By Tom Kleckner

“Evolutionary, not revolutionary,” Southwest Power Pool executives like to say about their RTO. It’s written into SPP’s corporate culture, the idea being that it takes time “to do the right thing, for the right reason, in the right way every time.”

The RTO’s emphasis on continuity will be tested in 2020, however. By midyear, SPP will be without five of the key figures who have helped expand the grid operator’s footprint into 17 states and implement a day-ahead market. Former Board of Directors Chair Jim Eckelberger and Directors Harry Skilton and Phyllis Bernard left the board at year-end after having served together since 2003. COO Carl Monroe will follow them out the door after January.

Come April, CEO Nick Brown, who joined the RTO 35 years ago as employee No. 7, will retire. SPP, having identified both internal and external candidates, says it is on track to announce his replacement during January’s board meeting in Santa Fe, N.M. (See SPP’s Brown to Retire as CEO in 2020.)

Larry Altenbaumer replaced Eckelberger in January 2019, seeking to place his own stamp on the RTO by shortening board meetings and focusing them on strategic discussions with members and the Regional State Committee. In addition to taking over the chairmanship of the Strategic Planning Committee, he also headed the Affordability and Value Task Force, which identified “meaningful opportunities to enhance other aspects of performance.” (See SPP Value Group Finds No ‘Silver Bullets’.)

Dennis Florom, manager of energy and environmental operations for Lincoln Electric System, said that as SPP grows in size and membership, “it gets more difficult to keep things member-driven,” referencing the RTO’s preference to serve as advisers to members.

“This is what sets SPP apart, and SPP prides itself on that. The new CEO will need to work with the board to make sure that SPP maintains its identity and that members continue to set the direction as forks in the road present themselves,” Florom said.

SPP’s expansion into the Rockies and beyond has already reached the crossroads.

In early December, the RTO became the reliability coordinator for 15 Western Interconnection utilities, representing about 12% of the region’s load. (See Westward Ho: SPP Now a Western RC Provider.) However, shortly thereafter, SPP’s ambitions to run an energy market in the Western Interconnection took a hit with news that Colorado’s largest utility (Xcel Energy) and three others chose CAISO’s Western Energy Imbalance Market over its own competing market offerings. (See EIM Lands Xcel, 3 Other Colo. Utilities.)

The RTO is still plugging ahead with its Western Energy Imbalance Service, which is scheduled to go live in early 2021. Two additional utilities, Municipal Energy Agency of Nebraska and Wyoming Municipal Power Agency, have announced they will join the five that signed contracts in September to fund WEIS’s development: Basin Electric Power Cooperative; Tri-State Generation and Transmission Association, and three Western Area Power Administration entities, Colorado River Storage Project; Rocky Mountain Region and Upper Great Plains. (See SPP Board OKs $9.5M to Build Western EIS Market.)

“Discussions continue with other interested parties, but no additional contracts have been signed at this point,” SPP spokesman Derek Wingfield said.

CAISO’s EIM, which currently has nine members, is expected to grow to 23 by the end of 2022.

Competing for Load

In the meantime, there’s plenty for the grid operator and its members to chew on. The explosive growth of renewable energy shows no signs of easing. Wind farms and, more recently, solar installations and energy storage, continue to add more energy than SPP — with a reserve margin of around 25% — knows what to do with.

SPP set a new wind peak record of 17,861 MW on Dec. 11, breaking a mark set two months earlier by 266 MW. In the early-morning hours of Oct. 9, the RTO produced 73.67% of its energy from wind, hydro and other non-fossil resources, fulfilling predictions a year before that it would reach the 70% threshold.

Florom said that a peek at the generation interconnection queue “shows a level of renewables that SPP load can’t handle.” The RTO had more than 22 GW of installed wind capacity as of October, with more than that in the queue.

Florom suggested storage and new transmission could “present opportunities for addressing more renewables.”

“Tariff changes and working with other entities outside of SPP to export these renewables are ways that SPP can address this challenge in ways that might benefit everyone,” Florom said.

But exporting energy could require additional transmission construction, which comes with a cost. Altenbaumer is keenly aware that members are still digesting the $10 billion in transmission construction and upgrades over the previous decade.

“The big concern [stakeholders] have is what happens with the next wave of transmission projects and making sure they pass a very tight metric to provide value,” he said in November.

Some of the answers may lie in the implementation of the Holistic Integrated Tariff Team’s recommendations. (See SPP Board Approves HITT’s Recommendations.) State regulatory staff are working on some of the key recommendations, including creating larger transmission pricing zones and sub-zones; evaluating the byway facility cost allocation review process; and evaluating cost allocation and rates for storage devices classified as transmission assets.

Other stakeholder groups are working on an uncertainty market product, improvements to the day-ahead market — including a multiday, longer-term market product — and establishing uniform local planning criteria within the Tariff’s Schedule 9 pricing zones.

SPP’s staff take a deeper view into the future. During a Strategic Planning Committee meeting in November, Senior Engineering Vice President Lanny Nickell said the RTO and its stakeholders should be “thinking about” competition between RTOs and keeping its own load while competing for other loads.

“How do we compete, as a region, for loads that love the renewable resources and [their] low prices?” he asked. “They’re looking for opportunities to add warehouses and data centers. How do we compete for those?”

“Given concerns with costs, we can’t afford to lose much load as we calculate administrative costs and move forward in a world that is changing rapidly,” said Bruce Rew, senior vice president of operations. “We can’t afford to lose megawatt one.”

Change is coming. Whether it’s evolutionary or revolutionary, a new cast of characters at the top will be the ones to address it.