Thursday, November 15, 2018

SPP Board of Directors/Member Committee Briefs: Oct. 30, 2018

By Tom Kleckner

The SPP Board of Directors and Members Committee met Oct. 30. | © RTO Insider

Stakeholders Honor Eckelberger, Skilton’s Service

LITTLE ROCK, Ark. — SPP directors, members, staff and other stakeholders took time out last week from the normal board week activities to honor two directors who predate the organization’s RTO status.

The RTO treated Jim Eckelberger, who stepped down in April after 14 years as the Board of Directors’ chairman, and Harry Skilton, vice chair for 14 years, to a catered farm-to-table dinner the night before the Oct. 30 board meeting.

The SPP board and members give Skilton (foreground) and Eckelberger a standing ovation. | © RTO Insider

Staff shared a video of family, friends and stakeholders sharing their favorite anecdotes about the two men. Both were presented with plaques topped by — what else? — replicas of transmission towers.

Eckelberger and Skilton are the last remaining members of SPP’s original board, which was created in 2000. FERC didn’t recognize SPP as an RTO until 2004.

Since then, SPP has expanded its footprint with the addition of Nebraska utilities and the Integrated System, and by offering reliability coordination (RC) services to Western Interconnection entities. The RTO has also become one of the lowest-cost grid operators by creating day-ahead and financial transmission rights markets and investing billions in transmission infrastructure.

Eckelberger, who takes great pride in SPP’s cost of service, pointed to an LMP contour map of the footprint, dominated by the cool blue denoting prices in the $20 to 30/MWh range, as an example of the RTO’s effectiveness.

“SPP greatly appreciates the 18 years Jim and Harry dedicated to SPP,” CEO Nick Brown said. “They have made extraordinary contributions to our company and were instrumental in transforming SPP into the regional transmission organization we are today.”

“Both should be proud of the legacy they have created here for SPP,” said Larry Altenbaumer, who replaced Eckelberger as chairman in April.

“I’m very fortunate to have 18 years at SPP be the capstone of my career,” Skilton said.

Both men are transitioning into emeritus status, effective Jan. 1.

“We’re fortunate they’ll be staying on in this emeritus role, because they have a wealth of experience,” said the Members Committee’s Tom Kent, COO for Nebraska Public Power District.

Awards of recognition for Skilton and Eckelberger | © RTO Insider

Members Elect 2 New Directors

The Members Committee replaced Eckelberger and Skilton on the board by electing newcomers Susan Certoma and Darcy Ortiz during its annual meeting. The appointments are effective Jan. 1.

Bruce Scherr, who joined the board in January 2016, was also re-elected.

Newly elected Director Susan Certoma | © RTO Insider

Certoma is president of Enterprise Engineering, which provides software and consulting to financial firms. She previously held technology-related positions at Wachovia Bank, Goldman Sachs, Merrill Lynch and Lehman Brothers during 30 years in the finance field. Certoma holds a bachelor’s degree in management and economics and an MBA from St. John’s University.

Ortiz is Intel’s vice president and general manager of corporate services. She previously led the global team responsible for Intel’s IT operations and services and served in several CIO positions. She has a bachelor’s degree in business administration from the University of New Mexico and an MBA from the University of California, Berkeley.

Brown said the new members’ technology backgrounds will be invaluable to SPP.

“Much of our continued success now hinges on effective management of data and technology infrastructure and our approach to cybersecurity,” he said in a statement.

The committee also elected seven representatives to three-year terms on the committee, with “the narrowest of unanimous margins,” Altenbaumer joked.

Members Committee ballot | © RTO Insider

The representatives are Kent for State Power Agencies; Blake Mertens (Empire District) and Kevin Noblet (Evergy) for Investor-Owned Utilities; Jason Atwood (Northeast Texas Electric Cooperative) and Mike Wise (Golden Spread Electric Cooperative) for Cooperatives; Kevin Smith (Tenaska Power Services) for Independent Power Producers/Marketers; and Jody Sundsted (Western Area Power Administration – Upper Great Plains) for Federal Power Marketing Agencies.

Mertens is the only newcomer; everyone else was re-elected.

Altenbaumer Tweaks New Governance Schedule

Altenbaumer continues to tinker with the board’s meeting schedule as he enters his first full year as chairman, saying he wants to “elevate the work of the board and members to focus on those things that are strategically important.” (See SPP Strategic Planning Committee Briefs: Oct. 18, 2018.)

