Monday, July 23, 2018

SPP Board of Directors/Members Committee Briefs: July 25, 2017

Z2, Two Other Task Forces Expire

DENVER — The SPP Board of Directors and Members Committee approved the Markets and Operations Policy Committee’s decision to allow the Z2, Export Pricing and Gas-Electric Coordination task forces to expire. (See related story, SPP Moves Ahead with ‘Tweaked’ Panhandle Congestion Study.)

Stakeholders also approved two recommendations from the Z2 Task Force. The first eliminated credits for non-capacity upgrades, such as substation facilities, while the second disposed of credits for short-term transmission service of less than a year.

SPP’s Board of Directors and Members Committee meets in Denver | © RTO Insider

The motion passed the Members Committee with two “no” votes (NextEra Energy Resources and Oklahoma Municipal Power Authority) and an abstention (ITC Holdings).

However, in nearly a year of work, the task force was unable to reach consensus on simplifying the vexing process spelled out in Attachment Z2 of SPP’s Tariff, in which financial credits and obligations are assigned for sponsored transmission upgrades. The group expressed “significant concern” over SPP’s existing congestion rights processes and the “perceived lack of hedging” but was unable to reach consensus on using incremental long-term congestion rights (ILTCRs) to replace Z2 credits.

NextEra Energy Resources’ Aundrea Williams | © RTO Insider

“With respect to transparency, neither of these two changes does anything to move the ball forward,” said NextEra’s Aundrea Williams. “The vast majority of the task force agreed there was a better market solution out there but couldn’t support it. Perhaps when the TCR market is improved, that’s the time to look at the Z2 process.”

During the MOPC meeting last month, members learned staff would have to resettle nine years of historical Z2 credits and obligations because of billing disputes, “minor” software defects and problems in calculating the present value of creditable balances. (See “More Z2 Woes; SPP to Resettle 9 Years of Data,” SPP Markets and Operations Policy Committee Briefs: July 11-12, 2017.)

Board Reaffirms Seams Project with AECI

Golden Spread Electric’s Mike Wise | © RTO Insider

Unfazed by a nearly 50% cost increase, stakeholders reaffirmed their endorsement of the proposed $13.75 million seams project with Missouri-based Associated Electric Cooperative Inc. (AECI).

Golden Spread Electric Cooperative and Southwestern Public Service opposed the project, while NextEra and American Electric Power abstained.

The project involves installing a new 345/161-kV transformer at AECI’s Morgan substation and an uprate of a related 161-kV line, both near Springfield, Mo.

SPP’s Lanny Nickell explains the High Priority study | © RTO Insider

Nickell attributed the project’s increase to an increase in the amount of work needed to upgrade the 161-kV line. Staff’s cost-benefit re-evaluation of the project since last month’s MOPC meeting has shown SPP will still receive most of the benefits. (See “Staff to Review AECI Joint Project After Cost Increase,” SPP Markets and Operations Policy Committee Briefs: July 11-12, 2017.)

Based on the amount of unforeseen work, AECI has agreed to increase its share of the project’s cost to 10.9%, or $1.5 million. SPP will bear the remaining $12.25 million.

The project would be regionally funded, as it solves congestion issues on SPP’s side of the seam. It is contingent on reaching an agreement for compensating AECI, which will own the project and be responsible for its construction, operations and maintenance.

Brown: SPP has Good Story for Congress

SPP CEO Nick Brown | © RTO Insider

Previewing testimony he would deliver to a Congressional energy subcommittee the day after the board meeting, SPP CEO Nick Brown said he had a good story to tell. (See related story, RTOs to Congress: Don’t Lose Faith in Markets.)

“SPP is obviously one of the nation’s RTOs that has been successful in reliably implementing a significant amount of wind,” he said. “We have been very successful at reliable operations because of three specific actions we have taken over the last decade.”

Those actions, Brown said, included SPP’s $10 billion infrastructure build, deploying a day-ahead market for unit commitment and consolidating 18 balancing authorities into a single entity.

“Take any of the three away, and we would not be where we are today,” he said. “Make no mistake, we have been very successful because of the bold moves our members have taken over the last decade.”

Vote on FERC Nominees Possible in August

FERC’s Patrick Clarey said the U.S. Senate’s shrinking August recess may give the body time to act on nominees waiting to join the five-person commission, which currently consists of acting Chair Cheryl LaFleur.

