shining or the wind is blowing.^[105] Therefore, a regional OWM will allow Colorado to make use of these clean and cheap resources from other states, even when sufficient wind and solar is unavailable in Colorado itself. Even though solar and wind are among the cheapest resources available, Colorado can only utilize these resources to the extent they are available on the state’s grid.^[106] What is more, out-of-state clean energy might be cheaper, depending on the time of day: Colorado evening electricity demand, for example, could peak earlier than California, where solar is likely still abundant late into the workday afternoon. Thus, a regionally expansive OWM likely provides significant absorption opportunities between states with complementary supply and demand curves.

These are important considerations for a state such as Colorado that has an ambitious goal to cut carbon emissions from its generation fleet by eighty percent by 2030 and to eliminate all such carbon emissions by 2050; the ability to leverage renewable energy even when Colorado resources are unavailable will help meet these long-term targets.^[107] In the short to medium term, these cheaper and cleaner resources may accelerate Colorado’s transition away from often more expensive fossil fuels, such as coal.

In short, wind and solar are naturally cheaper resources but often harder to reach. Outside of day-to-day operations, an OWM structure not only increases the amount of renewable supply on the market but also lowers the barriers to entry for new “high-quality” renewable generation assets coming onto the grid.^[108] The reason is that the transmission component of an OWM structure helps connect remote supply areas (where wind and solar are often located) with key load centers (where energy customers live and work).^[109]

In addition to providing transmission between these areas, RTOs avoid a key issue with the currently fractured transmission ownership structure: “rate pancaking.”^[110] Because transmission owners charge an access fee for their lines, rates compile—or “pancake”—as remote generators look to supply far-away load centers.^[111] This dynamic poses a significant barrier for IPPs to send their electricity across state borders at a worthwhile profit because producers must pay for access to each individual merchant developer’s and utility’s transmission infrastructure. As noted by the PUC, the West is currently governed by “[thirty-eight] separate balancing authorities, individual utility transmission rates that pancake on top of each other, and contract path transmission approach that bear little relationship to actual energy flows.”^[112] A Western OWM should aim to address these issues—including consolidating balancing authorities into one regime—in order to best reduce costs currently associated with electricity distribution.^[113] By reducing costs, Coloradans will benefit not only from these savings but also from the lowered cost barriers that allow for more low or zero emissions assets to join the grid.

Despite the potentially vast availability of renewable resources in the West, Colorado still relies heavily on coal and natural gas: in June 2022, 1,860 thousand megawatt-hours (“MWh”) of Colorado’s net electricity generation came from coal-fired plants, whereas only 1,696 thousand MWh came from nonhydroelectric renewable sources.^[114] Although coal-powered generation has decreased significantly over the past decade, it remains a substantial part of Colorado’s utility-scale net electricity generation, ahead of natural gas-fired plants and the national average share of coal generation.^[115] Thus, Colorado stands to gain from the abundance of alternative resources available on an OWM.

Still, the state PUC has found that even without OWM participation, Colorado technically has enough wind and solar potential within the state to reach its eighty percent reduction target.^[116] Specifically, the PUC expects significant growth in Colorado’s wind, solar, and storage capacity and a significant decline in coal capacity by 2030.^[117] But
Bill 72 follows other even more ambitious state goals, including the one-hundred percent clean energy goal by 2050 and the ninety-percent economy-wide reduction goal by the same date.^[118] Additionally, despite the PUC’s current projections, a “deep decarbonization scenario,” which involves shifting new demand such as electric vehicle charging and building heating to the electricity grid, requires even more renewable energy capacity than what has been projected.^[119] In any event, renewable capacity within Colorado may not necessarily translate to electricity availability at all hours. With OWM participation, Colorado will no longer need to rely as heavily on its own renewable resources to meet demand in real time and ultimately address its climate goals.^[120] The OWM requirement is, therefore, an effort to reduce emissions by better integrating cheap renewable resources and matching them to demand, not only in Colorado but across the region and country.^[121]

4. Economic Motivations

In addition to the climate benefits, Colorado lawmakers expect Bill 72 to have beneficial economic returns in the form of decreased electricity rates for energy customers.^[122] The Colorado PUC estimates that participation in an OWM could save the state’s utilities up to $230 million annually, which amounts to about five percent of those utilities’ costs.^[123] The PUC further finds that any type of organized market (even one lacking a transmission-planning component) would result in increased savings compared to bilateral trading between utilities.^[124] Notably, the PUC suggests that similar cost savings are likely whether Colorado utilities join the CAISO or the SPP, or partner with neighboring states to create a new OWM.^[125] However, the more heavily integrated the market (i.e., with fully-realized transmission-planning and optimization overseen by the OWM) and the larger the market footprint (i.e., the higher the number of transmission and distribution utilities and independent power producers that participate in the market), the greater the savings for Colorado utilities and ratepayers.^[126]

The primary driver of these savings comes from reduced necessity for capital investment because the state can instead procure electricity supply from elsewhere in the OWM.^[127] In addition to potential long-term transmission fee savings, Colorado can, relatedly, derive savings from what the PUC calls “[r]esource optimization,” or day-to-day operational savings, which includes “short-term savings (intra-hour balancing), medium-term savings (day ahead unit commitment), and long-term savings (lower investment costs).”^[128] Although the PUC estimates that RTO participation will raise administrative costs to Colorado, the volume of savings is expected to far outweigh this consideration.^[129] Moreover, less conservative assumptions than used by the PUC would have included the added benefits of a fully-optimized transmission system and increased competition for the supply of ancillary electricity services to the state (such as emergency supply reserves).^[130] On the other side of the equation, to the extent that owners of resources such as solar or wind farms are unable to find “customers” when supply is abundant or demand is low, an OWM will ideally expand the potential market for these producers and help reduce curtailment, eschewing economic losses and providing the market with much needed clean energy resources.

Another related motivation for Colorado is that corporations care about a state’s climate progress and their ability to utilize renewable resources to meet their own corporate benchmarks. For example, the Renewable Energy Buyers Alliance, which includes seventy-seven Fortune 500 companies, has pushed for a West-wide RTO in the name of spurring renewables adoption across the region.^[131] The Alliance includes Google, which has committed to complete decarbonization of its energy consumption by 2030.^[132] Because Colorado is surrounded by other renewable-rich states, Bill 72 could attract companies who want to invest in and locate their business in states that will make it easier to fulfill corporate emissions goals.

Relatedly, Bill 72 gave Colorado lawmakers an opportunity to act as “first movers” in the West, alongside Nevada. Several other states, including Utah, Oregon, Washington, Idaho, and Montana, have considered joining a regional OWM.^[133] But Colorado and Nevada are the first to unequivocally act, and Xcel is leading a group of utilities across the region in evaluating the benefits of market coordination.^[134] In addition to the potential economic benefits that will result from drawing cheap renewable energy to the state, Colorado now enjoys the status of being seen as an active leader of the regional market movement and of the efficient distribution of clean energy resources.

In sum, the reputational and economic benefits of joining an OWM are sizable, primarily because the costs savings from an optimized regional market are expected to be significant.^[135] Moreover, Colorado’s participation in a regional OWM improves the ability or at least signals the opportunity for corporations to meet their climate goals by investing in the state.

