Three weeks after it was unable to agree on a recommended developer for a competitive upgrade in New Mexico, SPP’s Board of Directors regrouped Tuesday and endorsed an industry expert panel’s initial direction.
Following a brief virtual discussion, the board approved a notification to construct award to NextEra Energy Transmission (NEET) Southwest as the Crossroads-Hobbs-Roadrunner transmission project’s designated transmission owner.
Xcel Energy subsidiary Southwestern Public Service (SPS), the incumbent transmission provider, was selected as the upgrade’s alternative designated TO.
NEET Southwest’s bid came in at $291.6 million to build the proposed 90.5- and 44.5-mile, 345-kilovolt lines to connect the Crossroads, Hobbs and Roadrunner substations. SPS’ bid came in at $220 million.
NEET Southwest and SPS were the only entities to submit proposals. A third proposal that came in at $282.7 million is thought to be NEET Southwest’s; according to the IEP’s report, the two proposals were similar, but the SPS bid offered a construction schedule of one year, half as much as the other two.
“No explanation, method or means was provided in the proposal to support the indicated timeframe to construct,” the IEP said of the SPS bid.
The board failed to reach a decision during last month’s board meeting in St. Paul, Minn., when some of the directors were unable to get satisfactory answers from the IEP on the cost and timelines of the winning bid. The board rejected the panel’s recommendation after the Members Committee’s straw ballot gained only three votes in favor. (See SPP Board Rejects Recommended Competitive Project.)
The Members Committee’s straw vote passed in a 10-7 vote. The committee also approved SPS as the alternate DTO 10-2, with five abstentions.
Larry Altenbaumer, one of the more vocal directors during the July discussion, supported the IEP’s recommendation during the Tuesday call.
“As a board member, I don’t have the credentials or the analytic ability to independently develop my own recommendation, and I don’t think it is either the job of me as a board member or the IEP to try to resolve deficiencies in terms of proposals that are submitted,” he said.
“I remain a very strong supporter of the competitive process. but in the end, my conclusion is that the shortfalls we have in this particular process were largely shortfalls in terms of what had been submitted by proposals,” Altenbaumer said.
He said he still was unsatisfied with the panel’s response to one of 10 questions the directors asked the industry experts. Asked to explain who the panel would have recommended had the scores been the same, the IEP acknowledged the scores were very close.
“Therefore, the essence of this question was discussed in the selection of the proposals,” the panel wrote. “The IEP concluded that based on the review of factual information in the proposals as described in the IEP report, the IEP made and stands by its recommendation as stated in the IEP report.”
Altenbaumer said he planned to suggest additional considerations “that I think can further strengthen what is already a very high-quality and comprehensive competitive bid process.”
SPP will review its competitive transmission owner selection process, required under FERC Order 1000, for potential improvements. The grid operator has done the same thing after the four previous IEP panels.
NEET Southwest has been awarded SPP’s last three competitive projects, including Wolf Creek-Blackberry in Kansas and Missouri and Minco-Draper in Oklahoma. (See “Expert Panel Awards Competitive Project to NextEra Energy Transmission,” SPP Board of Directors/Members Committee Briefs: Oct. 26, 2021. See SPP Board of Directors/Markets Committee Briefs: April 26, 2022.)
The IEP was seated last August to evaluate anonymous bids for the project. The upgrade, initially estimated to cost $376.3 million, was proposed by SPS as an alternative to a previously identified project in the 2021 Integrated Transmission Plan. (See SPP Board of Directors/Members Committee Briefs: July 26, 2022.)