Republicans Robert Powelson, a Pennsylvania commissioner, and Neil Chatterjee, energy adviser to Senate Majority Leader Mitch McConnell (R-Ky.), advanced out of the Senate Energy and Natural Resources Committee in June on the strength of 20-3 votes. A confirmation vote by the full Senate has not been scheduled, but it is on the executive calendar, Clarey said.

“There could be a vote any time,” he said.

The White House has said President Trump intends to nominate Republican attorney Kevin McIntyre as chair and Richard Glick, the Democrats’ general counsel for the committee, to fill the remaining two spots on the commission. (See Trump Names Energy Lawyer McIntyre as FERC Chair.)

However, McIntyre and Glick’s official paperwork has yet to be submitted, Clarey said.

FERC has been without a quorum since Chairman Norman Bay stepped down in February. Colette Honorable left the commission when her term expired June 30.

Oversight Panel Members to Serve as Liaisons with SPP Officers, Businesses

Oversight Committee Chair Joshua W. Martin III said the committee’s members will “establish ongoing contact” with SPP officers and staff and oversee defined areas of responsibility.

The liaisons are: Harry Skilton (internal audit), Phyllis Bernard (compliance), Graham Edwards (Market Monitoring Unit) and Bruce Scherr (security).

In another personnel-related action, Brown notified members that NextEra’s Williams, Duane Highley (Arkansas Electric Cooperative Corp.), Dave Osburn (Oklahoma Municipal Power Authority), David Hudson (SPS), Philip Crissup (Oklahoma Gas & Electric) and Jon Hansen (Omaha Public Power District) have all reached the end of their terms on the Members Committee. With the exception of Crissup and Hansen, all have chosen to run for re-election.

Consent Agenda Includes 8 Revision Requests

Members and the board unanimously approved a consent agenda that included eight revision requests and several other items:

  • MWG-RR185: Clarifies which SPP criteria document (Planning Criteria or Operating Criteria) is referenced when used in the market protocols and the Tariff’s Attachment AE, and directs users to the correct document.
  • MWG-RR82: Ensures combined cycle units avoiding outage deviation penalties and do not lose eligibility for start-up cost make-whole payments (MWPs) because of physical or environmental limitations. Adds a previously discussed increase in the MWPs’ grace period for commitments from one hour to two hours. The revision’s implementation date was scheduled for this August to allow SPP to complete development of software that allows market participants to register and submit separate offers for each of the combined cycle units’ multiple configurations.
  • MWG-RR222: Includes a multi-configuration combined cycle resource’s (MCR) committed and actual configuration for each interval in a bill determinant report, allowing MCRs to shadow the configuration SPP is using to settle these resources.
  • MWG-RR225: Cleans up confusing and misleading Tariff language on ILTCRs that could have construed ILTCRs as load-serving entities or non-LSEs.
  • MWG-RR226: Changes settlement location pairs that have potential for unconstrained flow to electrically equivalent settlement locations during the auction revenue rights process to comply with a FERC order (ER17-310). SPP will post the settlement locations before the annual ARR allocation process, along with the system topology and other data.
  • MWG-RR229: Satisfies FERC Order 831’s requirements on energy offer caps by using actual costs for MWPs on offers above $1,000/MWh. According to the order, costs underlying a resource’s cost-based incremental energy offer above $1,000/MWh must be verified before that offer can be used to calculate LMPs.
  • ORWG-RR228: Clarifies existing planning criteria language for system operating limits to reduce the potential of misinterpretation by entities complying with NERC reliability standards.
  • RTWG-RR233: Ensures that eligible network customers will not be billed twice for the same deliveries by not assessing charges against a specific use of an owner’s facilities that do not receive the benefit the charges provide to other transmission owners.

Also approved on the consent agenda:

  • The scope for the expedited re-evaluation of the Kummer Ridge-Roundup 345-kV line. (See “MOPC Endorses Re-evaluation of Basin Electric Project,” SPP Markets and Operations Policy Committee Briefs.)
  • A request that FERC waive SPP rules to allow restating of settlement prices for TCRs at Omaha Public Power District’s Fort Calhoun nuclear plant site. The plant was retired Dec. 1, 2016, but incorrect modeling of shift factors from Dec. 1 to Dec. 14 resulted in the marginal congestion component being overstated and the TCR settlements sourcing at the location being understated.

— Tom Kleckner