Because of the benefits to be gained in terms of system reliability, resource adequacy, climate goals, and economic savings and incentives, stakeholders have mostly applauded Bill 72, albeit with reservations. Specifically, some stakeholders are concerned Bill 72 duplicates existing efforts and alters a regulatory regime that in many ways adequately addresses Colorado’s intrastate transmission needs. This Note will now analyze both Xcel’s and the PUC’s response to Bill 72, including their ultimate support for the OWM requirement.

B. Key Stakeholder Responses

1. Xcel’s Pre-Bill 72 Progress and Response to Proposed Legislation

Although Xcel is now supportive, the IOU initially expressed concern over Bill 72, even as late as March 2021, a few months before the Bill’s enactment.^[136] In particular, Xcel feared that the creation of a new independent transmission authority would duplicate an existing “well-established and transparent process,” skirt regulatory oversight by the PUC, and increase costs for Xcel customers.^[137] Xcel noted that it was already operating in a capacity similar to the CETA and feared that the new law would add unnecessary bureaucracy and regulation to the existing process, distracting from the utility’s decarbonization and transmission building efforts.^[138]

On this point, Xcel had previously put forth its own $1.7 billion plan to address the transmission and renewables concerns motivating Bill 72.^[139] For example, Xcel’s own plan proposed 560 new miles of transmission infrastructure in rural areas of Colorado.^[140] In addition, Xcel, Black Hills Energy, and other Colorado electric utilities signed an implementation agreement to join the CAISO’s Western Energy Imbalance Market in 2022 and announced plans to join the SPP Western Energy Imbalance Service Market in April 2023.^[141] Although these EIMs lack “the full range of day-ahead energy trading or transmission planning coordination” that OWMs can offer, EIMs can increase the opportunity to trade wind and solar that “would have otherwise been curtailed due to lack of demand to absorb.”^[142] This consideration is particularly relevant for Colorado, which ranked seventh in installed wind power capacity in the United States in 2020.^[143]

Xcel’s own electric resource plan (submitted to the Colorado PUC in March 2021, not long before Bill 72) aims to cut carbon emissions by eighty-five percent by 2030 and includes significant additional generation from renewables, including wind and solar.^[144] In fact, Xcel was the first electric utility in the nation to set a complete decarbonization goal (by 2050).^[145] Despite this commitment by Xcel and utilities across the country, a 2021 global study by the World Benchmarking Alliance indicates that global electric utilities, including Xcel, are falling short of their own decarbonization goals.^[146] Xcel, for its part, holds that its internal studies suggest they are on track with decarbonization goals to keep warming below 1.5 degrees Celsius.^[147] Moreover, Xcel has accelerated plans to retire its entire coal fleet by the end of 2031.^[148] Thus, it is possible that Xcel is outperforming other global utilities in this respect.

Since Bill 72 became law, Xcel has publicly supported and stated that Bill 72 provides “a robust framework for evaluating market options.”^[149] Although it is unclear what changes to the final version of Bill 72 precipitated Xcel’s ultimate support, the benefits to the utility are surely numerous. For one, other out-of-state utilities want to coordinate on participation in a Western RTO, therefore increasing the likelihood of success and reaping benefits above and beyond Xcel’s existing transmission and decarbonization plans.^[150] Moreover, despite “deregulation” at the wholesale level, nothing in Bill 72 indicates that anything would change Xcel’s regulated monopoly on retail markets in its service area. As outlined above, wholesale competition will help Xcel keep its electricity costs down as well: although Xcel would typically pass unexpected costs along to its ratepayers, a well-functioning market would likely lessen the chance that Xcel would have to purchase wholesale electricity at an exorbitant cost and justify its rate increases to the PUC.

In terms of transmission, Bill 72 could be a mixed bag for Xcel and Colorado’s other incumbent utilities. On one hand, the creation of the CETA will relieve Xcel of much of its planning and execution burden, particularly as it relates to regional benefits, which state transmission utilities may not be able to easily evaluate compared to an independent authority dedicated to this purpose. On the other hand, the CETA is another regulatory body under which Xcel must coordinate new transmission projects. And although Xcel and other transmission utilities would receive a guaranteed return on transmission investments, it is possible that the increased supply provided by a wholesale market may decrease the necessity of capital investment in generation assets, on which electric utilities have also historically gained a rate of return in Colorado.

In short, Xcel has recognized the benefits and cost savings to be gained from OWM participation but has noted its fears about unnecessarily duplicating transmission and decarbonization planning efforts. Further, many of the cost savings to be reaped will be due to the foregone capital investments in generation from which Xcel formerly would have gained a guaranteed rate of return.

2. Colorado PUC Response

The Colorado PUC has similarly supported the OWM requirement but has enumerated a series of concerns and drawbacks. One concern in the immediate fallout of Bill 72 is whether statutory mandates, such as emissions reduction targets and economic responsibility guidelines imposed on state utilities and the PUC, will be helped, hindered, or pushed aside by the 2021 legislation. At least according to the PUC, “enhanced regional market coordination could significantly help Colorado achieve [emission reduction target] goals” in the long term.^[151] However, as noted below, the PUC has identified specific issues related to the governance structure of existing OWMs that may complicate this progress. For example, although RTOs provide emission tracking mechanisms for market participants, the method in which RTOs track and attribute emissions to each market participant may differ significantly from how Colorado currently tracks this information. Moreover, deregulation at the wholesale level will inherently loosen the PUC’s control over some electricity rates, which will instead be subject to the efficiency and regulation of the OWM and FERC. Lastly, as described above, an RTO’s transmission-planning scheme may deprioritize otherwise beneficial and cost-effective projects for Colorado.^[152] Although an OWM will ideally help the state realize savings and meet its climate goals, the PUC perhaps rightly highlights the risks and uncertainty associated with loss of state control over important aspects of Colorado’s electricity market.

Nonetheless, the PUC has endorsed a position of consolidation in the West and sees benefits to immediate regional coordination (even in market structures lacking a transmission-planning component) because such coordination can “de-pancake transmission rates, . . . shift toward flow-based transmission approaches, and . . . optimize short-term intra-state dispatch in Colorado.”^[153] To help protect the Colorado public interest during the inevitable regulatory hand-off to a regional entity at the end of the decade or sooner, the PUC will also initiate a rulemaking proceeding in 2022 to make sure protections are in place for Coloradans.^[154] Thus, despite its concerns about changing the existing regulatory framework, the PUC has recognized the benefits of an OWM and is actively facilitating the state’s transition to that system.

III. Potential OWM Targets and Western Progress on OWM Participation

Although OWM participation stands to benefit Colorado, the characteristics of that OWM will surely impact how great the benefits will be. In addition to the regulatory structure and renewables makeup of such an OWM, the footprint of the marketplace will likely impact the potential effectiveness and efficiency of the marketplace. Although each target OWM has its own drawbacks, Colorado and the West have realistic options. Perhaps no Western state (besides California and Nevada) has made as much progress towards OWM participation as Colorado, but recent activity from neighboring states supports a promising outlook for West-wide coordination on a wholesale market. This Section analyzes the most likely OWM targets for Colorado and the progress made so far in the West.

