Monday, October 15, 2018

SPP Board of Directors/Members Committee Briefs

Board Sends $144M Tx Project Back for Re-evaluation

DALLAS — The SPP Board of Directors and Members Committee last week approved 13 of 14 transmission projects in the Integrated Transmission Planning 10-Year Assessment but directed staff to further evaluate the largest project in the portfolio.

RTO members and the board asked staff to further study and update a proposed 90-mile, 345-kV line in Southwestern Public Service’s service territory in the Texas Panhandle and bring back another recommendation to the April board meeting. SPS argued against the need for the project during January’s Markets and Operations Policy Committee meeting, saying it was “the wrong time” for the line. (See SPP MOPC Endorses 14 Tx Projects over Objections.)

SPS President David Hudson argues against the Potter-Tolk line with SPP’s Lanny Nickell | © RTO Insider

SPS President David Hudson and the company’s director of strategic planning, Bill Grant, reiterated comments made a day earlier at the Regional State Committee meeting.

“Overall, our view is this could be a good project,” Hudson said. “It could taste great, but we don’t think it’s ready to come out of the oven. We think it needs more study.”

The line — which would run southwest of Amarillo to an SPS power plant that is currently being evaluated for continued operation — does little to relieve congestion in the area, Grant said. He also noted that several SPS customers are becoming more responsible for their resource needs.

“It just moves [the congestion] a little further south. It does move the north LMPs down, but it doesn’t merge the north LMPs and the south LMPs,” he said. “If anybody believes we’re building this line and all of a sudden the congestion goes away, that’s a misconception.

“I think that whole area needs to be looked at. I would like to see that better vetted before we go down this road.”

SPP staff said the proposed line would resolve local congestion dating back to 2001, estimated at an annual average cost of $21 million the last two years. At a projected $144 million for engineering and construction costs, accounting for 71.6% of the portfolio’s $201 million cost, the project has a benefit-to-cost ratio of 1.4 to 1.7.

“We just don’t believe some of these assumptions are warranted. We’d like to talk about it some more,” Hudson said, pointing to a likely delay of the Clean Power Plan and the replacement of a Tolk Generating Station coal unit with a gas-fired combined cycle plant. “We’re just not comfortable about a project that started coming back in the fourth quarter last year.”

Staff’s supplemental analysis late last year helped identify the project as an economic need. The addition of future generation in the latest planning models indicated more congestion than in previous versions, SPP Engineering Vice President Lanny Nickell said.

SPP Engineering VP Lanny Nickell details the 2017 ITP10 portfolio to the Board, members | © RTO Insider

“We’ve matured in terms of the metrics we actually use to calculate these studies,” Nickell said.

American Electric Power’s Richard Ross advocated making the best use of that analysis.

“If we don’t get ahead of this with the economic analysis staff has done, we could be waiting for the shoe to drop,” Ross said. “When an entity requires another unit, we’re going to get behind the curve.”

Ross was concerned that SPP could face a reliability issue if it couldn’t get the line built in time to meet a future need. “Let’s make use of the best available information,” he said.

SPP Board Chair Jim Eckelberger agreed. Channeling his inner salty dog, the retired Navy admiral said, “We need to go back and make damn sure we’re going in the right direction before we start spending a hell of a lot of money.”

Director Bruce Scherr urged those “who have voiced reasonable doubts and sensitivities” to “come to the table and provide solutions and ideas that improve the understanding of the project and its benefits and costs.”

Members voted overwhelmingly for further study, with only ITC Holdings abstaining.

The ITP10 also recommended a 345/161-kV transformer and 161-kV line upgrade in southwestern Missouri, near Springfield. The line connects to an Associated Electric Cooperative Inc. substation in Morgan and could qualify as a seams project pending negotiations with AECI. (See “SPP-AECI Joint Study Recommends Two Projects,” SPP Seams Steering Committee Briefs.)

Stakeholders Try to Grasp Wind Energy’s Implications

SPP’s Bruce Rew delivers his Integrated Marketplace update | © RTO Insider

The board and members devoted time to discussing the phenomenal growth of wind energy in the footprint and how best to integrate the variable resources.

SPP Operations Vice President Bruce Rew told stakeholders that another 3,100 MW of wind capacity began operating in the last quarter, bringing total installed and operational wind capacity to 15,500 MW. Another 630 MW of wind resources were registered as 2017 began, although they’re not yet operational.

