Monday, October 22, 2018

SPP’s Tariff Team Begins Carving up the Elephant

By Tom Kleckner

KANSAS CITY, Mo. — As chairman of SPP’s Holistic Integrated Tariff Team (HITT), Tom Kent has been asked to lead a team responsible for addressing “the many issues challenging” the region.

spp hitt cost allocation

HITT Chair Tom Kent | © RTO Insider

Simple things, like cost allocation and transmission zones, Z2 credits, the planning and study process, and what to do with 60 GW of wind in the planning queue — issues that have vexed staff and members for the past several years.

“There are some pretty meaty topics,” admitted Kent, Nebraska Public Power District’s COO.

The 17-person team includes state regulators, SPP directors and key member representatives, all of whom also have day jobs. So how do you keep everyone on track?

“We have to come together on how we want to eat the elephant, so to speak, right?” Kent said before the team’s April kickoff. “It’s a pretty big topic, and you’ve got to take it one bite at a time. We’re going to spend a lot of our time kind of understanding what the elephant is, and what the scope is, and how big the elephant is. Hopefully, we’ll get to the point where we’re able to start prioritizing which bites we want to take off and go after.”

Fortunately, Kent has plenty of experience in meeting management and team dynamics.

“It’s nothing new. It’s a broader group with different perspectives, but the dynamics of leading a team or a group are very similar,” he said. “You’ve got to get everyone to start working together and understand how we’re going to function as a group. Keep the group focused on the priorities that we’re working on — and there are going to be lots of things to work on.

“It’s just typical team dynamics, right?”

HITT Squad

The “HITT squad,” as it is called informally, encountered some early turbulence when several stakeholders complained about the secrecy under which it was created in March. SPP’s Board of Directors approved the team’s formation during a closed-door meeting. (See SPP Questioned on Secrecy over Tariff Team.)

SPP proposed that most HITT meetings be held face to face, with stakeholders “encourage[d]” to participate by dialing in, unless they are presenting to the team in person. Early discussion about the group suggested that only team members would be allowed to participate in meetings, but other stakeholders are now invited to provide information and ask questions.

The SPP HITT meets for the first time. | © RTO Insider

“I wouldn’t use the word ‘secret.’ It’s just new,” Kent said. “You’ve got to give everyone an understanding of how the group’s going to work, what the scope’s going to be, what the priorities are going to be. You can’t take the elephant all at once. I expect for a while, at least, the meetings will be focused on the team.”

The early focus has been on education and technical presentations. The HITT’s first meeting was spread out over two days following the April board meeting, with staff delivering detailed presentations on SPP transmission, planning and cost allocation, and markets and operations.

The team began drawing up a list of hot topics and requested feedback from stakeholders on the issues, topics and/or challenges they believe it should be addressing.

Afterward, Kent shared with the HITT a study on the market value of variable renewables and additional background materials.

“I thought we covered a lot of good information,” Kent said.

The team next meets in Dallas on May 16. On the agenda: developing a problem statement, reviewing requested information, and more technical presentations and education.

The HITT has been tasked with filing a written report by April 2019, but it can request additional time, if needed. It will report to the board’s Members Committee and provide status reports to the Regional State Committee, Markets and Operations Policy Committee and Strategic Planning Committee.

The team includes Directors Larry Altenbaumer and Graham Edwards, state commissioners Shari Feist Albrecht (Kansas Corporation Commission) and Dennis Grennan (Nebraska Power Review Board), and member representatives for the investor-owned utilities, cooperatives, independent power producers, municipalities, state agencies and independent transmission companies.

Cindy Ireland, the Arkansas Public Service Commission’s director of research and policy, has joined the team as a liaison for the Cost Allocation Working Group (CAWG). The RSC had requested a liaison, as much of the HITT’s work will touch on that of the CAWG’s.

“We don’t want to retrace ground other groups are working on,” Kent said. “That coordination and working together is going to be important for the CAWG, and it’s also going to be important for other groups, potentially.”

Taking on the Animal

The HITT has been asked to assess:

  • Transmission planning and study processes: generation interconnections; the interconnection queue; aggregate studies; energy resource interconnection service and network resource interconnection service; capacity requirements, including more attributes than energy; and related FERC planning requirements.
  • Transmission cost allocation issues: highway/byway; directly assigned costs; Attachment Z2 credits; cost allocation impacts on transmission pricing zones with large wind resources; and state-by-state supply resource mix requirements and/or goals.
  • Integrated Marketplace: effects related to a changing resource mix; access to lower cost generation; potential changes in production tax credits; using market-based compensation for varying attributes of different types of generators.
  • Disconnects or potential synergies between transmission planning and real-time reliability and economic operations.
  • Additional areas and/or issues as appropriate and reasonably related to its scope of work.

The team has been modeled after the Synergistic Planning Project Team (SPPT), which was formed in 2008 to suggest a process addressing deficiencies in SPP’s then-existing planning processes. In just a matter of months, it filed a report that led to the RTO’s Integrated Transmission Planning process and the highway/byway cost allocation methodology.

SPP is hopeful the HITT will be just as successful.

spp hitt cost allocation

Left to right: Paul Suskie, Tom Kent and Rob Janssen guide HITT’s first meeting. | © RTO Insider

General Counsel Paul Suskie, who represented the Arkansas PSC on the SPPT and is the staff secretary to the HITT, said the SPPT’s work led to FERC Order 1000.

“Three of the five commissioners told me that SPP’s approach to planning is what the nation needed,” Suskie said.

Suskie also recalled conversations he had with fellow team member Barry Smitherman, then chair of Texas’ Public Utility Commission. Texas was in the midst of its Competitive Renewable Energy Zone project, which used state money to finance nearly $7 billion in transmission infrastructure to connect West Texas wind energy with cities to the east. Customers would eventually pick up the tab through CREZ fees on their bills.

The two would tease each other over the best methods to fund transmission buildouts.

“I’d always call [regional funding] socialization,” Suskie said. “Barry would tell me, ‘In ERCOT and Texas, they call it uplift.’”

Suskie is just one of three holdovers from the eight-person SPPT, which also included Dogwood Energy’s Rob Janssen, the HITT’s vice chair, and SPP COO Carl Monroe.

“That experience and that background, having gone through the process before, will be invaluable,” Kent said. “I’m excited about being able to sit down with them and take on this animal, and talk about some different issues and look for opportunities to improve things going forward.”

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