Western’s Merchant Desk:

On the Western slope of the Rocky Mountains is an unlikely commodity exchange. Framed by the majestic San Juan mountains, the Colorado River Storage Project’s Energy Management and Marketing Office operates one of Western Area Power Administration’s two merchant offices. Staff in this Montrose, Colo., office schedule Western’s reliable, cost-based hydroelectric power, purchase energy and handle surplus energy sales to fulfill customers’ needs.

Scheduling: Power in the balance

At the Montrose merchant office, energy management and marketing specialists work around the clock to make sure power is available when customers need it.

Once Western’s firm power customers calculate their daily energy needs, marketers total the amount of power required and examine available generation from Federal dams and other sources. Then they schedule those generation resources to fit Western’s loads every hour of every day.

Marketing: A key role within Western

The Montrose Marketing Office’s role in power delivery works like this: Staff in Western’s regional offices negotiate, develop and administer contracts with customers who get power from Federal dams that generate electricity from the Loveland Area, Parker-Davis or Salt Lake City Area/Integrated projects. These contracts include the sale, interchange or purchase of power and energy, ancillary services (for transmitting the energy) or interconnection to Western’s system.

To meet those contract commitments, merchant desk staff schedule Federal hydrogeneration resources and supplemental purchases for CRSP Management Center and Desert Southwest and Rocky Mountain regional customers. They also market excess energy from the Laramie River plant for the Rocky Mountain General Cooperative and perform real-time merchant responsibilities for Basin Electric Power Cooperative, Western Interconnection loads and resources. Merchant desk staff develop energy schedules that include energy transmitted, and power purchased, sold or interchanged with neighboring utilities.

Dispatchers use those energy schedules to deliver the power to customers. Once all power and energy transactions have been recorded, that information goes to power billing staff in Western’s regional offices, where bills for power and transmission services are prepared monthly.

Forecasting: A crucial skill

To help determine customer energy needs, pre-scheduling marketers forecast:

• How much power is needed (system loads)
• What resources will be available and how much power to purchase on a seasonal, short term and same day basis

If low water conditions or operational constraints reduce available Federal generation, marketers purchase additional energy or exchange resources with other power systems on the open market. If more generation resources are available than needed, they sell the surplus energy to firm power customers, then into the open market.

Merchant office staff pre-schedule energy needs by planning resources for the next day or longer, including preparing seasonal and monthly outlooks. If marketers project long-term shortages, they may pursue a futures contract—buying a quantity of energy six months in the future. Seasonal purchases can be cheaper than buying the energy on the real-time market (the 24 hours in which they are operating), but these contracts don’t cover 100 percent of the load because it’s so difficult to accurately estimate the precise amount of power needed six months in advance. Using price forecasting tools such as publications or Internet resources, marketers may make up the rest of the load with shorter term, monthly or day-to-day purchases.

While buying and selling energy are key functions, these transactions are done solely to support firm power contracts, not for speculation and profit.

Real-time tasks

Real-time marketers:

• Watch our resources hourly or daily making sure we’re following load requirements.
• Buy and sell resources for Western’s control areas when needed.
• Monitor load/resource balances to ensure dispatchers have the required regulation and reserves to serve contract loads and control area requirements.
• Look for real-time opportunities to sell surplus capacity or purchase for resale.

Marketers use Open Access Same-Time Information System information when transmission must be purchased to complete energy delivery. Separating the marketing and transmission functions allows Western to comply with Federal Energy Regulatory Commission Order No. 888.

Commitments

At the Energy Management and Marketing Office, marketers stay focused on Western’s commitment to customers. Every hour of every day, marketers perform their balancing act—buying and selling energy to ensure that customers have the energy they need when they need it.