By Tom Kleckner
LITTLE ROCK, Ark. — SPP’s Strategic Planning Committee on Thursday endorsed the Competitive Transmission Process Task Force’s recommendations for improving the competitive solicitation process for transmission projects under FERC Order 1000.
SPP’s first run-through of its transmission owner selection process resulted in the award of a competitive project, only to have the project’s notice-to-construct (NTC) withdrawn in July because of falling load projections.
The task force recommended raising the minimum threshold for competitive projects from $100,000 to $3 million, seating the selection panel sooner and requiring it to quickly publish its selection criteria. It also said SPP should allow restudy requests before an NTC is issued. The SPC unanimously approved all the recommendations.
The SPC also approved using a consistent template for annual transmission revenue requirement (ATRR) responses, based on the expected rate recovery under the SPP Tariff.
Much of the remaining work will be handed off to other stakeholder groups and SPP legal staff, who will draft the revision requests, revise business practices, prepare FERC filings and revise the ATRR template. The finished products are scheduled to be brought to the Markets and Operations Policy Committee in January.
The task force’s chair, Bill Grant of Southwestern Public Service, said the group discussed a higher threshold before settling on $3 million. SPP Director Harry Skilton proposed a $5 million threshold, with the idea that FERC would accept a lower number.
“The risk in starting out with a high number is that FERC flat out rejects it and sends it back to you,” Sunflower Electric Power’s Tom Hestermann said.
Board Chair Jim Eckelberger said he was comfortable with the lower $3 million threshold, assuming it’s “defendable.”
“I think that number is defendable, because that’s what we’re going to spend just to seat the [selection] panel,” Grant said, referring to the $300,000 projection to train and seat the industry expert panel (IEP). A company bidding on competitive projects is required to put down 10% of the project’s cost — $300,000 for a $3 million threshold.
Grant said seating the IEP early in the solicitation process and requiring the panel to publish its scoring criteria as early in the process as possible would allow transmission companies to submit more focused bids, reducing potential cost variances.
The task force determined developing “a more robust” ATRR template that includes special modeling needs for various business models would negate the need for a standard, regionwide formula rate. The template will include incremental costs specific to the RFP project.
“My biggest concern is not the highway projects this will be applied to. My biggest concern is with the byway projects,” Grant said. “When you evaluate based on incremental basis, everyone’s on the same playing field.”
The withdrawal of the NTC on SPP’s first Order 1000 project, a 115-kV line from Walkemeyer to North Liberal in southwest Kansas, led to the recommendation that the solicitation process be suspended to allow for re-evaluations in the case of a significant load change. (See SPP Cancels First Competitive Tx Project, Citing Falling Demand Projections.)
“Under the Tariff, the developer had to get an NTC before it could be re-evaluated,” Grant said. “If there’s been a substantial change, we don’t want to have to wait to go through the RFP process and get an NTC.”