Real-time wind output during the fourth quarter ranged from a record 12,336 MW to a minimum of 384 MW, Rew said. Output averaged 6,041 MW, up nearly 40% from the third quarter.

Wind energy’s variability is exacerbated by the diverse nature of SPP’s 14-state footprint, which ranges from Louisiana to the Canadian border. On Jan. 12, the footprint saw a 98-degree spread in temperatures — from 20 below in Bismarck, N.D., to 78 in Shreveport, La. The simultaneous temperature spread that day was 78 degrees.

Brown said SPP has experienced the loss of more than 10,000 MW in a single 24-hour period, underscoring the importance of “top-notch” forecasting tools.

“That’s the equivalent of 10 nuclear units,” he said. “That type of variance certainly got my attention. [Wind energy] is a wonderful resource, but it certainly keeps us on our toes.”

Ross agreed. He said that while forecasting is important, so is reliability, and he stressed the need for market participants to be able to effectively hedge when pursuing transmission service.

“The reliability issue is the paramount issue,” Ross said. “We need to be mindful of the impact on the existing base of the region and what our actions are doing to the existing customers.”

Ross, who chairs the Market Working Group, said he will coordinate the group’s work with the Transmission Working Group. The MWG will look at reliability unit commitments, negative lift prices and whether the market is sending appropriate price signals.

“It’s not clear what the solutions are, but it’s clear what the problems are,” said Golden Spread Electric Cooperative’s Mike Wise, who chairs the Strategic Planning Committee. “Substantial amounts of generation remain online with minimum loads.”

Given the difficulty of clearing coal plants in the day-ahead market, the RTO must determine how to get those plants offline if they’re not needed for long periods, Wise said.

“We’re pushing huge amounts of energy onto [a] market we have no load for,” he said.

SPP CEO Nick Brown suggested asking staff to develop a list of all the issues being discussed in order to assign responsibility, an idea seconded by Eckelberger.

“My concern is making sure we have the right people looking at the right issues,” Eckelberger said. “Let’s make sure we’re being as comprehensive in our thinking and getting the right answers.”

Rew also said that SPP added 10 market participants during the fourth quarter and now has 187 entities registered for its Integrated Marketplace, 121 of which are classified as financial-only. He said the market systems continue to be readily available, with the real-time balancing market successfully solving 99.97% of all intervals and the day-ahead market delaying postings just twice in 12 months.

SPP ‘Working Diligently’ with Mountain West

Brown said that Mountain West Transmission Group is “working diligently” with his staff as the two organizations explore potential RTO membership. Mountain West announced last month that is was entering discussions with SPP. (See Mountain West to Explore Joining SPP.)

COO Carl Monroe will continue to serve as the RTO’s lead in negotiations with Mountain West and Nickell has been designated as staff lead in the integration efforts, which could take up to two years, Brown said.

“In the past, we’ve learned the value of the officer responsible for integration to be intimately involved in the negotiations over the final details,” he said.

Brown said Mountain West’s potential membership is “front and center on my plate,” along with seams projects, integrating wind energy, cybersecurity and cost shifts within SPP’s transmission zones. (See Strategic Planning Committee to Continue Work on Tx Cost Shifts.)

“Our charge as staff is to bring very specific proposals to the SPC for [its] consideration,” Brown said. “I can assure you we will wrestle this to the ground very quickly.”

He said he had assigned Paul Suskie, SPP’s executive vice president of regulatory policy and general counsel, to lead the zonal cost shift effort.

Oversight Committee Provides Update on MMU Search, Audit Compliance

A search firm is conducting a nationwide hunt for the new executive director of the SPP Market Monitoring Unit, according to Oversight Committee Chairman Joshua W. Martin III, who hopes to narrow the selection by the committee’s next scheduled meeting. Current Director Alan McQueen has indicated that he wants to retire this year.

Martin, an SPP director, said the MMU is filing quarterly compliance reports as a result of last year’s FERC audit, the latest of which was submitted last week. (See FERC Calls for Changes to Protect SPP Market Monitoring Unit Independence.)

“We’re satisfied, based on the results of that report, that the MMU is operating correctly,” Martin said.