A. Overview and Potential OWM Targets: CAISO, SPP, or a new West-wide RTO

As of 2022, there are no true multistate OWMs on the Western Interconnection, although CAISO operates within California (and a small part of Nevada) and the nearby SPP operates across the middle-United States on the Eastern Interconnection.^[155] Behind the momentum of Bill 72, it is possible that existing markets in the West will expand their services to accommodate transmission planning or that Colorado and other states will choose, instead, to create a new OWM in the West, despite past failures to do so.^[156]

CAISO is one of the key potential OWM targets for Colorado utilities. CAISO currently provides transmission planning within California and operates broader EIMs across much of the West.^[157] Given Xcel’s active participation in these markets, CAISO perhaps represents the fastest path to OWM participation in the West (although Xcel has also agreed to participate in SPP’s equivalent market, starting in 2023). Furthermore, CAISO has the only real track record of managing a large regional market for an extended period of time, with more active participants than any other similar market in the West.^[158] However, as it stands, CAISO’s board is appointed by California’s Governor and is confirmed by the State Senate: if CAISO were to become a regional OWM, it would have to change its governance structure to facilitate participation by non-Californian utilities and independent power producers.^[159]

The SPP provides another potential OWM home for Colorado transmission utilities. At the moment, Colorado Springs Utilities, which participates in the SPP Western Energy Imbalance Service Market, is also evaluating whether to join the SPP RTO.^[160] The Colorado PUC has also highlighted benefits of the SPP RTO over CAISO, including that the SPP gives states more “control over resource planning and acquisition.”^[161] However, the Colorado PUC has critiqued the SPP RTO for its “less open” and less inclusive decision-making process (compared to Colorado’s existing procedures for onboarding new generation assets) and has cited concerns that regional entity interests in the SPP “may not fundamentally align with Colorado’s statutorily mandated economic and environmental goals.”^[162] What is more, the SPP RTO allocates transmission costs based on load: given Colorado’s relatively high energy demand, the state may face higher transmission costs compared to other SPP RTO participant states, even for projects that only indirectly benefit Colorado.^[163] In other words, future transmission benefits may “accrue unevenly” among states and yet Colorado could face higher costs regardless.^[164] In addition to these cost allocation concerns, because of the SPP’s state-driven governance structure, new state entrants may be generally disadvantaged in terms of important RTO decision-making, relative to incumbent participants.^[165]

Lastly and perhaps most importantly, with its current energy makeup, the SPP may not actually improve Colorado’s ability to address climate goals in the short term: although (as of the end of 2021) wind power accounts for 34.6% of the SPP’s energy production, coal still leads as the primary production source on the RTO at 35.6%.^[166] Despite these issues and the fact that Xcel previously declined to participate in the SPP EIM in favor of CAISO’s equivalent option, the IOU has since agreed to join the SPP EIM in 2023.^[167] Thus, SPP remains a possible OWM target for Colorado transmission utilities.

Federal and state actors have also supported the creation of a new West-wide RTO, which the Department of Energy estimates could save customers nearly $2 billion by 2030 through increased state coordination and system reliability.^[168] Indeed, Western utilities, led by Xcel and utilities in Utah, Arizona, Nevada, Idaho, Washington, and Oregon, have banded together to create the Western Markets Exploratory Group, whose purpose is to informally coordinate on assessments of new market services and market efficiencies in the region (i.e., those resulting from Bill 72).^[169] Together, the members of the exploratory group control about sixty gigawatts of electricity demand in the West.^[170] Consequently, these utilities could form a highly impactful OWM in their own right. Of course, creating a new OWM might pose additional costs (compared to joining an existing RTO) and would deprive the market of the load centers and solar resources in California and the wind resources on the SPP. Therefore, states and utilities would need to weigh the benefits of establishing their preferred market structure and regulatory scheme against the forgone advantages of linking up with renewables supply and market demand on the CAISO and the SPP.

In short, it is not yet clear which OWM Xcel and other utilities will join—or even which they prefer. But it is possible that Xcel’s decision will weigh heavily on the decision-making of other large utilities in the West, given the potential efficiencies gained through consolidated participation in a single OWM rather than several. There are governance drawbacks with existing RTOs but the most important factor for success will be the size of the market footprint or, in other words, the number of participating states and utilities. Promisingly, other Western states have made progress along these lines, as well.

B. OWM Progress by Western States: Nevada, Utah, and California

Outside of Colorado, Nevada has made the most advancement towards participation in an OWM. In the summer of 2021, Nevada passed legislation similar to Bill 72 that also requires the state’s utilities to join an RTO by 2030.^[171] The Nevada bill (Senate Bill 448) was largely motivated by the state’s goal of deriving 100 percent of its energy from carbon-free resources by 2050.^[172] The bill seeks to address local transmission constraints, both through a 2030 OWM requirement and by legislatively backing a major transmission project, planned to connect population hubs in Nevada.^[173] To this end, Nevada’s Governor has also initiated a task force to evaluate the costs and benefits of participating in an RTO.^[174]

Like Colorado, Nevada is eager to accelerate its renewable energy adoption. Recently, NV Energy lost key electricity customers such as MGM Resorts, who paid the Nevada utility to exit its service in 2016 and procure power from independent generators—namely, renewable energy generators.^[175] NV Energy is one of the utilities participating in the Western Markets Exploratory Group with Xcel, and coordination therefore appears promising between Nevada and Colorado.^[176]

Unlike Nevada and Colorado, Utah has not yet passed legislation mandating OWM participation, although the state has led studies to explore the benefits and impact of OWM participation. Specifically, Utah’s Office of Energy Development estimates that a West-wide RTO including Utah’s electric utilities (i.e., Rocky Mountain Power) would produce three times the cost-saving benefits that participation in a day-ahead market would (with the same footprint).^[177] Moreover, in early 2022, the Utah legislature proposed legislation to direct the state’s Public Service Commission to conduct a similar study with respect to RTO participation.^[178] Perhaps most importantly, along with Colorado and Nevada utilities, PacifiCorp (the parent company of Utah’s largest electric utility) also joined the exploratory group evaluating expanded market services.^[179] Utah has therefore implicitly acknowledged the benefits to be reaped from participation in a market that includes a transmission-planning component.

In comparison, California has opted for a more incremental approach, focusing on expanding CAISO rather than pushing to create a West-wide RTO.^[180] Part of the state’s past hesitation stemmed from a fear of losing control of governance, procurement, and transmission decisions; such concerns apparently stifled legislative efforts to open up CAISO as a West-wide RTO option in 2017.^[181] Nonetheless, CAISO’s Western Energy Imbalance Market has a made major impact on the region, helping to consolidate and optimize eighty-four percent of load and create $1.72 billion in savings from 2011 to 2021.^[182] Additionally, given SPP’s EIM expansion in 2021, CAISO may be motivated to solidify its foothold in the region by expanding its market capabilities into a fully regional RTO.^[183] Indeed, CAISO has started planning an “interim day-ahead market[],” perhaps signaling preparation to eventually propose a West-wide RTO.^[184] Whether CAISO is open to governance changes for this proposed day-ahead market or not will further indicate whether the system operator has similar openness to becoming the Western RTO option.

IV. Potential Drawbacks and Shortcomings of Senate Bill 72

If the “new” OWM works as expected, utilities and ratepayers alike will reap cost savings from increased market efficiency and the state will be able to better integrate renewable energy onto its grid. But a few key challenges, drawbacks, and uncertainties remain. In addition to the potential loss of some beneficial state autonomy, existing RTOs may not address all concerns related to electricity markets nor operate as efficiently as one would hope.^[185] This Section summarizes the potential drawbacks related to Bill 72.

