By Tom Kleckner

SPP will welcome the Integrated System and its three primary entities as full members Thursday, extending its footprint into Big Sky Country.

The IS — comprised of Western Area Power Administration-Upper Great Plains, Basin Electric Power Cooperative and Heartland Consumers Power District — expands SPP’s footprint to 14 states, adding the Dakotas and parts of Iowa, Minnesota, Montana and Wyoming.

It will add more than 5,000 MW of peak demand and 9,500 miles of transmission infrastructure to SPP’s responsibilities, while increasing its territory by 55% to 575,000 square miles.

“It’s a significant change for SPP, considering the amount of area we’re responsible for and the parties we’re responsible for as members,” Executive Vice President Carl Monroe, SPP’s chief operating officer, told RTO Insider. “We’re extending our footprint and ensuring SPP’s members will get the benefits of our services.”

While SPP expands with the IS, indications are it will not gain another potential member with Lubbock Power & Light’s announcement last week that it will join ERCOT in 2019.

Reliability Coordination Began June 1

SPP has been providing reliability coordination for the IS since June 1, monitoring power flow and managing congestion while WAPA, Basin Electric and Heartland dispatched their generating resources. The three entities will transfer functional control of their facilities to SPP at midnight Wednesday night and become active participants in the Integrated Marketplace, forming the new Upper Missouri transmission zone.

Other entities will become full SPP members Thursday, including the East River Electric Power Cooperative, Northwest Iowa Power Cooperative and Corn Belt Power Cooperative. It will be SPP’s first major membership additions since 2009, when Nebraska’s major utilities joined the RTO, and boosts its membership to 92.

“We’re really looking forward to Oct. 1,” Monroe said. “We have very good relationships with those parties, and some are already participating in SPP’s working groups.”

SPP prides itself on being a stakeholder-driven organization and its governance model was a major reason the IS joined. Heartland CEO Russell Olson cited the RTO’s “collaborative process” in a statement announcing the move last year.

“They felt they would have a voice,” Monroe said, “and that made a difference in their decisions.”

Joining SPP gives IS members access to the RTO’s markets. Several current members have already credited market savings with allowing them to reduce the size of rate increases or providing additional pricing efficiencies through a broader pool of resources.

“I would guess that would be able to happen again from expanded footprint,” Monroe said. “Savings in the energy market will reduce the cost of wholesale energy. Depending on how each entity handles its customers, it could be a reduction in costs.”

Monroe said SPP’s increased membership also will reduce RTO service fees for existing members. “Everyone will be paying less as a ratio than they would have paid before,” he said.

WAPA, Basin Electric and Heartland began discussing joining an RTO four years ago to increase their options for buying and selling power. All three conducted public hearings and assessments before determining last year that SPP was the best fit. FERC approved the move in November.

“We felt that SPP was a solid philosophical match for our cooperative,” said Paul Sukut, Basin Electric’s CEO and general manager.

WAPA will become the first federal power marketing administration to join an RTO. WAPA spokesperson Lisa Meiman said joining SPP “alleviates the marketing restraints” the agency was facing in delivering firm power to its customers.

Because the Energy Policy Act of 2005 placed conditions on power marketing administrations joining RTOs, SPP did have to “accommodate” WAPA’s “unique needs,” Meiman said. SPP modified its Tariff to exempt WAPA from regional cost-sharing charges. WAPA also is exempt from congestion and marginal loss charges when it is marketing and delivering federal hydropower to its federal load, she said. FERC issued an order Monday approving SPP Tariff changes accommodating WAPA (ER15-2350).

WAPA will merge its Eastern Interconnection balancing authority into SPP’s balancing authority, and its Eastern and Western Interconnection transmission facilities will be incorporated into the new Upper Missouri Zone. Meiman said WAPA will remain a transmission operator and develop transmission rates, revenue requirements and other necessary rates for use in SPP’s Tariff.

WAPA’s Western Interconnection BA will not become a part of SPP’s BA, nor will UGP’s Western Interconnection generation and load become part of the Integrated Marketplace.

Lubbock Sees Savings in ERCOT

Excitement over the addition of the IS was tempered last week when Lubbock Power & Light, which receives its energy through SPP member Xcel Energy, said it will join ERCOT to reduce its energy and capacity costs. (EDITOR’S NOTE: An earlier version of this story incorrectly stated that Lubbock Power & Light was an SPP member.)

The LP&L Electric Utility Board met with the Lubbock City Council on Sept. 24 to outline its transition to ERCOT, which manages 85% of the Texas grid. LP&L is the third-largest municipally owned electric company in the state, after San Antonio and Austin.

“That’s their decision,” Monroe said. “We’re a voluntary organization. If that’s what they intend to do, they make those choices that are best for their organization.”

LP&L says significant transmission infrastructure will be needed to interconnect with ERCOT, and that approval, certification and construction will likely take four years. The process began with a feasibility study, which was approved by the Public Utility Commission of Texas last week.

The utility says taking advantage of smaller, cheaper contracts in the ERCOT market will save it $20 million annually over what it currently spends in a long-term wholesale contract with Xcel Energy. LP&L’s three old, small power plants are seldom committed.

Lubbock also will be freed of about $40 million in annual capacity fees in ERCOT’s energy-only market.

LP&L also said it will benefit from Texas’ diversified energy portfolio and a simplified regulatory environment.

Monroe said SPP hasn’t had any conversations with LP&L or Xcel or looked at the implementation plans. “I’m not sure what [the announcement] means,” he said.

In a press release, Xcel expressed disappointment and said the city’s proposal will increase costs for customers in both ERCOT and the areas it serves in SPP. Noting the “significant investments” it has made in the area’s high-voltage network, Xcel said “Lubbock’s portion of the annual cost of these investments will be added to the costs Xcel Energy customers in Texas and New Mexico already pay.”

Xcel also said its long-term power supply agreement for a portion of Lubbock’s power needs through 2044 could be “impacted” by the utility’s move to ERCOT. According to LP&L, it will honor the contract by purchasing 170 MW from Xcel after June 1, 2019, which means it will remain interconnected with SPP.

By joining ERCOT, the city says it would also escape FERC regulation. As a Texas-only grid operator, ERCOT is regulated by the PUCT and the state legislature; FERC governs SPP and other interstate providers.

The PUCT and ERCOT would both have to approve LP&L’s move.