Board Chair Larry Altenbaumer explains changes in 2019 as CEO Nick Brown (left) and Director Graham Edwards listen. | © RTO Insider

Following feedback from members and the Regional State Committee, Altenbaumer has scheduled a joint session between the board and RSC on the day the state regulators normally meet (the day before the board’s quarterly meeting). That time will be used for joint informational and background presentations to the directors, members and RSC.

“It’s an opportunity to become more efficient,” Altenbaumer said. “Many presentations given to the RSC turn out to be warmups for the same presentations to the board the next day.”

Altenbaumer has left slots in the RSC and board meetings for executive sessions, but he promised “anything that relates to decisions will be addressed during the typical [open] board meeting.”

Addressing stakeholder concerns that the changes could reduce transparency, Altenbaumer said keeping discussions from public view is “by far the last thing intended from this.”

“If any of you ever feel these things are trending in the wrong direction, as far as engagement and transparency, bring it to my attention,” he said.

Given a chance to respond publicly to Altenbaumer’s comments, no one did.

As proof of how governance will be handled in the future, Altenbaumer noted the board’s only approval item was the consent agenda.

“That speaks to the collaborative process,” he said. “This is a desire to try and improve the overall governance.”

Two days later, SPP moved its December board meeting, which has traditionally been used to approve the budget, from Little Rock to the more accessible Dallas/Fort Worth International Airport. The meeting has also been shortened by two hours; next year, it will likely become a conference call.

MMU Clarifies its Role in Generator Retirements

MMU Executive Director Keith Collins addresses the board and members. | © RTO Insider

Keith Collins, executive director of SPP’s Market Monitoring Unit, clarified comments he made during recent governance meetings that raised stakeholder concerns about the MMU’s involvement in generator retirement decisions. (See Stakeholders Push Back Against SPP Retirement Changes.)

At October’s Markets and Operations Policy Committee and Strategic Planning Committee meetings, some stakeholders pushed back against the possibility of the MMU intervening in regulatory proceedings. Collins said the MMU would only raise concerns in instances of physical withholding or other market power issues.

“The SPP Tariff is very clear,” he said. “Physical withholding and market power are under the MMU’s purview.”

“The MMU has an obligation to investigate and review those issues,” said Director Joshua W. Martin III, who chairs the Oversight Committee. The MMU reports to Martin’s committee.

Collins said the MMU has always used available data when it reviews generator retirement requests, and that the MOPC discussion was an attempt to collect data from market participants to improve its analysis.

He noted the Tariff is unclear as what the MMU should do if it identifies physical withholding or market power.

“Our responsibility rests with FERC,” Collins said. “To the extent we identify market power of physical withholding, we would have to raise that issue with FERC, unless the protocols or the Tariff [are] clarified as to what steps should be taken.”

“The Oversight Committee has reviewed this issue, and we’re comfortable with where it is right now,” Martin said.

SPP staff have said they will provide the MOPC and the board draft Tariff revisions for generator retirement procedures in January.

SPP-MISO Operating Procedures not yet Documented

Brown said during his president’s report that it is “untenable” that SPP and MISO “end up in situations where our operators are confused,” as happened in January’s “Big Chill” event.

The two RTOs have increased their coordination across their seam since the Jan. 17 event, when severe cold weather and generation shortfalls in MISO South led MISO to exceed its regional dispatch limit on transfers between its northern and southern footprints across SPP’s system. MISO made emergency energy purchases from Southern Co. before operations returned to normal.

Brown recalled that shortly after the event, he had told the board that one of his top priorities for the year was to reach an agreement with MISO on “exact operating procedures.”

“I was hoping to report we have signed documents for this meeting, but we don’t,” Brown said.

He was able to share with directors and members a pamphlet that says SPP members receive $1.7 billion in annual benefits, an 11-1 benefit-cost ratio. The document notes the Integrated Marketplace has produced more than $2 billion in savings since going online in 2014 and references a study that indicates every dollar SPP spends on transmission investment returns $3.50 in benefits.

“I would have no problem standing before any regulatory committee and defending these numbers,” Brown said.

Western RC Services to Net $3.4M

Operations Vice President Bruce Rew said SPP’s RC contracts with Western Interconnection entities will result in $3.4 million in net income through 2024. (See CAISO RC Wins Most of the West.)

