LITTLE ROCK, Ark. — The SPP Board of Directors and Members Committee approved the 2017 Integrated Transmission Planning 10-Year Assessment’s scope, which had been revised to account for pending North American Electric Reliability Corp. transmission planning standards. The scope, which was recommended by the Markets and Operations Policy Committee, was approved with three no votes during their quarterly meeting Oct. 27.
The board and members discussed whether fluctuating gas prices, one of the assessment’s sensitivities (along with demand levels and final reliability and stability assessments), would result in a drain on staff’s time and increased study costs.
“How can you assess the demand on gas prices when you’re looking that far into the future?” asked Stuart Solomon, COO of Public Service Company of Oklahoma.
Alan Myers, chairman of the Economic Studies Working Group, said the study’s scope uses a $6/MMBtu price for gas 10 years in the future and tries to account for the impacts of increased liquefied natural gas exports and decreased fracking.
The assessment currently assumes a high availability of natural gas due to fracking. It also will consider three futures: a regional Clean Power Plan, a state-level CPP solution and an assumption the CPP is not implemented. The 2020 and 2025 models will include the CPP’s interim goals that begin in 2022 and 2025-2027, respectively.
Enhanced Combined Cycle Project Moves Forward
Natural gas prices were also at issue in the board and committee’s approval of revised Tariff language clarifying the design of the enhanced combined cycle (ECC) project, an effort to provide more sophisticated modeling that captures such plants’ flexibility. The revisions limit the number of combined cycle configurations at registration to three, tweaks the market-clearing engine’s algorithm to account for overlapping commitment periods between the day-ahead and real-time markets, and makes simplifications to ensure the project’s timely and on-budget completion.
“With gas prices where they are today, how is the ECC project going to achieve efficiencies?” asked American Electric Power’s Richard Ross. “Theoretically, [the savings] will be much smaller than what we started with, which was gas in the $4-5 range.”
Other stakeholders said the Tariff change was needed and should be approved. “Holding up the ECC cleanup revision is not the right way to move forward,” said Dogwood Energy’s Rob Janssen.
Janssen reminded members they moved forward with the ECC project not only because of the current cost-benefit analysis, “but also with the expectation the SPP system moves toward more natural gas-fired capacity in the future.”
Ross said SPP would achieve more by moving the deadline for day-ahead offers to 9 a.m. and compressing the commitment time to four hours. This summer, both SPP’s board and the MOPC voted to move the deadline for day-ahead offers up 90 minutes to 9:30 a.m. CT. (See “Board Approves Gas-Electric Timeline Change,” in SPP BoD/Members Committee Briefs.)
Ross said AEP was a no-vote against the ECC-cleanup language because it understood that the ECC project and further gas-electric harmonization couldn’t proceed in tandem, with the latter being the higher priority.
“It may have been a breakdown in communications,” Ross said, “but we understood we couldn’t advance the gas market-clearing logic any further and also implement the ECC.”
Bruce Rew, SPP’s vice president of operations, said the RTO believes it can complete the gas-electric harmonization work by next fall and complete the ECC logic by March 2017. The two projects are expected to cost a combined $7.7 million.
“Our own constraint is whether we can go down to four hours,” Rew said. He said SPP’s market-clearing engine is currently able to work with a 4.5-hour compressed timeline. He agreed to report back in January’s meeting as to “what we can do with this current technology.”
The ECC project was delayed last year to allow for a more thorough cost-benefit study. SPP has estimated it will take approximately $1.5 million and 14 months to implement the changes, which would require new software.
AEP has said it believes the ECC logic “is unlikely to resolve the challenges of combined cycle operation,” saying SPP’s market solution-engine is “already among, if not the, most complicated and computationally intensive such algorithms in the country.”
Lone Interregional Project Approved
The board and Members Committee approved the MOPC’s recommendation to approve one of three interregional projects evaluated as part of a regional review with MISO, the South Shreveport-Wallace Lake rebuild. The 11-mile 138-kV project addresses area congestion in northwestern Louisiana and has an estimated cost of $18.5 million — of which SPP would fund 20% ($3.7 million) — and a benefit-to-cost ratio of 11.86, far exceeding the 1.0 threshold.
MOPC Vice Chairman Paul Malone, of the Nebraska Public Power District, reminded the board that MISO has yet to act on approving the project and its Planning Advisory Committee did not support the project.
Eckelberger said he understood his MISO counterpart, Judy Walsh, is still open to the project. He said he will send Walsh a letter to “see if we can get this rolling.”
Eckelberger also said, “We think we’ll have to change some numbers to get MISO to work with us.”
