Monday, October 23, 2017

Overheard at the Gulf Coast Power Association’s 3rd Annual SPP Regional Conference

IRVING, Texas — SPP’s transmission buildout, interregional processes, new generation resources and cyber threats highlighted the Gulf Coast Power Association’s third annual SPP Regional Conference on Sept. 1. Here’s a summary of what the more than 150 attendees heard.

Order 1000 Debated

Wise © RTO Insider

Wise © RTO Insider

Three influential SPP stakeholders debated the merits of FERC’s Order 1000’s competitive transmission process and just how much more transmission needs to be built, after more than $9.7 billion in upgrades since 2004.

“As one who serves members, we know transmission has to be built to get the energy out, but we don’t want it built on the backs of the consumers of SPP,” said Mike Wise, chair of the RTO’s Strategic Planning Committee and senior vice president of commercial operations and transmission for Golden Spread Electric Cooperative. “Transmission is an inter-generational asset. The stuff we’ve built is providing those dividends. The question is how do you get transmission built and paid for by those who are really benefiting from it.”

Williams © RTO Insider

Williams © RTO Insider

“Is the current transmission funding method working? Yes,” said GridLiance COO Noman Williams, who chairs SPP’s Markets and Operations Policy Committee. SPP’s “highway/byway regional cost [sharing] allocates the cost for future transmission facilities based on voltage level. What we’re seeing is pockets of load growth and load shifting. Ultimately, we’re going to see additional build in SPP. If you look at the age of the infrastructure in SPP … there’s a lot of old stuff.

“So will there be a need to have additional transmission built? I’d say yes, if that’s the goal,” Williams said. “The real frontier for transmission in SPP the next 10 to 15 years is at the seams. How do you deal with that, and how do you get energy to the seam?”

Former Missouri Public Service Commissioner Steve Gaw, SPP policy director for The Wind Coalition, said Order 1000 is not yet providing needed solutions to interregional planning. “Order 1000 really needs to be strengthened so we are … implementing [interregional] transmission in the best interest of consumers, the same way we do it regionally.

Gaw © RTO Insider

Gaw © RTO Insider

“I think it should be a top priority for FERC to work on that issue. I think it’s already clear there’s a substantial problem with the order,” Gaw said. “There are significant questions about what type of upgrades will be necessary, and whether or not we can ever get those paid for in the [generation interconnection] process we have now. We need a mechanism to try and figure out whether there’s another way to do this.”

Wise agreed with Gaw, saying the RTOs could use some help from above in building interregional projects.

“There’s a little bit of transmission that needs to be built for load pockets, but I think the projects that need to be built are across the regions,” Wise said. “We need some sort of national directive for getting transmission built across regions. Is Order 1000 the right way to do this? Quite possibly, but we need a federal directive and federal help to get these interregional projects built.”

Williams said competitive transmission is off to a slow start in SPP, contrasting the withdrawal of the RTO’s only awarded project with the ability of PJM and CAISO to approve competitive projects. “We recognize we can do it better and we can do it cheaper,” he said. “We devoted a fair amount of cost to participating in that process, but in the end, we didn’t build a project that didn’t need to be built.”

“The caution I have for Steve and Noman is the load has to pay for this. We need to make sure the [transmission] projects show a real cost-to-benefit,” Wise said. “We do not want to build transmission that benefits the load if the load isn’t going to pay for it.”

gulf coast power association spp

Golden Spread’s Mike Wise, GridLiance’s Noman Williams and The Wind Alliance’s Steve Gaw share a light moment during their panel discussion. © RTO Insider

Wise said wind generation enabled by transmission had produced economic development in his company’s footprint. “Golden Spread landowners … they love to have these wind farms built on their land,” he said. “It’s generating huge amounts of money for them. We want to encourage this.”

Getting Interregional Projects Built

Malone © RTO Insider

Malone © RTO Insider

As chair of SPP’s Seams Steering Committee since its creation in 2010, Paul Malone is well aware of the difficulty the RTO has had in developing interregional projects with MISO.

“We’ve hit a wall when it comes to building interregional transmission,” said Malone, transmission compliance and planning manager for the Nebraska Public Power District. “We’ve built a lot of transmission in the SPP footprint, but we’re having difficulty of finding solutions that cross the borders.”

