OKLAHOMA CITY — Acknowledging members’ dissatisfaction, SPP CEO Nick Brown promised the Board of Directors and Members Committee that the RTO will complete the oft-delayed Z2 crediting project this year.

“I know the frustration that’s out there. I’ve had meetings with a number of members over the last year,” Brown said in delivering his annual president’s report during SPP’s quarterly board meeting last Tuesday. “Z2 will be the focus of the organization this year, as it has been the focus of the organization the last several years.”

The Z2 project began in 2008 as a result of years of incorrect credits for transmission upgrades. SPP staff told the Markets and Operations Policy Committee on Jan. 12 the project’s complexity and challenges in processing historical data has pushed its expected completion to November of this year. (See Latest Z2 Credit Project Delay Renews Old Frustrations.)

Members have been frustrated with their inability to get an idea of their liabilities or credits.

SPP has resisted giving a rough estimate of the sponsored upgrades. Were staff to provide an estimate, “it would be nothing more than a shot in the dark,” Brown said. “I’m hopeful, and I promise we’re looking at engaging all internal resources to accelerate that [November] date.”

According to the project’s latest schedule, staff will begin processing historical data in late March, concluding the process in late August. The first reports will be submitted and reviewed in August and September, with invoicing beginning Nov. 4.

The software handling the process consists of 58 system components and still requires some manual intervention. Brown pleaded for members’ patience, saying, “We’re on a course to get these calculations performed in this calendar year.

“From [a software] engine perspective, it’s a thing of beauty. From a business perspective, boy it’s complex. We’ve got to work very hard this year to balance the persistence of the effort and the patience to wait for the results.”

Noman Williams, MOPC chairman and COO for South Central MCN, said SPP staff and outside consulting firm Accenture have accelerated the project by adding resources, reassigning work and compressing the testing schedule.

While the Z2 project will consume a significant amount of SPP’s resources this year, Brown said the RTO also will be preparing for several audits, helping its members and states prepare to comply with the Clean Power Plan’s federal rules and dealing with cybersecurity issues.

SPP is set for a SERC audit this year, and Brown said he expects the RTO to be one of the first to be audited under NERC’s new Critical Infrastructure Protection version 5 standards effective April 1. He said staff will expend “a tremendous amount of energy the next several months” preparing for the audits.

“We’re pursuing independent third-party assessments, penetration assessments … to get a sense of comfort we’ve done everything we can do” on cybersecurity, he said.

Brown said the RTO will continue to collaborate with states to prepare for the Clean Power Plan and possible trading plans. He said the “winners” will be able to maximize their assets, while the “losers” will be able minimize the effect on their end-use customers.

“It’s going to be an interesting year.”

FERC Audit Reviewing Market Monitor’s Independence

SPP’s Market Monitoring Unit is undergoing a FERC audit to assess its independence, said SPP Director Josh Martin, chair of the Oversight Committee.

Unlike most RTO market monitors, SPP’s monitoring unit is housed internally. Martin said the Oversight Committee has finalized a position statement on the unit’s independence.

“It’s a step beyond where we’ve been in the past,” Martin said. “We wanted to be as clear as we can the MMU is an independent entity.”

According to the position statement, “The Oversight Committee is confident that an internal MMU provides both an appropriate level of independence and the level and depth of expertise needed to perform its functions and does so at a more economical cost than an external contractor.”

The committee performs an annual assessment to “ensure the continuing effectiveness of the SPP’s market monitoring approach,” the statement said.

Potomac Economics, which performs market monitoring for MISO, ISO-NE, NYISO and ERCOT, is conducting this year’s review of the Market Monitoring Unit. It also will be supplementing the Monitor’s staff until two vacancies are filled.

Alan McQueen, the unit’s director, will retire at the end of 2016, Martin announced. He said McQueen has offered to stay for a transition period.

Martin said Boston Pacific’s annual “Looking Forward” report will cover retail customer reactions to the cost of transmission facilities, how to pay for transmission used to export power from the SPP region and market effects from the unit’s decisions.