The other two projects in the regional review are the Alto-Swartz series reactor and the Elm Creek-NSUB 345-kV transmission line. Both could be reevaluated in a future regional or interregional study.
Annual Meeting of Members
Calling the previous 12 months “another interesting year for the corporation and our members,” SPP CEO Nick Brown ticked off the Integrated Marketplace’s successful performance, recent transmission investments and the addition of 10 new members through the Integrated System’s incorporation as achievements during his annual president’s report.
Brown credited the Integrated Marketplace with creating $300 million in savings off of a $100 million investment, saying “nothing speaks more to our value to members” than seeing the markets credited for savings in members’ rate cases, annual reports, press releases and news stories.
“If ever there’s a success metric, it’s that,” Brown said.
The annual meeting began with members voting to re-elect two board members, a Regional Entity trustee and five members of the Members Committee, while also unanimously accepting a Corporate Governance Committee recommendation to increase their compensation.
Board members saw their annual retainers doubled to $30,000, with Board Chairman Jim Eckelberger’s retainer increased by $15,000 to $35,000. Members approved slightly smaller increases for meeting participation and RE trustee compensation.
Members re-elected Eckelberger and Harry Skilton to three-year board terms and Dave Christiano to another three-year term as an RE trustee. They also approved a recommendation to expand the RE trustee membership to four “in the interest of succession.”
Members re-elected Kelly Walters (Empire District Electric Co.), Mike Wise (Golden Spread Electric Cooperative), Kevin Smith (Tenaska) and Tom Kent (Nebraska Public Power District) to three-year terms on the Members Committee. Also re-elected was Bob Harris (Western Area Power Administration-Upper Great Plains), who was elected to fill a vacancy earlier this year.
Brett Leopold (ITC Great Plains), Scott Heidtbrink (Kansas City Power & Light) and Jason Atwood (Northeast Texas Electric Cooperative) were all elected to their first three-year terms.
Board Approves New Order 1000 Evaluation Panel
The board followed a unanimous members’ vote to approve the Oversight Committee’s recommendation for the 2016 industry expert panel (IEP), which will evaluate proposals for SPP’s competitive solicitations under FERC Order 1000.
SPP recently asked FERC to allow it to waive Tariff provisions governing the IEP’s selection (ER16-126). It has proposed using one of its 2016 panelists to replace a 2015 candidate who may not be able to serve.
The panel was to begin its evaluation this week of bids for the 21-mile, Walkemeyer-North Liberal 115-kV project in Kansas. (See SPP Issues RFP for 115-kV Transmission Project.) It will recommend a winning proposal and an alternate proposal to the SPP board.
IEP renewals from 2015 include financial consultant William Steele, rate expert Denis Bethel, transmission analyst Michael Jacobs, NERC-compliance consultant Raj Rana, planning engineer Ronald Brown, regulatory expert Steve Strickland, former Kansas Corporation Commissioner Tom Wright and former NERC vice president Dave Nevius.
The new IEP applicants are economist Monica Kachru, former Heartland Consumers Power District CEO Michael McDowell, regulatory veteran Murry Witcher, former SPP lead engineer Bob Lux, power-systems consultant Ali Al-Fayez and engineering consultant Kirk Patterson.
Skilton: 39-Cent Administrative Fee ‘Still Realistic’
Finance Committee Chair Harry Skilton said an administrative fee of 39 cents/MWh “is still realistic,” based on SPP’s draft budget for 2016.
The administrative fee, which is collected through charges to transmission customers, funds SPP’s ongoing operating costs. The budget will be voted on during the board’s December meeting.
SPP in recent years has used a 10:1 ratio to describe the benefits members receive for every dollar they put in. However, Mike Ross, the RTO’s senior vice president of government affairs and public relations, is working on a “comprehensive dialogue and story” of transmission’s value, according to Brown.
“We want to know the true value of the transmission we invest in, the value we offer with and without that transmission,” Brown said.
HR Committee Sets Merit-Compensation Increase
Josh Martin, chair of SPP’s Human Resources Committee, said the group has set SPP staff’s merit-increase budget pool at 2.5% of projected 2015 base salaries.
He said the committee has also tightened the performance compensation plan’s metrics and revised its measurements for “simplicity and alignment” with SPP’s strategic initiatives. The plan will now measure cost control, NERC violations, operating metrics and the annual customer-satisfaction survey.
Martin said SPP’s 401(k) program has been able to save $40,000 annually with a revised fee structure for its advisers. He also noted a 96% employee participation rate in the 401(k).
— Tom Kleckner