Alan Myers, director of regional planning for ITC Holdings, lamented the lack of infrastructure across the RTO seams, saying it’s a nationwide problem.

“People have been saying we need some sort of a national policy and vision for some of those things, but we don’t have it,” he said. “That doesn’t mean we can’t stop asking for it. We need a national view to provide correct signals. Each RTO serves their own masters and interests, but sometimes, you need another view to close those gaps.

“One of the things we’ve consistently done as an industry is undervalue transmission construction. … If a project is good across the seams, does it really matter if it’s a low-voltage project? Can’t it just be a good project? How about we start talking about beneficial projects, rather than reliability, economic and policy projects?”

Abebe © RTO Insider

Abebe © RTO Insider

Merchant transmission projects have their own difficulties, said Jonathan Abebe, manager of engineering and transmission for Clean Line Energy Partners. Two of the company’s six proposed projects focused on delivering wind energy from the Great Plains to the seaboards, the Grain Belt Express Clean Line and the Plains & Eastern Clean Line, begin in SPP’s footprint.

“Some projects are more challenging than others, specifically the financing,” Abebe said. “We cross multiple states, so we need approval in multiple states. It’s much easier to make the case for the line in states where wind is being built and where it’s being delivered. Some of issues we’ve had are in the fly-by states that are not getting the wind.

“A lot of these RTOs are used to approving projects coming in front of them. There’s not a process for RTOs to study merchant projects, which causes regulators difficulties in approving them.”

Edwards: Communicating RTOs’ Value is Key

Edwards © RTO Insider

Edwards © RTO Insider

Former MISO CEO Graham Edwards (2006-2009), an SPP director since January, gave the keynote address, urging RTOs to remember their end consumers and to continue to improve interregional processes.

“We need to demonstrate value, and we need to communicate the value,” he said. “We haven’t been very good about communicating the benefit we bring to the … residential and industrial consumers that are on your systems.”

Edwards also said the difficulties SPP and MISO have had in approving interregional projects is partly because of criteria that discount lower-voltage transmission lines.

“The lower-voltage projects need some attention, in my opinion. Interregional planning has some merit to it. … I think the RTOs can, and should, get together and better implement those processes across the seams,” he said.

Renewables, Storage Growing but ‘There’s Still Life’ in Coal

Mehan © RTO Insider

Mehan © RTO Insider

With the Clean Power Plan looming and cheap gas having replaced coal as the dominant generation source, it probably shouldn’t come as a surprise that SPP’s generation interconnection queue does not include a single megawatt of coal.

It does list 22,000 MW of wind and 2,800 MW of solar. The queue also lists 700 MW of gas-fired generation.

Tenaska Power Service’s Courtney Mehan, director of SPP origination, called the CPP “the elephant in the room.”

“Some speculate 2 [GW] of coal retirements as a result of the Clean Power Plan. That overhanging [regulation] and cost is going to drive most of these coal retirements, but there’s still life in these plants.”

Noting a NERC forecast from December that SPP won’t dip below its 13.6% reserve margin until 2024, Mehan said, “Without these kinds of reserve margins, without significant retirements, you aren’t going to see a push to build” non-renewable generation.

Bill Grant, director of strategic planning for Xcel Energy’s interests in New Mexico and Texas, said declining water tables are making it difficult to site new thermal generators that require cooling.

“What are your options?” he asked, before referencing another speaker’s comment on plant maintenance. “Maybe it’s the old utility concept of putting duct tape on the [existing] plant and keeping it going for 50 years.”

Safuto © RTO Insider

Safuto © RTO Insider

Or maybe it’s wind energy, which has provided nearly half of SPP’s total generation at times in 2016. (See “Integrated Marketplace Adds Participants, Wind Energy,” SPP RSC Briefs.)

Grant, who chaired SPP’s first wind integration study, recalled its analysis assumed 13 GW of available wind energy.

“Well, guess what? We’re there. We’re taking that much wind energy right now,” he said. “I think we’ve overcome some of the concerns and myths and operational impediments to do that.”

Ben Lowe, director of policy and market development for energy storage provider Alevo USA, said grid-scale storage, with its ability to integrate renewable energy, and provide voltage and ramping support and frequency regulation, makes it “the grid’s Swiss Army knife.”