Market Working Group Addressing Monitor’s Recommendations

American Electric Power’s Richard Ross, chair of the Market Working Group, reviewed the group’s plan for addressing MMU recommendations to improve the Integrated Marketplace.

The Monitor identified nine issues in last year’s annual State of the Market report, ranging from quick-start logic and ramp-constrained shortage pricing, to potential manipulation of make-whole payment provisions. The market report was the unit’s first since the Integrated Marketplace’s March 2014 implementation.

The MWG is working on numerous revision requests and has suggested forming a task force. While the group continues to work on some of the items, Ross said the group can always use SPP’s revision-request process separately, if it thinks progress is too slow.

“I don’t agree with everything being done, but that’s to be expected,” McQueen said. “These are complicated issues, but I agree with Richard’s assessment [that] these things are in flight. I agree … these action items are being addressed.”

Board Chairman Jim Eckelberger said the eventual disposition of the items will be on the July agenda, when a final report is expected.

“I hope it’s final,” Eckelberger said.

Board Approves MISO Settlement Language, Tariff Revisions

The board approved Tariff revisions, previously endorsed by the MOPC, that will set guidelines for distributing revenues from last year’s settlement with MISO over its use of SPP’s transmission grid. The approval was opposed by Xcel Energy and Golden Spread Electric Cooperative. Dogwood Energy abstained from the members’ vote.

“Whenever we have cross-boundary issues on the Xcel system, we’re following protocols,” said David Hudson, president of Xcel subsidiary Southwestern Public Service. “[SPP] will have to show us why this is preferential to what’s already in the Tariff.”

MISO has agreed to pay SPP and impacted members $9.6 million to settle claims for compensation back to 2014. (See SPP Board, Members Discuss MISO Settlement.)

The Regional Tariff Working Group drafted language to handle revenues accrued during three different phases affecting SPP’s transmission system: pre-Integrated System, with the Integrated System and moving forward. It also revised other Tariff sections to take the new revenue distribution into account. SPP has said it favored allocating the money to transmission owners, with benefits flowing through to the grid’s load.

The board also passed a consent agenda that included seven Tariff revisions, five notification-to-construct modifications and the 2016 SPP Transmission Expansion Plan report (STEP), a comprehensive listing of all the RTO’s transmission projects over a 20-year planning horizon. All were endorsed by the MOPC earlier in the month. (See Markets and Operations Policy Committee Briefs.)

The STEP report consists of 480 transmission upgrades costing $6.1 billion.

Wind Study, Capacity Margin Work Nears Completion

Bruce Rew, SPP vice president of operations, updated the board on the RTO’s recent wind integration study, which indicated it can handle wind-penetration levels of up to 60% with additional transmission and monitoring tools. (See Study: 60% Wind Penetration Possible in SPP.)

The RTO’s first wind integration study in six years projects the grid operator’s wind energy will grow significantly beyond its current 14% of system capacity.

CEO Brown said he was happy to see the study recommend an additional study using phasor measurement unit applications to provide real-time analysis.

“I’m concerned we’re evaluating our current situation with X-ray technology, when MRI technology is available,” Brown said.

Rew said he was optimistic he can bring full results back to the board’s next meeting in April. SPP is holding a two-day wind study summit in Little Rock, Ark., Feb. 17-18 to gather further stakeholder input.

The board also could see final reports and policy suggestions in April from the task forces looking at SPP’s capacity margin and transmission-planning improvements.

“Get your comments in,” Eckelberger urged the board and members, “because we’re going to have some big decisions to make.”

Longtime Member Working Group Chair Retires

Dennis Reed, most recently director of FERC compliance for Westar Energy, was recognized by the SPP board and members with a standing ovation for his 10 years as chairman of the Regional Tariff Working Group. Reed retired from Westar at the end of 2015, but he has promised to remain a presence at SPP meetings through his new venture, Midwest Regulatory Consulting.

Brown said Reed oversaw 16 RTWG meetings and conducted 92 votes last year alone, which he extrapolated to nearly 1,000 votes overall. He also said SPP’s Tariff was only 796 pages in 2005 when Reed first chaired the working group, but today “it’s 5,530 pages of rates, terms and conditions.”

— Tom Kleckner