By Tom Kleckner

OKLAHOMA CITY — Spurred on by two of its newest members, the SPP Regional State Committee last week tasked its Cost Allocation Working Group (CAWG) with drafting a report on adding new members and determining their impact on existing cost allocations.

Geri Huser, chair of the Iowa Utilities Board, led the push for the motion, which passed unanimously and came during a report from SPP CEO Nick Brown on the integration of Mountain West Transmission Group into the RTO. She was supported by DeAnn Walker, chair of the Texas Public Utility Commission, and long-time RSC member and Oklahoma Corporation Commissioner Dana Murphy.

“I would like to know we are getting information from our staff on the CAWG and be able to discuss that with other members,” Huser said during the RSC’s Jan. 29 meeting. The CAWG, composed of state commission staff members, reports to the RSC and its commissioners.

“I find it’s difficult for information to be shared in a manner that is timely for those of us that serve on other commissions or boards,” Huser said. “We would like to have as much information as early as possible in the process, so we can make decisions.”

Brown told the regulators that a small negotiating team composed of himself, Board of Directors Chair Jim Eckelberger, Director Larry Altenbaumer, Westar Energy’s Kelly Harrison and Golden Spread Electric Cooperative’s Mike Wise have been meeting “almost daily” with Mountain West representatives as part of a “very concerted effort” to reach a final decision by the end of February. (See SPP, Mountain West Resolving ‘Contentious’ Issues.)

He said SPP is intent on scheduling a “decision meeting” in mid- to late February with the board and Members Committee, to review the results of those negotiations and other closed-door meetings.

“Assuming the board and member companies accept those policy statements, we will engage our normal and very public stakeholder process to take those policy decisions and put them into specific language that would become part of our Tariff,” Brown said. He reminded the RSC that Tariff language and other changes would go through the board before being filed with FERC.

“Many had hoped we would have reached a decision by now,” Brown said. “In my personal view, while we are very close, we’re just not quite there. We have a lot of details that need the full vetting of our Members Committee, which has yet to see the details arrived at by our smaller negotiating team.”

Murphy responded that there were “many who had hoped” a decision wouldn’t have been reached by now. She said she has met with Oklahoma SPP members whose constant concern seems to be the timeline.

“The overarching concern I have, and it was raised by the Integrated System [and its 2015 integration], was the pattern of special meetings,” Murphy said. “I know at least three other states had that issue as well. It’s a little bit concerning to be having off-pattern meetings, given the scope and complexity of this potential integration.”

The commissioners have primary responsibility for cost allocation, financial transmission rights, resource adequacy and remote resources planning issues, and have held two Commissioners Forum meetings on Mountain West. Most of the CAWG members have signed nondisclosure agreements that have allowed them to participate in Strategic Planning Committee meetings on the integration.

That is not enough for some members of the RSC.

“SPP staff has done a good job trying to provide us with information that’s needed, but when things change so quickly, we don’t have time to digest them,” Murphy said. “When we talk about a possible decision being made, I get concerned. We just found out what some of the changes are” in a closed education session.

Brown asked the committee whether it wanted the CAWG report before negotiations end and the board and members consider “high-level” policy matters.

“We’re simply telling them to perform the duties that have been laid out [for the CAWG],” Huser said. “If we provide them with this direction, they can begin preparing and providing us with information.”

“If you started today, it would not be a wasted effort,” Brown said. “We’re prepared to provide a lot of information that’s not going to change.”

The CAWG’s John Krajewski, a private consultant, agreed that, under the group’s New Member Review Process document, enough information on Mountain West’s pending integration had been disclosed to trigger a mechanism to allow the work to proceed.

The RSC asked for an action plan and that the CAWG’s report include — but not be limited to — information on the new members’ transmission facilities and planning, generation and load numbers, and proposed modifications to SPP’s governing documents. The report will also include a cost allocation review of rate standards, impacts to existing members, facilities and entities to which cost sharing applies, and a benefit-cost analysis.

Huser, who said transparency is very important to her, did not let the matter rest. Concerned that the previous discussion might not be reflected in the minutes, just before the meeting adjourned she requested a motion for a special meeting or closed session in April so that the commissioners can deliberate the Mountain West integration. The motion carried unanimously.

Committee Takes on Cost Allocation Issues

The RSC also directed the CAWG to work with staff on identifying cost allocation issues and report back to the committee in April. Members unanimously passed an action item rather than a motion, following a lengthy deliberation over how to word the action.

The vote followed a presentation on cost allocation in wind-rich areas by Sunflower Electric Power’s Al Tamimi, chair of the Generation Interconnection Improvement Task Force. The group has been working to suggest improvements in SPP’s study processes that address the “extreme amounts” of new generation in its interconnection queue and new requirements from FERC-proposed rulemakings.

Tamimi, representing a small entity focused on keeping its customer rates low, said SPP has undergone a paradigm shift in why it builds transmission infrastructure. Projects used to be based on changes in load or in designated resources in the same geographical area where the facilities were built, he said, but today’s renewable generation is built at great distances from load centers, with many wind projects in small load zones exported elsewhere.

This additional wind benefits the SPP market, but not necessarily the local zones, Tamimi said. He said those zones are saddled with two-thirds of the costs of byway projects in SPP’s highway/byway methodology but don’t benefit from the reduced energy costs.

“Load growth is mostly stagnant … in our footprint,” Tamimi said, “but we’re still seeing transmission getting built, we’re still seeing wind being integrated on our system.”

The presentation was eventually swallowed up in the larger discussion of cost allocation and how to frame direction to the CAWG.

“I agree with expanding and looking at the total impact,” Tamimi said. “The wind-rich areas, especially those with small loads and ratepayers, are the ones I’m looking to protect.”