“Storage makes the grid more efficient, and its costs are only coming down,” he said. “We’re pretty optimistic about what the future holds.”

Market Working Group Members Reflect

Weigel © RTO Insider

Weigel © RTO Insider

Members of SPP’s Market Working Group said it has been successful even though it has not produced a large number of new products.

The group is “extremely open. Sometimes, I feel like maybe it’s too much discussion,” said Robert Safuto, director of SPP market intelligence for Customized Energy Solutions. “I think it’s better to lean towards what SPP does. Anyone can show up or listen in and offer an opinion. Other markets I deal with are not like that.”

“I feel like coming into the market, we had a voice right away with the major decisions going on,” said Valerie Weigel, manager of marketing financial analytics for Basin Electric Power Cooperative, which joined SPP last October. “We’ve brought our concerns forward and we’ve been heard.”

Franklin © RTO Insider

Franklin © RTO Insider

Cliff Franklin, a senior regulatory specialist with Westar Energy, said the MWG has discussed only one possible new market offering, a ramping product “that isn’t something you bid or offer or clear in the market.”

“It’s more of an opportunity-cost kind of a thing,” Franklin explained. “Here’s the theory: You allow slower-ramping units to start up in the morning and save your faster units for when you really need them. Why do this? If we can manage ramp better, we might reduce the amount of headroom, which reduces production costs.”

Kevin-Galke,-The-Energy-Authority-(RTO-Insider)-web

Galke © RTO Insider

“It’s hard to build a business case around market design or a market element, like battery storage,” said Kevin Galke, a structure and pricing analyst with The Energy Authority. “I don’t think you really want to be the last person to bring a product to market, but I applaud SPP for learning from what others are doing to make a full functioning and operating market.”

Cybersecurity Experts: not if, but when Grid is Attacked

Steven-Bullitt,-Solutionary-(RTO-Insider)-web

Bullitt © RTO Insider

A pair of cybersecurity experts had dire warnings for the audience and suggestions on the protective actions utilities can take.

“A lot of things you’re doing now is [Internet Protocol]-based,” said former Secret Service agent Steven Bullitt, vice president of cyber forensics and investigation for NTT Security, a subsidiary of Nippon Telegraph and Telephone. “I always say you’re either a victim of opportunity or a victim of choice. You’re mostly victims of choice, because you have aging systems and are moving into IP-based solutions, which exposes you to the Internet.

“You’re going to see more attacks in this industry. Other companies may just lose data, but if they hit you, that’s going to have severe consequences.”

Bullitt recalled attending a conference last October, where he was joined by former National Security Agency directors Gen. Keith Alexander and Gen. Michael Hayden. “Gen. Alexander said we’re experiencing the greatest transfer of wealth in our history. He said our intellectual property is being stolen by China and Russia. Gen. Hayden said, ‘Folks, the cavalry is not coming. If you think the government is going to step in, it’s not. You’re on your own.’”

Hebert © RTO Insider

Hébert © RTO Insider

“One thing we know is, it’s not if we’re going to have a cyberattack on the grid, but when,” said former FERC Chairman Curt Hébert, a partner with Brunini, Grantham, Grower & Hewes. “We know this threat has evolved and it’s not standing still. That means we can’t stand still, either. It’s going to be expensive, and I hate that, but it’s necessary so that we can protect our systems.”

Chairman Foresees Renewable Future

Eckelberger © RTO Insider

Eckelberger © RTO Insider

Jim Eckelberger, chair of SPP’s Board of Directors, closed the conference with a look 20 years into the future. He predicted “really sophisticated gas plants” will replace all coal plants and that SPP’s 14-state footprint will have so much renewable energy it may not need fossil-fueled generation.

“The Southwest Power Pool is one of those places where green energy is immensely abundant. … It’s the cheapest energy source anywhere in the United States, besides hydro,” he said.

Unlike some of the other speakers, Eckelberger said he isn’t seeking a national energy policy to guide the way forward. “The president is responsible for federal matters, but governors, not presidents, are in charge of what happens in the land mass. … I think the federal government is pretty useless in this process.”

– Tom Kleckner

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