By Tom Kleckner

Not content with pillorying SPP officials on their home turf, Louisiana Public Service Commissioner Foster Campbell has broadened his complaint over RTO expenses with a letter challenging SPP’s and MISO’s spending on offices and executive salaries.

Campbell last week filed a letter with SPP’s and MISO’s state commissions and the National Association of Regulatory Utility Commissioners’ senior leadership, calling for a “thorough examination of [grid operators’] spending.”

“Turning the American power grid into the electricity equivalent of an interstate highway system is probably a worthwhile goal, but I question how those RTOs freely spend our dollars,” Campbell wrote, adding a new acronym to the industry’s lexicon: Overspending Other Peoples’ Money (OOPM).

The Louisiana commissioner described SPP’s Corporate Center as a “150,000-square-foot Taj Mahal of an office building in a leafy 20-acre suburban setting fit for a Fortune 100 corporation.” He said he hasn’t been to MISO’s corporate offices in Carmel, Ind., and was thus unable to compare them to SPP’s “ornate offices.”

“If MISO’s offices are anything like SPP, then these two [RTOs] have a bad case of OOPM,” he said.

Campbell also lambasted the salaries paid to the grid operators’ top executives. He noted SPP’s Nick Brown and MISO’s John Bear are paid eight and 16 times, respectively, as much as FERC Chairman Neil Chatterjee ($155,500). Campbell cited 2017 data for Brown ($1.5 million in total compensation) and said Bear receives $2.8 million in compensation.

Bear’s salary matches up with the 2017 IRS Form 990 available through nonprofit tracker GuideStar. Brown’s 2016 Form 990 shows his total compensation was $1.2 million.

Campbell contrasted the CEOs’ salaries with Louisiana’s “1.6 million electric customers, many of whom live at or below poverty level.” He said SPP and MISO charge the state’s investor-owned utilities nearly $31 million a year to dispatch energy.

The letter would sound familiar to those who were present last month in Little Rock, Ark., when Campbell livened up the SPP Regional State Committee’s October meeting at the RTO’s corporate headquarters by criticizing the facility’s $62 million price tag and senior executives’ salaries. Several observers found his comments to be political, as Campbell is up for election next year. (See “Louisiana’s Campbell: SPP Spending ‘Extravagant,’” SPP Regional State Committee Briefs: Oct. 28, 2019.)

SPP said it “respectfully but wholeheartedly disagrees” with Campbell’s allegations.

Spokesman Dustin Smith said the grid operator provides “significant” savings to ratepayers in its footprint and listed several examples to back up his point:

• The $570 million in savings to participants in the Integrated Marketplace.
• “Conservative” cost-benefit studies that indicate the RTO’s services produce $2.2 billion in annual savings across its 14-state region.
• FERC’s 2018 State of the Markets report indicating the SPP region enjoys the nation’s lowest wholesale electric costs.

“To anyone who questions SPP’s affordability, stewardship or ethics, we welcome the opportunity to provide answers,” Smith said.

MISO spokesperson Allison Bermudez would only say that the RTO, “as we have for the past 20 years, continue to be good stewards of our members and those customers we work together to serve.”

Louisiana utilities Entergy Louisiana and Southwestern Electric Power Co. both said RTO membership is worth the costs.

Entergy spokesman Mike Burns said the company’s MISO membership has been a “highly effective tool in helping control costs and keeping our rates among the lowest in the nation.” After netting out the RTO’s administrative costs, Louisiana customers realized an estimated $560 million in savings between 2014 and 2018, “largely because of MISO’s organized power markets, which allow power plants to be dispatched more efficiently, resulting in a lower delivered cost of energy,” he said.

“Customers also see significant cost savings from MISO members sharing generation reserves across the organization’s footprint, producing long-term benefits,” Burns said.

SWEPCO’s Peter Main said the utility’s customers benefit from SPP’s regional markets through reduced fuel costs and more efficient transmission planning. However, he also said SWEPCO is concerned about the RTO’s rising costs. SPP’s Board of Directors last month approved a record increase in the administrative fee, from 39.4 cents/MWh to 43 cents. (See “Directors Approve 9.1% Administrative Fee Increase for 2020,” SPP Board of Directors/MC Briefs: Oct. 29, 2019.)

“SWEPCO and other SPP members remain concerned about the growing costs of RTO operations,” Main said. “We are actively involved in efforts to ensure that the RTO is cost-effective, efficient and providing good value for our customers.”

SPP is equally concerned about costs. First-year board Chair Larry Altenbaumer created and led a task force focused on finding opportunities to increase value and improve affordability for SPP’s members and stakeholders. The group determined there is work to be done around the edges. (See SPP Value Group Finds No ‘Silver Bullets.)

RTO Insider asked regulatory commissioners in both regions for comment on Campbell’s letter. Arkansas’ Kimberly O’Guinn and Missouri’s Scott Rupp responded.

O’Guinn, who is the RSC’s president this year, said she didn’t agree with Campbell’s assessment, but she “appreciated” his concerns about the costs of participating in SPP.

“The RSC is conscious of SPP’s costs as well as other issues that impact utilities and ultimately the customers,” she said. “Therefore, the majority of the RSC regularly participates in monthly calls and quarterly business meetings to educate ourselves on these matters and engage in dialogue with the SPP Board of Directors and staff, members and stakeholders.”

O’Guinn said the Arkansas Public Service Commission finds that SPP’s services and the Integrated Marketplace have “resulted in net benefits to ratepayers” and justified the commission’s decision to allow certain utilities to transfer functional control of their transmission assets.

“Along with financial benefits,” she said, “participation in SPP has provided increased reliability and a decrease in required reserve margins.”

Rupp said the Missouri Public Service Commission believes “there is a large amount of benefit from RTO membership.” He cited back-of-the-envelope figures from SPP’s last regional cost allocation report that indicated Evergy’s Missouri subsidiaries Kansas City Power & Light and KCP&L Greater Missouri Operations enjoyed 3.97 and 2.15 benefit-to-cost ratios, respectively.

He also said the PSC requires the state’s utilities to file studies every three years that justify their RTO membership.

“In the past few years we have waived the study, believing firmly that benefits are realized and the cost of the study would not be a good expenditure of resources,” Rupp said.

He also noted that that there have been few instances of load shed despite recent severe storms and floods in Missouri. “Before RTO membership, there would have been a shedding of load in Missouri.”

Amanda Durish Cook contributed to this article.