How the Southwest Was Really Won
Salt River Project Tames Wholesale Energy Market with Help from SAS®
Arizona is a land of extremes: In the northern part of the state, temperatures dip to nearly zero degrees Fahrenheit amid snowfall in winter while the southern desert bakes in 110-degree heat in the summer. Yet the Grand Canyon State remains one of the most desirable places to live in the United States.
That's, in part, thanks to the work going on at Salt River Project (SRP). SRP, based in Phoenix, was established in 1903 as the nation's first multipurpose reclamation project authorized under the National Reclamation Act. Today, SRP is the nation's second-largest public power utility (based on net generation in megawatt-hours) and one of Arizona's largest water suppliers, providing power to about 960,000 retail customers throughout a 2,900-square-mile service territory in central Arizona.
SRP operates or participates in thirteen major power plants as well as hydroelectric facilities throughout the Southwest.
Lowering Customer Costs by Ensuring Favorable Deals
"To be successful in the wholesale electric industry, you must have very good models. Models help project where you have excess electricity, and subsequently, you can make better decisions on when and how much you can sell," explains Mike Krause, marketing representative in SRP's supply and trading group.
For example, traders need to know how an outage at a power plant will affect value on certain deals or whether excess power will even be available to sell. Or what will happen to net revenues if retail load takes an unexpected dip. "We can flip a switch in our model and minutes later have that output in our hands," says Harry Sauthoff, Principal Planning Analyst .
Harnessing the Data
Controlling Their Own Destiny
SRP analysts now have direct access to the data in order to refine the model, test forecast techniques, and build a Web-reporting interface. To support trading, new forecast assumptions can be updated in just minutes – and the results are immediately available over the Web to all business users.
With such greatly improved reporting capability, the traders gain more insight into what they have available to sell – meaning they rarely have to debate their positions. That allows SRP to develop successful trading strategies and other groups can use the information for activities such as preparing budgets.
Confidence in the Numbers
"Upon completion of the model and data mart, SRP traders now have confidence that they are capturing more opportunities than ever before," Sauthoff says. "We are constantly benchmarking our model with graphical and numeric analysis. This data is available daily and is used to refine our assumptions that drive our model. Moreover, anyone can access the forecast performance reports via the Web."
The trading group generates millions of dollars per year for SRP, and the supply and trading team gains valuable insights using SAS, allowing them to better manage load and how they sell excess energy. "We're talking tens of millions of dollars in what this group does, so the impact of SAS has to be in the millions," Sauthoff says. "And gains that we make are used to offset retail prices. So the revenues we generate go to help our customers."
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Salt River Project (SRP)
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“ We're talking tens of millions of dollars in what this group does, so the impact of SAS has to be in the millions. ”
Principal Planning Analyst