By Amanda Durish Cook

INDIANAPOLIS — Two topics dominated the discussion this week among industry leaders, RTO officials and transmission planners attending EUCI’s Transmission Expansion in the Midwest conference.

One: The region must focus its transmission expansion efforts on moving wind output from vast resource areas in the west to population centers in the east.

And two: To support that effort, industry participants must overcome ineffective interregional processes among RTOs.

“You’ve got a lot of cheap wind resources where not a lot of people are — Minnesota, the Dakotas, Iowa — and you have to get this clean, affordable energy to where the people are,” Betsy Beck, director of transmission policy for the American Wind Energy Association, said during a Dec. 4 panel discussion. “There’s not enough transmission capacity to move it east where it’s needed.”

Beck said 35 GW of wind capacity is expected to come online in the U.S. by the end of 2020, joining the nearly 85 GW of current wind capacity. She noted that 20-year power purchase agreements are being signed in the Great Plains for less than $20/MWh.

Adam McKinnie, chief economist with the Missouri Public Service Commission, said he has observed a pattern of central states trying to push wind energy toward eastern states where power is more expensive. The eastern states, in turn, claim they can solve their resource adequacy and public policy goals by building new generation and won’t need the imports.

“How do you solve that?” McKinnie asked.

“That’s kind of the million-dollar question,” Beck laughed. “D.C. and the East don’t have a lot of space in their backyards for renewable development, and I think these states are starting to realize that.”

MISO interregional adviser Adam Solomon said the RTO’s 2018 Transmission Expansion Plan will include a new study on the impacts of renewables while also focusing on wind development needs and seeking to predict where future projects are likely to be sited. “We’ll try to find the trend within our footprint and better predict how that’s going to move in the future,” he said.

Seams and Order 1000

An effective wind transmission network in the Midwest will require interregional projects, conference panelists agreed.

Over the past year, MISO has worked with both PJM and SPP to identify large interregional projects, but the two separate efforts failed to produce a viable candidate after identifying just two serious contenders. (See MISO, PJM Reverse Support for Lone Interregional Tx Project and MISO Confident in Tx Process with SPP Despite Lack of Projects.)

“Interregional projects have remained elusive,” Solomon said.

PJM Manager of Interregional Planning Chuck Liebold said MISO and PJM will try again next spring to identify a large interregional project, commencing another two-year coordinated system plan between the RTOs. Officials from both RTOs last week announced that the next Order 1000 project submission window will open in November 2018.

“All that study, hours and hours of analysis, and we have yet to pass a big interregional project,” Liebold said. “We have 200-something joint coordinated flowgates on the MISO-PJM seam. … It seems like there’s a natural area where there could be joint coordination on a project, but that hasn’t happened yet. There are some issues with our process that we keep ironing out over the years.” He also reminded attendees that “there’s no measuring stick that says you have to have an interregional project.”

“I don’t think people understand how jagged the seams are,” McKinnie said.

“I think it’s safe to say that meeting the goals of Order 1000 so far today have been elusive,” said Alan Meyers, ITC Holdings director of regional planning.

Order 1000 has failed to “uniformly encourage” transmission development and may actually be stifling it, he said. “I think there’s a tendency to focus on the competition rather than the planning and cost allocation. The competition is only the sizzle, but the planning and cost allocation is the steak.” ITC has transmission holdings in MISO, PJM, SPP and NYISO.

Meyers criticized RTOs’ past “arbitrary” cost allocations and voltage thresholds on interregional projects but said practices are improving. He said that while RTOs excel at regional transmission planning, they come up short when trying to plan interregional projects. “It may be the biggest area we can improve on,” he said.

Some audience members asked about the next steps for the $2.3 billion Grain Belt Express, a 780-mile HVDC transmission line that would move wind energy from the Midwest to eastern markets. Developer Clean Line Energy Partners last week asked the Missouri Supreme Court to review state regulators’ decision to refuse a development permit. The Grain Belt Express did not result from an RTO process and is not seeking cost allocation.

Mark Lawlor, Clean Line’s vice president of development, said that while SPP and MISO are creating small west-to-east lines, those projects don’t go far enough — literally.

“They’re needed, but they’re not connected. There’s failure to create a process that allows for interregional projects such as the one Clean Line is developing. There’s not a place for us. … Perhaps that’s for Order 1001,” he joked. “I don’t want to say this hasn’t gone right, but there’s no mechanism to facilitate these projects.”

Lawlor added that Order 1000 is still young and “really only created competition for a fraction of the transmission projects out there. There could be more room for competitive projects.”