A. Existing Barriers to Transmission Buildout Will Continue

First, despite the creation of the CETA, transmission construction remains a challenge, requiring both local and state approval, albeit on statutorily backed deadlines.^[186] Although planning (and judicial review) will now consider benefits from the transmission system as a whole, the realities of working with local actors when building physical systems continue.^[187] Relevantly, one of the last changes to Bill 72 included modifying the language such that the Colorado PUC was no longer mandated to approve transmission projects but merely empowered to do so.^[188] In other words, the PUC fully retains its authority to strike down or modify transmission proposals, all other legal requirements satisfied. Despite the gains that might be realized from an increased market footprint and more centralized planning, roadblocks to transmission planning can still disrupt efficient market operation.^[189]

Furthermore, because a regional RTO would prioritize regional transmission needs over individual state needs, it is possible that cost-effective albeit smaller Colorado transmission projects will be left unbuilt as the CETA prioritizes other projects with more regional benefits.^[190] This outcome is perhaps better for the region and Colorado in the long run but not necessarily a transmission boon to the state in the medium term. Despite this concern, the CETA is empowered to “engage in other transmission planning activities that would increase grid reliability,” seemingly allowing the CETA to spearhead projects with benefits to Colorado only and not necessarily the region as a whole.^[191] Regardless, the clear overarching purpose of Bill 72 is regional coordination, and even in the name of that goal, the creation of the CETA does not completely streamline transmission planning. Thus, Bill 72 does not necessarily fully address existing hurdles but potentially creates new ones related to Colorado’s intrastate priorities.

B. Loss of Local Price Signals

Along these same lines, one potential trade-off to increased market efficiency is that the state will lose a valuable market signal in the form of “locational marginal prices,” which help show transmission utilities and the PUC where new investments are needed (to alleviate bottlenecks) and where reliability is a concern.^[192] Higher prices typically “signal” to the utility that demand is high, congestion is high, supply is low, or all three. Hypothetically, depressed prices for wholesale electricity resulting from OWM competition between regional power suppliers could discourage capital investment where it is locally needed in Colorado.^[193] Of course, this model is based on local transmission concerns within the state and does not account for similar pricing signals across the region that will result in new transmission in Colorado. Therefore, it is possible Colorado will lose a valuable local price signal but gain a regional one.

C. Dependency on Market Footprint and the OWM Opt-Out Provision

Additionally, Bill 72 does not mandate that Colorado utilities—not to mention out-of-state utilities—join the same OWM. The benefits differ substantially between a scenario where utilities across the West join a single OWM versus multiple.^[194] Although the bill mandates that any OWM must be “of sufficient scope or otherwise operate[] to substantially increase economical supply options for customers,” nothing guarantees that all Western utilities will move in the same direction, particularly given that both SPP and CAISO could expand RTOs and perhaps divide the market base.^[195] Moreover, although multiple studies show that wholesale market participation lowers costs by improving regional efficiency of electricity distribution and new asset onboarding, the efficiency of such an OWM rests heavily on whether transmission location is based on actual energy “flow” and whether the OWM is given sufficient authority to remove issues with transmission fee pancaking.^[196] It will be difficult to overcome these issues if transmission control and EIM participation remain fractured throughout the region. Even now, Colorado utilities participate in different EIMs.^[197]

What is more, Colorado utilities are allowed by statute to apply for waiver or delay of the OWM requirement if the PUC finds that the utility “has made all reasonable efforts to comply with the requirement but there is no viable and available OWM.”^[198] In short, the quality of existing RTOs could be a barrier to adequate wholesale market consolidation in the West. Even beyond “quality,” existing markets such as CAISO may not lend themselves to easily absorbing new participants because of their state-dependent governance structures. The Colorado PUC has gone as far as stating that “the risk exists that CAISO could protect California’s parochial interests at the expense of what is best for the region.”^[199] For example, California has recently faced worsening resource adequacy issues (e.g. from drought causing lower hydropower availability), and the Colorado PUC fears that California would thus push for transmission projects addressing these concerns at the expense of regional electricity flow.^[200] Both sides must overcome these concerns if CAISO is to become the RTO of the West.

D. Loss of Regulatory Autonomy

Of course, Colorado will lose some regulatory authority around transmission planning when a full-service Western RTO becomes the norm, at least in terms of the day-to-day operation and control of corridor and interconnection decisions. The Colorado PUC has warned that RTO participation can lead to states having a “reduced role in resource planning, accounting for greenhouse gas emissions across a region with varying environmental objectives and the management of transmission interconnection queues.”^[201] Per the PUC, “RTOs and ISOs have some structure to receive input from states . . . [but] the purpose of RTOs is not to address state concerns and implement state policy” because RTOs instead serve overall market efficiency and social welfare.^[202] For example, Colorado utilizes an interconnection system which awards grid interconnection to the lowest bid generator, which the state can then pair directly with load customers.^[203] Although a new regional RTO could adopt this lowest-cost interconnection practice, current RTOs such as the SPP do not necessarily take this approach and face long interconnection queues as a result.^[204] The “worst case scenario” of these queues is that cleaner, lower cost resources like wind and solar would come online more slowly in the SPP process than in Colorado’s current process.^[205]

Despite the potential pitfalls, RTOs are ultimately “beholden to transmission owners,” such as the legacy transmission utilities across the West.^[206] The perceived medium-term barriers to a successful OWM transition should not deter other states from following Colorado down the OWM path. If other states join the Colorado Senate by grasping the long-term benefits to be had for the whole region and each state individually, the West can modify an existing market or create a new Western RTO that anticipates and addresses these potential drawbacks and results in beneficial savings, reliability, and climate outcomes for all participants.

Conclusion

Wherever Xcel and other Colorado transmission utilities end up on OWM participation, Bill 72 spells a significant shift in how the state and likely the entire West will participate in wholesale energy markets. Although there are surely shortcomings and risks with existing RTOs, a fully optimized OWM will bring great benefits to Colorado and the region, including improved transmission planning and system reliability, better resource adequacy, increased access to carbon-free energy resources, and great cost savings and other economic benefits. Importantly, Bill 72 does not merely mandate OWM participation, but also creates the CETA, which may help optimize transmission planning and address hurdles to regional electricity coordination. Although there remains much uncertainty and work to be done, Bill 72 provides a foundation for success and signals to the rest of the region that Colorado is ready to lead on regional wholesale coordination.