SPP expects to earn $28.4 million in revenue over the life of the five-year contracts, which are effective in January 2020. However, adding up to 20 staffers in Little Rock to handle the new responsibilities will eat into much of that revenue.

Under the contract’s terms, the Western entities will pay an initial 5.5 cents/MWh. Annual extensions will begin in 2025, and mutual withdrawal provisions are included.

Smaller entities may yet participate in SPP’s RC services, Rew said. Later entities would be evaluated on a case-by-case basis.

Consent Agenda’s Approval Adds, Deletes Members

The board’s consent agenda included changes to the membership agreement that would clear the way for Mor-Gran-Sou Electric Cooperative to become the newest SPP member.

The Corporate Governance Committee approved membership agreement amendments for the North Dakota co-op similar to changes that facilitated the membership of Basin Electric Power Cooperative and its members as part of the Integrated System’s integration. Mor-Gran-Sou, which is embedded within the Integrated System, intends to join SPP as a transmission owner.

The CGC also recommended Cielo Wind Power’s membership be terminated immediately for failing to keep up with its membership dues and repayment agreements. SPP said Cielo in January stopped responding to the RTO’s outreach efforts and ignored a March demand letter.

The Austin, Texas-based company’s delinquency dates back to 2016. It owes $18,000 and interest.

The consent agenda also included staff’s recommendation to revise the SPP-MISO Coordinated System Plan. (See “MOPC Approves Changes to Joint Model with MISO,” SPP MOPC Briefs: Oct. 16-17, 2018). Also on the agenda were the Finance Committee’s 2019 operating plan, updates to the 2019 Integrated Transmission Planning assessment’s scope, the Market Working Group’s annual violation relaxation limits analysis, and nine revision requests:

  • MWG RR266: Substitutes “interest” for “ownership” in language modeling joint-owned units as single resources, recognizing that “ownership” doesn’t capture stakeholder intent that power purchase agreements and other non-ownership interests be included.
  • MWG RR288: Allows non-dispatchable variable energy resources converting to dispatchable status to use control statuses not originally available to them. SPP’s control statuses are: offline (the resource is not operating); non-regulating (online and capable of following a dispatch instruction or contingency reserve deployment but not eligible to clear regulation service); regulating (online and capable of following dispatch or contingency reserve instruction, and regulation deployment); and manual (online but not able to follow dispatch; e.g., start-up, shutdown, testing, etc.).
  • MWG RR316: Updates the multi-configuration (combined cycle) resource market design by adding two additional commitment parameters: group minimum down time and plant minimum down time. Also removes sync-to-min and min-to-off times from the submitted minimum down time or group minimum down time when the resource transitions between operational configurations. The current design only allows individual registered configurations to submit a minimum down time.
  • MWG RR323: Defines batteries as electric storage resources (ESRs), capable of being dispatched and participating in price formation. Excluded as ESRs are those resources that are either contractually barred or physically incapable of injecting energy back onto the grid because of their design or configuration. Also creates a new registration type, “market storage resource,” to be used only by ESRs.
  • MWG RR332: Corrects protocol calculations from designs implemented in RR200 (design change for bilateral settlement schedules (BSS) and over-collected losses (OCL) distribution) and RR235 (correction to RR200) necessary to accurately distribute OCLs and ensure BSS are receiving their correct OCL. The change ensures corrected resettlements back to the original May 1, 2018, release date.
  • ORWG RR318: Changes the contingency reserve requirement calculation to allow the use of the “most severe single contingency” as the basis of the minimum contingency reserve requirement on an hourly basis. SPP said the revision allows it to more accurately and reliably set the reserve requirement.
  • RTWG RR305: Updates Tariff language following modifications to the aggregate facilities study process by removing the requirement to file a service agreement before modeling new transmission service in the ITP models. Also removes the requirement that SPP issue notifications to construct (NTC) and notifications to construct with conditions (NTC-C) before filing a service agreement. Adds a financial commitment date of four years to the issuance of an NTC or NTC-C.
  • RTWG RR322: Changes the Tariff and other documents to reflect that the RTO is no longer using U.S. Energy Information Administration data in monthly load forecasts. SPP said the data in the EIA report are not granular enough because they are at the balancing authority level, rather than the local balancing authority level required. In January, the RTO began using forecast data that are available through the NERC system data exchange (SDX) and historical data where forecasts are not available.
  • RTWG RR325: Revises SPP’s pro forma language for large generator interconnection procedures and large generator interconnection agreements to comply with FERC Order 845.
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