TMEPs

MISO and PJM are poised to approve a five-project interregional portfolio this year, but it doesn’t contain the extended HVDC lines for which some in the industry had hoped.

This month, the RTOs’ boards of directors are expected to individually approve their targeted market efficiency project (TMEP) portfolio, composed of smaller, congestion-relieving interregional projects. PJM and MISO worked for three years to define the project type before getting FERC approval this year. (See FERC Conditionally OKs MISO-PJM Targeted Project Plan.)

All five TMEP projects this year are upgrades to existing systems. The projects, which have individual $20 million cost caps, will coincidentally cost $20 million combined.

On average, project costs will be allocated 69% to PJM and 31% to MISO, based on projected benefits, which are expected to reach $100 million.

“I think what MISO and PJM have done with TMEPs is prove that they can get something done. And I hope they’re not too discouraged that they don’t yet have a large interregional project,” Beck said.

However, Beck maintains that large, public policy interregional projects are going to be vital for the future of the Midwest, but unwieldy seams criteria and differing public policies will hold them back. “By having different rule sets, they create a lot of impediments,” she said.

“A lot of consensus will be needed,” Solomon said.

“As soon as they solve public health care, they’ll start in on public transmission policy,” Liebold joked.

“In the future though, we need to really look at what the Eastern Interconnect looks like and how we can move large amounts of power,” Beck said. She predicted that a handful of new HVDC lines will begin to take shape in the next few years, with others to follow.

“There’s a lot of folks out there that also think that microgrids are the wave of the future, and we don’t need any more transmission projects, and we should begin to take lines down, so I’m not betting just yet,” Liebold said.

McKinnie asked why MISO and SPP haven’t created their own TMEP process to deal with smaller congestion issues along their seam. Solomon said the TMEP process was largely driven by Northern Indiana Public Service Co.’s 2013 complaint against the MISO-PJM interregional planning process, but that MISO would like to implement a similar smaller interregional project type with SPP.

“So if I went back to commission and said the ‘squeaky wheel gets the grease,’ would that be correct?” McKinnie asked.

Solomon said that SPP is a relatively young RTO with less historical data, and while he thinks some SPP stakeholders might not be ready for such a cross-seams project type, he is hopeful they will be convinced of the benefits by observing the progress between MISO and PJM.

“I don’t want there to have to be a FERC complaint for this to get attention. We used to joke that the MISO stakeholder process was a FERC comment period. … We sometimes feel that we’re the kid sibling over on the SPP-MISO seam,” McKinnie said.

Bob Pauley, chief technical adviser with the Indiana Utility Regulatory Commission, urged gentler treatment of RTOs that must plan transmission systems with sometimes limited information.

“I don’t know of any empirical evidence where an RTO developed transmission where there was a better option available.

“I think it behooves us to remember the time before RTOs,” he reminded attendees, before adding jokingly, “When I worked with Thomas Edison and others, each utility had to plan their own needs as if they were an island.”

Pauley said “everyone would be better off” if utilities used the same degree of candor with RTOs as they do with their respective state regulatory bodies. He also said states should take a more active role in forecasting load.

Wind Catcher

American Electric Power’s Raja Sundararajan said his company’s $4.5 billion Wind Catcher project in Oklahoma is also bypassing the RTO transmission planning process in favor of self-funding to ensure it is realized. The project includes what will be the largest wind energy facility in the U.S at 2 GW and a dedicated 350-mile, 765-kV tie-line from the panhandle to Tulsa.

“This is the largest investment AEP has ever made; $4 billion is a massive amount, and we understand that,” Sundararajan said. He pointed out the project circumvented the RTO process because AEP did not have enough time to mount a complex transmission planning process for an expensive 765-kV line before wind production tax credits expire in 2020.

AEP settled on a 765-kV rating because it minimizes transmission line losses and doesn’t require converters, he said. Although AEP has not yet established a preferred route, most of the 350-mile stretch is located on farmland in Oklahoma, Arkansas, Louisiana and Texas. The company is planning to use 25-year extendable land leases with landowners. Regulatory approval is needed in all four states, which AEP hopes to obtain by April.

“Are we the only ones doing this? No. Especially in the Midwest, wind farms are so economical, especially for the ratepayer,” Sundararajan said, pointing to current wind projects by Public Service Company of Colorado, Northern States Power, Southwestern Public Service, MidAmerican Energy, PacifiCorp and Empire District Electric.

One audience member asked how AEP balances the massive wind project with apparently competing support for coal and nuclear subsidies.

“I’m not aware of it. I’m a transmission guy,” Sundararajan replied.