1. *University of Colorado Law School (J.D., Expected 2023). B.A. International Relations, Minor: Economics, The College of William and Mary (2013). I would like to thank the entire Colorado Environmental Law Journal staff for their efforts in making this work and the entire volume possible. I would also like to thank my wife, Jo, for her endless support during the writing of this piece and throughout my time at the University of Colorado. ↑
2. S.B. 72, 2021 Leg., Reg. Sess. (Colo. 2021) ↑
3. Colo. Rev. Stat. § 40-5-108(1)(a) (2022) (emphasis added). ↑
4. S.B. 72, 2021 Leg., Reg. Sess. (Colo. 2021). ↑
5. Kathryne Cleary & Karen Palmer, US Electricity Markets 101, Res. for the Future (Mar. 3, 2020), https://www.rff.org/publications/explainers/us-electricity-markets -101/. “Load-serving entities” is the industry term for electricity providers (namely, electric utilities) that supply electricity directly to end-customers, such as residences and businesses. The electricity “load” on the grid represents the demand for electricity. See id. ↑
6. See § 40-5-108(1)(a). ↑
7. Cleary & Palmer, supra note 4. ↑
8. Id. ↑
9. Id.; Electric Utilities, Colo. Energy Off., https://energyoffice.colorado.gov /electric-utilities (last visited Apr. 2, 2022). ↑
10. Cleary & Palmer, supra note 4. ↑
11. Colo. Pub. Utils. Comm’n, Electric Retail Rate Survey Report 7 (2021). ↑
12. Cleary & Palmer, supra note 4. This process is known as “cost-of-service ratemaking.” Dep’t of Energy, Quadrennial Energy Review: Transforming the Nation’s Electricity System 138­–39 (2017), https://www.energy.gov/sites/prod/files/ 2017/02/f34/Quadrennial%20Energy%20Review—Second%20Installment%20%28Full %20Report%29.pdf. Per Xcel’s annual report: “Rates are designed to recover plant investment, operating costs and an allowed return on investment.” Xcel Energy, 2020 Annual Report 26. The PUC notes that “[t]he regulated monopoly creates a tension between the profit maximizing motive of utility companies and utility shareholders on the one hand and price fairness to customers on the other hand.” Colo. Pub. Utils. Comm’n, Electric Retail Rate Survey Report 7 (2021). ↑
13. Understanding Electricity Market Frameworks & Policies, U.S. Env’t Prot. Agency, https://www.epa.gov/repowertoolbox/understanding-electricity-market-framew orks-policies (last visited Apr. 2, 2022); Cleary & Palmer, supra note 4. ↑
14. Understanding Electricity Market Frameworks & Policies, U.S. Env’t Prot. Agency, https://www.epa.gov/repowertoolbox/understanding-electricity-market-framew orks-policies (last visited Apr. 2, 2022). ↑
15. Dep’t of Energy, Quadrennial Energy Review: Transforming the Nation’s Electricity System 151, 469 (2017), https://www.energy.gov/sites/prod/files/2017/ 02/f34/Quadrennial%20Energy%20Review—Second%20Installment%20%28Full%20 Report%29.pdf. ↑
16. Id. ↑
17. See Electric Power Markets, Fed. Energy Regul. Comm’n, https://www .ferc.gov/electric-power-markets (last updated July 20, 2021). ↑
18. The PJM Regional Transmission Organization includes Pennsylvania, New Jersey, and Maryland as well as several other states, such as Illinois, Indiana, Michigan, North Carolina, Ohio, Delaware, Virginia, Tennessee, West Virginia, and the District of Columbia. Who We Are, PJM, https://www.pjm.com/about-pjm/who-we-are.aspx (last visited Apr. 2, 2022); see Dep’t of Energy, Quadrennial Energy Review: Transforming the Nation’s Electricity System 469 (2017), https://www.energy .gov/sites/prod/files/2017/02/f34/Quadrennial%20Energy%20ReviewSecond%20Installment%20%28Full%20Report%29.pdf. ↑
19. Cleary & Palmer, supra note 4; Travis Kavulla, R Street, Problems in Electricity Market Governance: An Assessment 2–3 (2019), https://www.rstreet.org/ wp-content/uploads/2019/08/FINAL-RSTREET180.pdf; Electric Power Markets, Fed. Energy Regul. Comm’n, https://www.ferc.gov/electric-power-markets (last updated July 20, 2021) (“The ISOs and RTOs use bid-based markets to determine economic dispatch.”). ↑
20. Cleary & Palmer, supra note 4. ↑
21. Id. ↑
22. See Electric Power Markets, Fed. Energy Regul. Comm’n, https://www.ferc .gov/electric-power-marketslast updated July 20, 2021). ↑
23. See id. ↑
24. RTOs and ISOs, Fed. Energy Regul. Comm’n, https://www.ferc.gov /electric/power-sales-and-markets/rtos-and-isos (last updated May 3, 2022). ↑
25. Ethan Howland, Boosting transmission between East, West grids will lower costs: NREL, Util. Dive (Oct. 19, 2021), https://www.utilitydive.com/news/transmission-east-west-seams-grids-lowers-costs-nrel-wind-solar/608475/. ↑
26. Id.; Colo. Pub. Utils. Comm’n, Colorado Transmission Coordination Act: Investigation of Wholesale Market Alternatives for the State of Colorado 9 (2021), https://www.ourenergypolicy.org/wp-content/uploads/2021/12/C21-0755A_19M-0495E1.pdf [hereinafter Wholesale Market Alternatives Investigation]. ↑
27. Electric Power Markets, Fed. Energy Regul. Comm’n, https://www. ferc.gov/ electric-power-markets (last updated July 20, 2021). ↑
28. See Herman K. Trabish, Changing climate and electricity mix renew region-wide power market ambitions for the ‘Wild West’, Util. Dive (Nov. 15, 2021), https:// www.utilitydive.com/news/changing-climate-and-electricity-mix-renew-region-wide-power-market-ambitio/608792/. ↑
29. Wholesale Market Alternatives Investigation, supra note 25, at 9. Such control is purely functional; OWMs do not actually own the transmission facilities themselves. Nonetheless, system operators of OWMs are key in optimizing existing transmission use across the market and for coordinating transmission planning. ↑
30. Electricity Explained: Electricity Generation, Capacity, and Sales in the United States, U.S. Energy Info. Admin., https://www.eia.gov/energyexplained/electricity/ electricity-in-the-us-generation-capacity-and-sales.php (last updated July 15, 2022). ↑
31. Utah Off. of Energy Dev., State-Led Market Study Stakeholder Meeting – Q2 2021 12 (2021), https://legacy-assets.eenews.net/open_files/assets/2021/06/29/doc ument_ew_02.pdf. ↑
32. S.B. 72, 2021 Leg., Reg. Sess. (Colo. 2021). ↑
33. Colo. Rev. Stat. § 40-5-108(1)(a). ↑
34. S.B. 72, 2021 Leg., Reg. Sess. (Colo. 2021). ↑
35. Electric Utilities, Colo. Energy Off., https://energyoffice.colorado.gov/electric-utilities (last visited Aug. 14, 2022). ↑
36. Electric Retail Rate Survey Report, supra note 10 at 7. Xcel also serves neighboring states through the West and Midwest. Xcel Energy, 2020 Annual Report (2020) 3. ↑
37. Electric Retail Rate Survey Report, supra note 10, at 2, 8–9. ↑
38. Id. at 7. ↑
39. See Emma Penrod, Colorado legislators direct all transmission utilities to join an organized wholesale market by 2030, Util. Dive (June 8, 2021), https://www. utilitydive.com/news/colorado-legislators-direct-all-transmission-utilities-to-join-an-organized/601423/; Trabish, supra note 27; Jeff St. John, Growing Energy Markets: Southwest Power Pool Expands Day-Ahead Trading to the West, Greentech Media (Feb. 1, 2021), https://www.greentechmedia.com/articles/read/growing-energy-markets-southw est-power-pool-expands-day-ahead-trading-to-the-west. ↑
40. Hank Lacey, Senate Bill Could Spur Power Grid Construction, Law Wk. Colo. (Apr. 13, 2021) https://www.lawweekcolorado.com/article/senate-bill-could-spur-power-grid-construction/. ↑
41. California operates its own ISO system within the state that includes transmission planning. While this ISO also manages wholesale services outside of California, these EIMs lack a regional transmission-planning component. See Cal. ISO, The ISO Grid, http://www.caiso.com/about/Pages/OurBusiness/The-ISO-grid.aspx (last visited Sept. 22, 2022). ↑
