By Tom Kleckner

DENVER — Before introducing a panel of Mountain West Transmission Group representatives during SPP’s recent Markets and Operations Policy Committee meeting, COO Carl Monroe assured everyone that they were sitting inside the cavernous Colorado Convention Center by pure happenstance.

“We set up this meeting in Denver two years ago,” before entering discussions with the group about SPP membership, Monroe said. “So, there is nothing nefarious by us having our meeting here.”

Not surprisingly, after Mountain West announced earlier this year that it intended to join an RTO, and preferably SPP, the MOPC meeting drew record attendance. SPP reported a head count of 185, with 173 attendees signing in. A good number of those were Mountain Westers — as those representing the organization’s various entities refer to themselves — and interested regulators from Colorado and other Western states.

Mary Ann Zehr, senior manager of transmission contracts, rates and policy for Tri-State Generation and Transmission Association, said Mountain Westers “showed up in force … to glean awareness of the SPP ‘process,’ stakeholder interactions and decision-making ability.”

They got a good dose of that, taking in a passionate, member-led discussion of cost shifts within the RTO’s transmission zones — an issue sure to be key should SPP integrate its new members. (See Divide Evident Between SPP Tx Owners, Users.)

“Members have been monitoring the zonal-placement discussion occurring in SPP for a few months now,” Zehr said. “Initial zonal construct and methodologies to address future zonal placement are critical decisional items.”

“We’re highly concerned about a lot of issues related to zonal placement,” said Joe Taylor of Xcel Energy, which owns Public Service Company of Colorado. “We don’t necessarily want to put ourselves at risk. We’re just not 100% resolved around how many zones there will be. Cost-shift negotiations among members … we’re not done with that.”

The Case for Membership

For his part, Monroe said he was pleased to have the Mountain West representatives present, saying they saw a demonstration of how SPP maintains its independence through membership diversity.

“They were able to witness firsthand the active engagement and meaningful voice our stakeholders have in the development of SPP’s policies, even during discussion of contentious issues,” Monroe said.

“My sense is that the group was pleased with the dialogue, ability to contribute and outcomes,” Zehr said. “It was also very helpful for members to be able to meet and have side discussions with existing SPP members.”

In return, Zehr and other Mountain Westers participated in a panel discussion, sharing background on each of their companies and explaining why the organization has decided to join an RTO.

Mountain West — comprising eight investor-owned utilities, municipalities, federal power marketing administrations and cooperatives, and their subsidiaries — announced in January that it was beginning discussions with SPP about joining. The group expects to arrive at a decision by October and could present a recommendation to the RTO’s Board of Directors in January 2018. (See Mountain West to Explore Joining SPP.

Mountain West members serve 6.4 million customers in and around the Rocky Mountains, with a coincident peak of more than 12 GW. Should the organization join, the new RTO’s Tariff would include all the DC ties between the Eastern and Western Interconnections, except for one in Canada.

“Our goal is to keep costs as low as we can for our customers by exploring any option,” said Platte River Power Authority’s Andy Butcher. “What does it cost versus the benefits? We believe there’s value, so that’s why we’re sitting at the table.”

A 2016 Brattle Group study found Mountain West could save $53 million to $71 million annually through 2024 by participating in a day-ahead market and replacing its nine tariffs with one. Eliminating pancaked rates for wholesale transactions and other tariff-revision concepts started the group’s dialogue about RTO membership.

Members said they also want to take advantage of modern market designs to maximize transmission capacity and use the most cost-effective generation. SPP’s Integrated Marketplace, with its day-ahead and real-time markets, is a huge selling point.

“Out here in the West, we use what we call available transmission capability,” Taylor told the MOPC. Noting that SPP’s transmission system is flowgate-based and Mountain West’s is flow-based, he said, “The [flow-based] contract methodology is very conservative. I think we’ll see great benefits without building additional transmission.”

Taylor also made a point of mentioning that, after the panel discussion, the Mountain Westers would be conducting their 70th meeting on Tariff revisions and RTO membership. They and SPP have formed a steering committee and working groups focused on governance, rate design, cost allocation, transmission planning, reliability coordination and the RTO’s Regional State Committee (composed of regulators from 10 different SPP states).

Comes Down to Business

SPP and Mountain West representatives have appeared twice before the Colorado Public Utilities Commission in a pair of information sessions. A third, focused on governance, has been scheduled for Aug. 24. (See SPP, Peak Reliability Pitch RC Services for Mountain West and Mountain West, SPP Tout RTO Membership to Colo. PUC.)

Monroe said SPP is following the same process it did when adding the Integrated System in 2015 and Nebraska utilities in 2009. The two sides are in confidential negotiations, with SPP staff keeping the board, RSC and Strategic Planning Committee updated during executive sessions.

“Most of the time is spent in educating both [parties], because there’s a lot to joining SPP, but we’re also trying to understand the parties that want to join, their concerns and how to address them,” Monroe said.

Asked whether Mountain West would be fully integrated with SPP’s Eastern Interconnection or on its own, Monroe said, “From an SPP staff perspective, we believe that having it all integrated together is the most beneficial form. SPP has technology it’s been exploring … and we believe it’s capable of running the market over the full footprint.”

In the end, each Mountain West utility will have to make a business decision.

“We’re doing that as individual companies,” Zehr said. “We have cost shifts associated with de-pancaking of transmission rates, we have implementation costs … lots of factors that drive our benefit costs as individuals.”

Other utilities from the region could also make the same business decisions about becoming RTO members, although they haven’t come out publicly.

“Because of some of the issues they’re still resolving among themselves, they haven’t added anyone to the party,” Monroe said.

Said Taylor: “Hopefully, in the future, all will be revealed.”