“This is something that needs to be addressed. You did a great job of teeing up the issues,” Southwestern Public Service’s Bill Grant told Tamimi. “We ruled out other possible solutions because of Z2 and other issues we have. The study needs to be comprehensive, not just highway/byway funding. It’s how we plan the system … studying wind deliverability is the low-hanging fruit.”

Tamimi shared with the RSC study results that showed Sunflower, which accounted for 2.41% of SPP’s load from 2011 to 2018, wound up paying $143,874/MW in byway costs for its share of the load. It was the only company above six figures, with second-place SPS at $98,788/MW.

The study, which didn’t include the Integrated System entities, was conducted with data from energy management firm ACES. Working with SPP staff will enable the CAWG to widen its pool of data.

“This is obviously well within the RSC’s authority,” said Kelson Energy’s Rob Janssen, who represents Dogwood Energy and helped develop the highway/byway methodology. “[We] came up with a very strong process that led to wind development and a robust grid, but we’ve gone well beyond the amount of wind we originally thought the customers would want to pay for. I’ve become more and more convinced we need to have a serious look at cost allocation again. I see Sunflower’s presentation as a plea for help, but my concern is where does the stakeholder involvement come in?”

“I’d like to move forward, but not on a really narrow path,” Walker said. “This discussion has gone beyond wind-rich areas. I don’t think you can look at the wind-rich areas and what Sunflower has raised in a vacuum or a silo.”

SPP staff pushed back on the RSC’s direction, pointing out the Strategic Planning Committee had just held a long discussion on transmission planning and energy-only resources two weeks prior. (See “Energy-only Resources Report Leads to Discussion, not Results,” SPP Strategic Planning Committee Briefs.)

“We’re respectful of the urgency Sunflower has shown, but this is just one of half a dozen issues that all need to be addressed together, rather than in one-off ways that tend to create unintended consequences,” Brown said. “We’re trying to get our hands around all the issues we’ve discussed over the last six months and determine the best way to tackle these in a comprehensive way.”

“I don’t know if the RSC members are aware of what the SPC issues are,” pointed out RSC Chair Shari Feist Albrecht, of the Kansas Corporation Commission.

Eckelberger expressed his support for the motion, before it was transformed into an action item.

“From my point of view, broader would be better,” he said. “What bothers me a lot is that we’ve seen this come along for three to four years now in the wind-collection areas. They’re being hurt. We need to do something to make sure equity comes out of the planning process as soon as we can. Let’s take that small step to see what’s really wrong here with the lack of equity and who’s paying the bills.”

RSC Agrees with Working Group’s Recommendations

While not being saddled with additional work, the CAWG also brought forward several recommendations to the RSC, all of which passed.

The committee endorsed the working group’s lessons learned from its work on SPP’s aggregate study safe harbor criteria. Safe harbor is applied when the utility granted a transmission service request (TSR) has no more than 20% of its designated resources (used to meet a load-serving entity’s capacity margin requirement) coming from wind or has designated resources greater than 125% of forecasted load, and when it has a five-year minimum commitment for the TSR.

Among the CAWG’s suggestions were to work with staff and stakeholders to come up with a reasonable methodology in updating the $180,000 safe harbor amount, determine whether the 125% criterion adversely affects smaller transmission customers and verify whether the original concerns that led to the 20% wind limit still exist.

“We just don’t have the algebraics [on the CAWG],” joked Adam McKinnie, chief utility economist with the Missouri Public Service Commission who was deeply involved with the group’s work.

The CAWG also recommended the RSC endorse the Supply Adequacy Working Group’s revision request (RR251) that addresses three issues FERC used in rejecting SPP’s resource adequacy package last year. (See FERC Again Rejects SPP’s Resource Adequacy Revisions.)

SPP Works on Response to FERC Resiliency Inquiry

But the CAWG didn’t monopolize the RSC’s agenda. Brown also briefed the committee on SPP’s planned response to FERC’s review of how RTOs define and ensure resiliency, which was initiated following the commission’s rejection of the Department of Energy’s call for cost-of-service payments to coal and nuclear generators. (See FERC Rejects DOE Rule, Opens RTO ‘Resilience’ Inquiry.)

Brown said staff have crafted its initial thoughts on the set of 39 questions FERC has asked in the docket (AD18-7) and will work with the SPC to compile stakeholders’ thinking on a “topic that is extraordinarily broad.”

“FERC raises any number of questions, many of which are outside the roles of at least this RTO,” he said. “We initially considered seeking an extension of time, but after seeing the questions, they’re so broad that the most the commission could be looking for at this point is initial thinking. We realized there’s no way in the world we could attain any consensus.”

The SPC has scheduled a Feb. 23 webinar to discuss the draft of responses, which will be distributed by Feb. 20, and will solicit additional input. Final comments will be due March 2, so that SPP can meet FERC’s March 9 deadline.

“It will be interesting to see what this morphs into,” Brown said. “I could see this going nowhere on one extreme, or on the other extreme we end up with a whole portfolio of resiliency standards, to which the industry must comply.”

RSC-Related Membership Changes

January’s RSC meeting was the first for Albrecht as its chair. She replaces Steve Stoll, who left the committee when his term on the Missouri PSC ended. Stoll was replaced on the RSC by Missouri Commissioner Scott Rupp.

The committee expects to add Louisiana Public Service Commissioner Foster Campbell for April’s meeting.

Albrecht and Paul Malone, chair of the Markets and Operations Policy Committee, are working to fill two vacancies on the Regional Allocation Review Task Force, which works with both committees to define the analytical methods using in reviewing the reasonableness of regional and zonal cost allocation.

Dennis Grennan, with the Nebraska Power Review Board, assumed the task force’s chairmanship on Jan. 1.

— Tom Kleckner