42. Ethan Howland, Renewables groups back call for Colorado regional transmission organization, CQ Roll Call (Mar. 18, 2021); Trabish, supra note 27. ↑
43. Cleary & Palmer, supra note 4. ↑
44. St. John, supra note 38. ↑
45. Jennifer E. Gardner, Overview of Regional Market Development in the Western Interconnection 1 (2019). ↑
46. Id. ↑
47. See Jason Plautz, Nevada passes clean energy bill requiring state to join RTO, accelerating $2B transmission project, Util. Dive (June 2, 2021) https://www.ut ilitydive.com/news/nevada-passes-clean-energy-bill-requiring-state-to-join-rto-accelerati ng/601106/; Nev. Rev. Stat. Ann. § 704.79886 (2021). ↑
48. Colo. Rev. Stat. § 40-5-108(2)(a)(I). ↑
49. § 40-42-103. ↑
50. §§ 40-5-108(1)(b), (2)(a). ↑
51. § 40-5-108(1)(a). ↑
52. §§ 40-5-108(1)(a)(II), (VI). ↑
53. § 40-5-108(1)(a)(V). ↑
54. § 40-5-108(1)(a)(IV). ↑
55. § 40-5-108(2)(a)(II)(A). ↑
56. § 40-5-108(2)(a)(II)(B). ↑
57. § 40-5-108(3)(a). ↑
58. SB21-072: Public Utilities Commision Modernize Electric Transmission Infrastructure, Colo. Gen. Assembly, https://leg.colorado.gov/bills/sb21-072 (last visited Sept. 3, 2022). ↑
59. Id. ↑
60. Sharon Dunn, Senate Bill 72 met with mixed reviews, Empowering Colo. (Mar. 21, 2021), https://empoweringcolorado.org/2021/03/21/senate-bill-mixed-reviews/. ↑
61. Colo. Rev. Stat. §§ 40-42-104(1)(n), (m) (2022). ↑
62. § 40-42-104(1)(p). ↑
63. § 40-42-104(5)(a). ↑
64. Colo. Rev. Stat. § 38-5-104(1) (2022). ↑
65. Colo. Energy Off., 2021 Legislative Session Snapshot 7 (2021). https:// drive.google.com/file/d/1s7XrnqRVxjSALzBWP2ldaVVZWv_qCIe0/view. ↑
66. See § 40-42-104(4). ↑
67. Id. ↑
68. See § 40-42-103(4); SB21-072: Public Utilities Commision Modernize Electric Transmission Infrastructure, Colo. Gen. Assembly, https://leg .colorado.gov/bills/sb21-072 (last visited Apr. 2, 2022). ↑
69. § 40-42-103(4); SB21-072: Public Utilities Commision Modernize Electric Transmission Infrastructure, Colo. Gen. Assembly, https://leg.colorado.gov/bills/sb21-072 (last visited Apr. 2, 2022). ↑
70. Colo. Rev. Stat. § 40-2-126 (2022); Colo. Rev. Stat. § 24-65.1-501(2)(d) (2022). ↑
71. Lacey, supra note 39. The CETA’s powers of authority will be vested in a nine-member board, which includes the director of the Colorado energy office or a designee within that office, as well as additional members appointed by the Colorado Governor, the speaker of the state house of representatives, and the president of the state senate. Board members must meet certain expertise qualifications (e.g., demonstrated experience in renewable energy development) and represent certain interests (e.g., organized labor). § 40-42-103(2). ↑
72. JD Taft, Electric Grid Resilience and Reliability for Grid Architecture 3 (2018), https://gridarchitecture.pnnl.gov/media/advanced/Electric_Grid_Resilience_and _Reliability_v4.pdf. ↑
73. Bill 72 also “requires” that a target OWM would “[i]mprove[], to the extent reasonably possible, service reliability within Colorado.” § 40-5-108(1). ↑
74. Colo. Energy Off., 2021 Legislative Session Snapshot 7 (2021); § 40-42-104(1)(n). ↑
75. Kim Riley, Xcel Energy cites concerns about higher costs for customers under proposed Colorado RTO, Daily Energy Insider, https://dailyenergyinsider.com/featured /29783-xcel-energy-cites-concerns-about-higher-costs-for-customers-under-proposed-colorado-rto/?amp (last visited Sept. 2, 2022); Colo. Rev. Stat. § 40-42-104(1)(p). ↑
76. See § 40-42-104. ↑
77. Colo. Rev. Stat. § 38-5-104(1). ↑
78. Xcel Energy et al., 10-Year Transmission Plan for the State of Colorado 113–14 (2020), https://www.transmission.xcelenergy.com/staticfiles/microsites/Trans mission/Files/PDF/Planning/PSCO/2020-PSCO-10-Year-Report.pdf. ↑
79. Id. ↑
80. Id. at 114. ↑
81. Sam Brasch & Miguel Otárola, The Cold Isn’t The Biggest Threat To Colorado’s Power Grid – Other Climate Disasters Might Be, CPR News (Feb. 20, 2021), https:// www.cpr.org/2021/02/20/the-cold-isnt-the-biggest-threat-to-colorados-power-grid-other-climate-disasters-might-be/. ↑
82. Id. ↑
83. Id. ↑
84. Xcel, supra note 77, at 113. ↑
85. U.S. Dep’t of Energy, State of Colorado Energy Sector Risk Profile 3 (2016). ↑
86. Brasch & Otárola, supra note 80. ↑
87. See, e.g., Xcel, supra note 77. ↑
88. Jeff St. John, Western states look to regional transmission organizations to boost clean energy’s pathways to market, Canary Media (June 3, 2021), https://www .canarymedia.com/articles/transmission/western-states-look-to-regional-transmission-markets-to-boost-clean-energy-and-expand-grid-reliability. ↑
89. Id. ↑
90. Ideally, other estern states will create authorities like the CETA to streamline transmission planning. Otherwise, the CETA would probably coordinate directly with each state’s transmission-owning utilities. ↑
91. Wholesale Market Alternatives Investigation, supra note 25, at iv. ↑
92. Id. ↑
93. Id. at 17. ↑
94. Or, perhaps less desirably, through demand-side response. See, e.g., Robert Walton, Texas narrowly avoids rolling blackouts after 2nd conservation plea by ERCOT this week, Util. Dive (July 14, 2022), https://www.utilitydive.com/news/texas-avoids-rolling-blackouts-ercot-conservation-plea/627253/. ↑
95. See Colo. Rev. Stat. § 40-5-108. ↑
96. See, e.g., Robert Walton, Texas narrowly avoids rolling blackouts after 2nd conservation plea by ERCOT this week, Util. Dive (July 14, 2022), https://www .utilitydive.com/news/texas-avoids-rolling-blackouts-ercot-conservation-plea/627253/. ↑
97. Riley, supra note 74. ↑
98. Id. Per State Senator Hansen, a sponsor of Bill 72, “[w]hen it’s sunny in Arizona, we can import the power, and when it’s windy in Colorado we can export the power.” Dunn, supra note 59. ↑
99. Brasch & Otárola, supra note 80. ↑
100. See W. Elec. Coordinating Council, 2021 Western Assessment of Resource Adequacy 39–40 (2021), https://www.wecc.org/Administrative/WARA%202021.pdf. ↑
101. Id. To illustrate this dynamic, the Western Electricity Coordinating Council models import-export balances in a scenario where the Hoover and Glen Canyon Dams are not providing power to the system and there is high demand in the West. In non-drought, high-demand scenarios, Colorado becomes a net exporter of energy on the Western Interconnection. Id. ↑
102. Scott Van Voorhis, Historic drought slashes hydropower generation in California, other Western states, Util. Dive (Aug. 24, 2021), https://www.utilitydiv e.com/news/historic-drought-slashes-hydropower-generation-in-california-other-western /605421/. ↑
103. Wholesale Market Alternatives Investigation, supra note 25, at 26–27. ↑
104. Energy Strategies, The State-led Market Study: Market and Regulatory Review Report 12–13 (2021), https://energy.utah.gov/wp-content/uploads/ State-Study-Final-Report-1.pdf. ↑
105. See Wholesale Market Alternatives Investigation, supra note 25, at 6. ↑
106. U.S. Energy Info. Admin., Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022 7–9 (2022), https://www.eia.gov/outlooks/aeo/pdf /electricity_generation.pdf. ↑
107. Ethan Howland, Colorado utilities could cut costs 5% by joining an RTO, PUC finds, as Western market momentum builds, Util. Dive (Dec. 3, 2021), https://www.utility dive.com/news/colorado-utilities-PUC-rto-report-power-markets/610918/. ↑
108. Utah Off. of Energy Dev., State-Led Market Study Stakeholder Meeting – Q2 2021 38, 50 (2021), https://legacy-assets.eenews.net/open_files/assets/2021/06/29/ document_ew_02.pdf; Energy Strategies, The State-Led Market Study: Market and Regulatory Review Report 13–15 (2021), https://energy.utah.gov/wp-content /uploads/State-Study-Final-Report-1.pdf. ↑
109. Energy Strategies, The State-Led Market Study: Market and Regulatory Review Report 13–15 (2021), https://energy.utah.gov/wp-content/uploads/ State-Study-Final-Report-1.pdf.

