By Tom Kleckner
DENVER — SPP and Peak Reliability extolled their virtues as reliability coordinators (RCs) before the Colorado Public Utilities Commission last week in a bid to provide the reliability function for the Mountain West Transmission Group.
Peak Reliability is Mountain West’s current RC. SPP would include the RC function among the bundled services it would provide Mountain West, should the informal collaboration of Western utilities eventually become members of the RTO. (See Mountain West, SPP Tout RTO Membership to Colo. PUC.)
The courtship is leaving the Colorado PUC a little queasy.
“This is like if your child potentially dates, if not marries, the wrong person,” Chairman Jeff Ackermann said in wrapping up the information session. “Take that wherever you want to go, but ultimately, consenting adults do what consenting adults want to do.”
“We may not want to pay for the wedding,” Commissioner Frances Koncilja pointed out.
Mountain West — comprising eight investor-owned utilities, municipalities, generation and transmission cooperatives, federal power marketing administration projects, and their subsidiaries — announced in January that it was beginning discussions with SPP about potentially joining the RTO. The group expects to arrive at a decision by October.
However, Koncilja prodded a panel of Mountain West representatives as to when the commission would see financial numbers coming out of the negotiations with SPP.
“I share your sense of urgency,” said Steve Beuning, director of market operations for Mountain West member Xcel Energy, offering no further response.
The Market Provides
Peak Reliability currently provides only RC services to Mountain West for about 5 cents an hour, CEO Marie Jordan said.
If SPP is to assume RC responsibilities for Mountain West, its members “would continue to pay what they pay Peak now,” according to SPP COO Carl Monroe.
“What they save is anything they would have to do if we were not the RC,” Monroe said, reminding the commission that SPP would also likely be running the balancing authority and the markets, besides other functions. “I know when we have to provide the functions we provide, we can do it more cost-effectively and more reliably than if we [were just the RC].”
Monroe said SPP’s “first line of defense” against reliability concerns is to let the market take action by resolving binding constraints through economic dispatch, which uses the lowest-cost generation facilities to meet consumer demand while recognizing any operational limits.
“The market itself provides you that mechanism. The market, for us, is a tool to maintain enhanced reliability,” he said.
Beuning pointed out that economic dispatch is “the missing piece in our tool kit.” The Western Electricity Coordinating Council, which has served as the Western Interconnection’s Regional Entity since 2007, has yet to implement economic dispatch. Peak was spun off as an independent RC from the WECC in 2014.
Economic dispatch “is the one thing that comes along with being a market operator,” Beuning said. “It’s my belief and opinion that at this point, we could obtain an integrated service at a lower cost for our customers, instead of paying for RC services or paying the Peak.”
“It would be a lost opportunity cost for us to not bundle those services together,” said Denton McGregor, reliability center manager for Mountain West member Black Hills Power.
Status Quo — or No
Jordan touted Peak’s experience as Mountain West’s incumbent RC and the knowledge it has gained providing the same service for the Western Interconnection. She said Peak continuing as the region’s single RC would address reliability concerns caused by the continued addition of renewable and intermittent resources, and it would provide a “single, unbiased” entity focused exclusively on reliability coordination.
“A single RC has been a very important piece of the vision for reliability in the West,” Jordan said. “The biggest concern is how the interconnection continues to bring on [renewables]. I also don’t want to underestimate how knowledge grows … we’re mature in our tools, we’re mature in our sophistication and we have learned. Based on feedback I get from our funding members, our model is becoming so much more reliable for them, from the time we started … to where we are today. It’s been tremendous growth.”
A nonprofit organization like SPP, Peak is responsible for an area of 1.6 million square miles that includes all or parts of 14 western states, Canada’s British Columbia and the northern portion of Baja California, Mexico. It oversees more than 110,000 miles of transmission lines, with centers in Vancouver, Wash., and Loveland, Colo.
For his part, Monroe played up SPP’s experience as both an RC and a market operator, underscoring the understanding the RTO gained integrating RC services in the Western Interconnection with the 2015 addition of the Integrated System. (See Integrated System to Join SPP Market Oct. 1.)
“Reliability for us is job [No.] 1,” he said. “When we’ve added things, we’ve done so in a manner that protects reliability or enhances reliability. Part of the benefits Mountain West is looking to get are those benefits at a cheaper cost to the consumers themselves. Everything we do is designed to enhance reliability at a cheaper cost.”
WECC CEO Jim Robb said costs would likely increase for Mountain West members should SPP become their RC.
“The cost of providing RC services isn’t particularly scalable,” he said. “I can’t see Peak’s cost structure changed, but it seems to me the pressures in aggregate go up. How they are allocated among customers remains to be seen.”
And that’s an issue for the Colorado PUC.
“We’re concerned about how these costs roll out and which ones end up back here in this room at some point in the future,” Ackermann said.
Monroe said SPP would incur additional costs should it separate the RC function from the market and balancing authority functions. He said there is a benefit to having multiple RCs in an interconnection, as evidenced by the 13 RCs in the Eastern Interconnection.
“We think [multiple RCs] reduces risk because now you have two different organizations and two different systems looking over that whole area,” he said. “In the East, we reduce the risk because we have people helping us do that. We’ve never been in an environment where we weren’t coordinating with other parties.”
Losing Mountain West would cost Peak — which has operated with a $44.6 million budget for each of the last two years — about 10% of its load.
“It’s negative to the interconnection, [and] it’s negative to area reliability — and not just for the Mountain West,” Jordan told RTO Insider. “We’ve taken full responsibility to keep this grid functioning reliably, and that’s a consensus shared by our members.”
The PUC has tentatively scheduled a third information session on Mountain West’s proposal to join SPP. The Aug. 24 session will focus on governance issues.
SPP will be holding its leadership meetings at the Colorado Convention Center and a nearby hotel in Denver next month. As he did during the PUC’s first information session in March, Monroe invited those in the room to attend the meetings and see how the RTO governs itself. He said SPP set aside 190 seats for the July 11-12 Markets and Operations Policy Committee meeting, with 170 attendees having already registered.