By Tom Kleckner
SANTA FE, N.M. — Capitalizing on their $5.6 billion transmission buildout, SPP members voted last week to reduce the RTO’s planning reserve margin to 12% from the current 13.6%.
The Markets and Operations Policy Committee approved a recommendation by the Capacity Margin Task Force that members said will reduce SPP’s capacity needs by about 900 MW, saving about $1.35 billion over 40 years. The Strategic Planning Committee endorsed the task force’s recommendations, contained in four white papers, as well.
The culmination of almost two years of work by the task force left SPC Chairman Mike Wise almost giddy with excitement. Wise said the reduced margin was made possible by SPP’s transmission expansion.
“We’ve tied all of the real old legacy balancing authorities together in a substantial way,” said Wise, senior vice president of commercial operations and transmission for Golden Spread Electric Cooperative. “One example of that is the old [Southwestern Public Service] area in SPP. That only had 59 MW [of] import capability. Now that capability is approximately 2,300 to 2,500 MW. … No longer is it an island.”
The white papers captured the task force’s work related to load-responsible entities (LREs), the planning reserve margin (PRM) and PRM assurance policy, and included a deliverability study. (See SPP Capacity Margin Task Force Shares ‘How Low’ Reserve Margin Can Go.)
The MOPC approved the policy package with one no vote and four abstentions. If approved by SPP’s Board of Directors next week, the capacity margin policies would become effective next summer.
“These policies identify who is responsible for resource adequacy, what the resource adequacy requirement is, and how and when the resource adequacy requirement can be and should be met,” said Sunflower Electric Power’s Tom Hestermann, the task force’s chair.
He said the policies are dependent on each other to balance economic and reliability benefits, and said they should be approved and implemented collectively.
The reserve assurance policy addresses concerns that current mechanisms to ensure sufficient reserve margins are inadequate. The policy incents LREs to correct planning reserve deficiencies.
Hestermann said the deliverability policy recognizes the Integrated Marketplace’s successful performance and the expected adoption of the assurance policy. It would allow SPP to determine the deliverability of generating units within its footprint, enabling entities to purchase capacity on a short-term basis through bilateral contracts to meet the PRM requirement.
The Nebraska Public Power District’s Paul Malone said he couldn’t support the use of non-firm resources in transmission planning.
“You’re putting firm resources on par with non-firm resources,” he said. “I don’t see how you can do that.”
“The task force was very adamant that firm transmission be necessary in order to deliver to resources to serve load,” responded Lanny Nickell, SPP’s vice president of engineering. “You could still use the transmission services process, with the added benefit of getting [transmission congestion rights].”
Malone offered a motion directing staff to evaluate the use of coincident peaks in determining the reserve margin. The motion was amended to add an evaluation of other regions that include non-firm resources in their reserve margin calculations and passed unanimously.
As it has done during every step of the process, Oklahoma Gas and Electric abstained from the vote. Greg McAuley, OG&E’s director of RTO policy and development, said his company wouldn’t stand in the way, but it would voice its concerns.
“The deliverability issue, to us, is a theoretical exercise. It sounds good on paper, but it hasn’t been tested,” he said. “We’re not convinced this has been vetted enough to the extent we’ll be comfortable with it. If this turns out to be a bad decision, it’ll be difficult to go back. We urge caution and a methodical approach to this … we would like to see more thought and more study go into it.”
Changes will need to be made to SPP’s Tariff and planning criteria, as the policies would replace “capacity margin” terminology with “reserve margin” terminology.
The task force will now turn its attention to developing a resource-adequacy workbook and guidelines with SPP staff.