     at 13–15. ↑

110. Id. at 13–14, 26. ↑
111. Id.; Wholesale Market Alternatives Investigation, supra note 25, at i–ii, 6. ↑
112. Wholesale Market Alternatives Investigation, supra note 25, at i–ii (emphasis added). ↑
113. Id. ↑
114. Colorado: Profile Overview, U.S. Energy Info. Admin., https://www.eia.gov/ state/?sid=CO#tabs-4 (last visited Sept. 23, 2022). ↑
115. Colorado State Energy Profile, U.S. Energy Info. Admin., https://www.eia.gov/ state/print.php?sid=CO (last updated Sept. 15, 2022). The country’s leading utility-scale generation source is natural gas. FAQS: What Is U.S. Electricity Generation by Energy Source?, U.S. Energy Info. Admin., https://www.eia.gov/tools/faqs/faq.php?id=427&t=3 (last updated Mar. 4, 2022). In June 2022, coal-fired plants accounted for 36.4% of Colorado’s utility-scale net electricity generation, whereas the United States average for coal-fired plant plants was just 19.3% of net electricity generation in that month. Colorado State Energy Profile, U.S. Energy Info. Admin., https://www.eia.gov/state/print.php? sid=CO (last updated Sept. 15, 2022). Renewables accounted for 37.5% of Colorado’s utility-scale net electricity generation in June 2022. Id. ↑
116. Wholesale Market Alternatives Investigation, supra note 25, at 2. ↑
117. Id. ↑
118. Id. at 3. ↑
119. David Roberts, Colorado’s cleanest energy options are also its cheapest, Vox (Nov. 7, 2019, 10:50 AM EST), https://www.vox.com/energy-and-environment/2019 /11/7/20951061/colorado-decarbonization-clean-energy-cheap-coal-electric-vehicles. ↑
120. Wholesale Market Alternatives Investigation, supra note 25, at 6. ↑
121. See Jeff St. John, Why US utilities must cut carbon emissions faster – and how data can help get it done, Canary Media (Apr. 27, 2021), https://www.canarymed ia.com/articles/climate-crisis/why-u-s-utilities-must-cut-carbon-emissions-faster-and-the-data-to-help-get-it-done. ↑
122. Lacey, supra note 39. ↑
123. Howland, supra note 106. ↑
124. Id. ↑
125. Wholesale Market Alternatives Investigation, supra note 25, at ii. ↑
126. Howland, supra note 106 (“Colorado utilities would save about $50 million a year, or 1%, by joining an EIM compared to up to 5% savings from RTO participation, according to the report.”). ↑
127. Wholesale Market Alternatives Investigation, supra note 25, at 17 (estimating that participation in an RTO is associated with $1.2 billion in savings related to decreased capital investments). ↑
128. Id. at 6. ↑
129. Id. at 19. ↑
130. Id. at 18. ↑
131. Julianne Basinger, Business, Clean Energy, and Conservation Groups: Western RTO Would Bring Big Benefits, W. Res. Advocs. (Oct. 19, 2021), https://wes ternresourceadvocates.org/blog/business-clean-energy-and-conservation-groups-western-rto-would-bring-big-benefits/. ↑
132. Sustainability, Google, https://sustainability.google/commitments/ (last visited Apr. 7, 2022). ↑
133. Penrod, supra note 38. ↑
134. Id. Nevada set a requirement that its utilities join an RTO by 2030 and established a task force to examine the steps necessary to participate in an RTO. Jason Plautz, Nevada passes clean energy bill requiring state to join RTO, accelerating $2B transmission project, Util. Dive (June 2, 2021) https://www.utilitydive.com /news/nevada-passes-clean-energy-bill-requiring-state-to-join-rto-accelerating/601106/; Nev. Rev. Stat. § 704.79886 (2021). ↑
135. Howland, supra note 106. ↑
136. Riley, supra note 74; Dunn, supra note 59. ↑
137. Riley, supra note 74. ↑
138. Dunn, supra note 59 (“‘To this day after much stakeholder engagement, we are still unclear to what specific problem this legislation is trying to solve,’ Xcel Colorado President Alice Jackson testified. ‘. . . Xcel has joined the Western Energy Imbalance Market . . . and we do exchange power. We are collectively tackling resource adequacy and regional reliability. This legislation isn’t needed for us to be successful and could prevent us from achieving our goals in the most efficient ways for our customers.’”). ↑
139. Riley, supra note 74. ↑
140. Id. ↑
141. Peter Maloney, Four Colorado utilities to join CAISO’s Western EIM, Am. Pub. Power Ass’n (May 27, 2020), https://www.publicpower.org/periodical/article/four-colorado-utilities-join-caisos-western-eim; Colorado utilities plan to join the Western Energy Imbalance Service Market, Elec. Energy Online (Jan. 27, 2022), https:// electricenergyonline.com/article/energy/category/t-d/56/941418/colorado-utilities-plan-to-join-the-western-energy-imbalance-service-market.html. ↑
142. St. John, supra note 38. ↑
143. Colorado National Rankings – 2021 Colo. Pub. Utils. Comm’n, https://puc .colorado.gov/colorado-national-rankings-2021 (last visited Sept. 23, 2022). ↑
144. 2021 Clean Energy Plan, Xcel Energy, https://co.my.xcelenergy.com/s/ environment/clean-energy-plan (last visited Sept. 23, 2022). ↑
145. Judith Kohler, Xcel Energy-Colorado seeks another rate increase, this one for $343 million to pay for improvements, updates, The Denver Post (July 6, 2021), https://www.denverpost.com/2021/07/06/xcel-energy-colorado-files-for-another-rate-increase/. ↑
146. 2021 Electric Utilities Benchmark, World Benchmarking All., https:// www.worldbenchmarkingalliance.org/publication/electric-utilities/ (last visited Apr. 7, 2022). ↑
