Where does my electricity come from? While this may seem like an easy question, in reality it can be next to impossible to answer, but we will try.
It is next to impossible to say where exactly the City’s electricity comes from because of how electricity is bought, sold, and transferred in the Southwest Power Pool (SPP). SPP was formed in 1941 and oversees the electric grid and wholesale power market in the central United States. Their area covers 14 states including: Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming. In 2008 Nebraska Public Power District (NPPD), Lincoln Electric System (LES), and Omaha Public Power District (OPPD) joined SPP. In 2015 Western Area Power Administration (WAPA) joined SPP.
As entities such as NPPD and WAPA joined SPP they no longer sell the electricity they generate directly a customer such as the City of Beatrice. Instead, everyday SPP forecast the demand for electricity the next day. Then entities with generation units bid into the market. SPP selects which generation units will run the next day based on the lowest bids. The last generation unit selected sets the price for all of the generation units that day. Finally the supply and demand for electricity is balanced every five (5) minutes throughout the day and a new price is set each time.
So for example, SPP forecast that the demand for electricity the next day is 10 MW. NPPD bids in their generation unit that can generate 20 MW at $100/MW. WAPA bids their generation unit that can produce 12 MW at $20/MW. In this example, SPP would dispatch WAPA (or tell WAPA to generate electricity) and pay them $20/MW. NPPD’s generation facility would not run because the demand for electricity is satisfied by the lower priced WAPA unit.
Now assume that SPP forecast the demand for electricity at 30 MW. Now both NPPD and WAPA’s generation units would be dispatched. NPPD would generate 18 MW at $100/MW. WAPA would generate 12 MW but now they would be paid $100/MW. NPPD’s unit was the last unit dispatched so it set the price for all generation units dispatched that day.
In either example, NPPD and WAPA are selling their electricity to SPP and then customers, like the City of Beatrice, are buying electricity with SPP. In a board sense, all of your electricity comes from SPP. That is why it is difficult to say exactly where our electricity comes from.
So although in January the City reduced our purchase of electricity from NPPD it is possible, and likely, that all of the electricity you used to heat your house or run your TV was produced at a NPPD generation facility. Then in a room at SPP’s headquarters an accounting entry is made to show that the City purchased a certain portion of its electricity from WAPA, NPPD, and AEP at a set price. After all of the meters are read, the City receives a bill from WAPA, NPPD, and AEP for the electricity that each is credited with selling to the City.
So as you can see, “Where does my electricity come from?” is not the easiest question to answer, but hopefully I was able to provide a little more clarity. Let’s be honest, most people really do not care where their electricity comes from as long as it works.
Tobias J. Tempelmeyer
City Administrator and General Manager