SPP has not yet followed through on FERC’s suggestion that the MMU be physically separated from the RTO’s office space inside the corporate headquarters, but the operation is “occurring.” Other items from the report have been implemented, such as new time-keeping standards and practices ensuring new employees are aware of the unit’s independence, he said.

Sugg | © RTO Insider

Barbara Sugg, the RTO’s chief security officer, said that the amount of malicious cyber activity continues to grow and that email phishing attacks are “more prevalent and real than any other security threat.”

“The numbers are just staggering. Your numbers are staggering,” she told members. “It’s crazy, the amount of traffic that tries to come in. It’s not targeted at SPP, but we’re just bombarded with the amount of information that comes up to the firewall.”

Sugg said SPP received 12 million emails in just one month and that only 7% were deemed legitimate. Eight million were deemed malicious.

SPP sends out emails as bait to see if anyone will click where they shouldn’t and then uses them as a learning experience, she said. Sugg regularly briefs the OC on cybersecurity issues and also represented all RTOs in testimony to Congress last week. (See related story, Interdependence Key to Cybersecurity Efforts, Congress Told.)

Eckelberger said that while SPP has done well with various audits and inspections, “the black eye we still carry with us” is a SERC Reliability Corp. cyber audit in 2013 that has yet to be closed.

“It’s still ugly, but [during] the last year — as a result of learning what’s going on here — we’ve quintupled the amount of people in the organization dedicated to cybersecurity,” Eckelberger said. “And we’re still less than other organizations.”

SPP RE Works to Improve Misoperations Numbers

Dave Christiano, chair of the SPP Regional Entity trustees, delivered mostly good news in a report. He said the six reported system events last quarter were at the lowest level of severity, improved audit processes have resulted in decreased audit times and team sizes, and 90% of violations were self-identified, denoting strong compliance cultures.

“That’s a good thing,” he said of the self-identified violations. “It’s good for you, it’s good for us.”

Director Harry Skilton noted misoperations were a “new green line” for FERC and inquired about how SPP ranked compared with other grid operators.

“We’re not one of the better performers,” Christiano said.

The most recent quarterly misoperations report shows an 88.7% success rate for relay operational performance. SPP’s sparsely populated footprint — approximately 18 million people in all or parts of 14 states — and long transmission lines play a part in the results, Christiano and Brown both noted.

“The problem is more the backup relays than the primary relays,” Christiano said. “When the primary relays operate, the backups don’t. They don’t get any credit for operating correctly, which might be part of the reason.”

“It’s hard for me to believe our relaying practices aren’t any more robust than anyone else’s,” Brown said, “but that could be.”

Board Remands 1 Revision Request, Approves 6 More

The board remanded BPWG-RR 155 back to the Regional Allocation Review Task Force, asking the group to decide whether the change needs to become a business practice and come back for another vote. The revision request, which failed to pass the MOPC in January, documents the potential Regional Cost Allocation Review remedies and clarifies the process to be used when implementing a remedy.

SPPs’ January Board of Directors/Members Committee meeting | © RTO Insider

The board approved RTWG-RR 187, with only Westar Energy voting against it, replacing the old capacity margin terminology with a 12% planning reserve margin requirement. The change incorporates previously approved policies that identify who is responsible for resource adequacy, the resource adequacy requirement, and how and when the requirement can be and should be met. (See “Stakeholders Endorse 12% Planning Reserve Margin, Policies,” SPP Markets and Operations Policy Committee Briefs.)

The board’s consent agenda, which passed unanimously, included five revision requests, a change to the Transmission Process Improvement Task Force’s white paper, the 2016 SPP Transmission Expansion Plan and several other minor revisions.

  • ORWG-RR 134: Clarifies previously ambiguous operating criteria language for the initial submission and subsequent updates of unit de-rate information in SPP’s control room software system.
  • MWG-RR 191: Clarifies that there should not be a requirement to reprice the day-ahead and/or real-time markets for every data input/software error.
  • ORWG-RR 195: Simplifies the process of SPP’s data-specification document required by NERC Reliability Standards IRO-010-2 and TOP-003-3 and makes basic formatting changes to the operating criteria document.
  • RTWG-RR 197: Completes the MMU’s annual review of frequently constrained areas by updating the list of constraints and resources.
  • MWG-RR 198: Uses a variable demand curve that moves SPP toward a more robust valuation of regulation and operating reserve and more accurately addresses and values operating and energy shortages during scarcity events.

Tom Kleckner

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