147. Emma Penrod, Xcel, Dominion dispute global utility assessment, say they are on track to meet 1.5 degree climate target, Util. Dive (Dec. 2, 2021), https://www.utility dive.com/news/xcel-dominion-dispute-global-utility-assessment-say-they-are-on-track-to/610831/. ↑
148. Id.; 2021 Clean Energy Plan, Xcel Energy, https://co.my.xcelenergy.com/s/ environment/clean-energy-plan (last visited Sept. 23, 2022). ↑
149. Penrod, supra note 38. ↑
150. See Several Western Power Providers Announce Plans to Explore Market Options, Xcel Energy (Oct. 5, 2021), https://investors.xcelenergy.com/news-market-information/press-releases/press-release/2021/Several-Western-Power-Providers-Announce-Plans-to-Explore-Market-Options/default.aspx [hereinafter Western Power Providers]. ↑
151. Wholesale Market Alternatives Investigation, supra note 25, at i. ↑
152. See id. at iv. ↑
153. Id. at v. ↑
154. Id. at vi. ↑
155. See The ISO Grid, Cal. ISO, http://www.caiso.com/about/Pages/OurBusiness/ The-ISO-grid.aspx (last visited Sept. 23, 2022); Fast Facts: An Overview of the SPP System, Sw. Power Pool, https://www.spp.org/about-us/fast-facts/ (last visited Sept. 23, 2022). ↑
156. Robert Mullin, Changing Grid, State Policies Favor Western RTO, RTO Insider (Feb. 28, 2022), https://www.rtoinsider.com/articles/29669-changing-grid-state-policies-favor-western-rto. ↑
157. Gardner, supra note 44, at 2. ↑
158. Trabish, supra note 27. ↑
159. Gardner, supra note 44, at 4. ↑
160. Colorado Springs Utilities joins Southwest Power Pool’s western market, will evaluate RTO membership, Sw. Power Pool (May 12, 2021), https://spp.org/newsroom /press-releases/colorado-springs-utilities-joins-southwest-power-pool-s-western-market-will-evaluate-rto-membership/. ↑
161. Wholesale Market Alternatives Investigation, supra note 25, at iii. ↑
162. Id. at iv. ↑
163. See id. at iv, 33. ↑
164. See id. ↑
165. See id. at 24–25 (“SPP’s RTO governance structure allows for state participation through the Regional State Committee (RSC), which is composed of one state utility regulator from each state with regulatory jurisdiction over an SPP member. The RSC determines the region’s approach to resource adequacy, ‘whether transmission upgrades for remote resources will be included in the regional planning process and the role of transmission owners in proposed transmission upgrades in the regional planning process.’”). ↑
166. Fast Facts: An Overview of the SPP System, Sw. Power Pool, https://www.spp.org/about-us/fast-facts/ (last visited Sept. 23, 2022). Wind, however, leads coal in terms of nameplate generating capacity on the SPP (as of January 2022). Id. ↑
167. Colorado utilities plan to join the Western Energy Imbalance Service Market, Elec. Energy Online (Jan. 27, 2022), https://electricenergyonline.com/article/energy/ category/t-d/56/941418/colorado-utilities-plan-to-join-the-western-energy-imbalance-service-market.html. ↑
168. Trabish, supra note 27. ↑
169. Western Power Providers, supra note 149. ↑
170. Trabish, supra note 27. ↑
171. Jason Plautz, Nevada passes clean energy bill requiring state to join RTO, accelerating $2B transmission project, Util. Dive (June 2, 2021) https://www.utility dive.com/news/nevada-passes-clean-energy-bill-requiring-state-to-join-rto-accelerating/601106/. ↑
172. Id. ↑
173. Id. ↑
174. Howland, supra note 106. ↑
175. Julian Spector, How MGM Prepared Itself to Leave Nevada’s Biggest Utility, Greentech Media (Sept. 16, 2016), https://www.greentechmedia.com/articles/read/how-mgm-prepared-itself-to-leave-nevadas-biggest-utility. ↑
176. Western Power Providers, supra note 149. ↑
177. Utah Off. of Energy Dev., State-Led Market Study Stakeholder Meeting – Q2 2021 22 (2021), https://legacy-assets.eenews.net/open_files/assets/2021/06/29/do cument_ew_02.pdf. ↑
178. H.B. 279, 64th Leg., 2022 Gen. Sess. (Utah 2022). ↑
179. Western Power Providers, supra note 149. ↑
180. See Trabish, supra note 27. ↑
181. Id. ↑
182. Wholesale Market Alternatives Investigation, supra note 25, at 36. ↑
183. Trabish, supra note 27. ↑
184. Id. ↑
185. See Travis Kavulla, R Street, Problems in Electricity Market Governance: An Assessment 1 (2019), https://www.rstreet.org/2019/08/30/problems-in -electricity-market-governance-an-assessment/. ↑
186. Colo. Rev. Stat. § 24-65.1-501(1)(d) (2022) ↑
187. § 38-5-104(1). ↑
188. § 40-2-126(3); S.B. 72, 2021 Leg., Reg. Sess. (Colo. 2021). ↑
189. See Gardner, supra note 44, at 5. ↑
190. See Wholesale Market Alternatives Investigation, supra note 25, at iv. ↑
191. Colo. Rev. Stat. § 40-42-104(1)(n). ↑
192. Wholesale Market Alternatives Investigation, supra note 25, at 28. ↑
193. See id. at 28–29. ↑
194. Utah Off. of Energy Dev., State-Led Market Study Stakeholder Meeting – Q2 2021 36, 40 (2021), https://legacy-assets.eenews.net/open_files/assets/2021/06/29/do cument_ew_02.pdf. ↑
195. Colo. Rev. Stat. § 40-5-108(1)(a)(V). ↑
196. Wholesale Market Alternatives Investigation, supra note 25, at i–ii. ↑
197. Id. at 8. ↑
198. § 40-5-108(2)(a)(II)(A). ↑
199. Wholesale Market Alternatives Investigation, supra note 25, at iii. ↑
200. Id. ↑
201. Howland, supra note 106. ↑
202. Wholesale Market Alternatives Investigation, supra note 25, at 24. ↑
203. Id. at iv. ↑
204. Id. ↑
205. Id. ↑
206. Travis Kavulla, R Street, Problems in Electricity Market Governance: An Assessment 5 (2019), https://www.rstreet.org/2019/08/30/problems-in-electricity-market-governance-an-assessment/. ↑