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Www.spp.org 11. Cost Allocation Les Dillahunty Presentation for APSC June 3, 2010 2.

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Presentation on theme: "Www.spp.org 11. Cost Allocation Les Dillahunty Presentation for APSC June 3, 2010 2."— Presentation transcript:

1 www.spp.org 11

2 Cost Allocation Les Dillahunty Presentation for APSC June 3, 2010 2

3 www.spp.org 333 RSC Primary Responsibility Determining regional proposals and transition process: Whether and to what extent participant funding will be used for transmission enhancements Whether license plate or postage stamp rates will be used for the regional access charge Financial Transmission Rights (FTRs) allocation, where a locational price methodology is used The transition mechanism to be used to assure that existing firm customers receive FTRs equivalent to the customers’ existing firm rights

4 www.spp.org 444 RSC & CAWG Regional State Committee (RSC) Cost Allocation Working Group (CAWG) ArkansasChairman SuskieSam Loudenslager/Pat Mosier KansasChairman WrightTom DeBaun/James Sanderson OklahomaCommissioner CloudBill Reid MissouriCommissioner DavisAdam McKinnie NebraskaChairman SiedschlagTim Texel New MexicoChairman KingCraig Dunbar TexasChairman SmithermanRichard Greffe

5 www.spp.org 5 SPP Pricing Zones

6 www.spp.org 6 SPP Pricing Zone Information

7 www.spp.org 777 Reliability “Base Plan Funding” 33% / 67% Criteria or Designated Resource Transmission 2005 Economic “Balanced Portfolio” Postage Stamp Benefits / Cost ≥ 1 345 kV and above 2008 Sponsored Directly Assigned w/ Revenue Credits Sponsor(s) Nominate Projects 2009 Highway/Byway Postage Stamp For EHV Projects from Integrated Transmission Plan Filed 4/19/10 Comments due 5/17/10 VoltagePaid for by RegionPaid for by Local Zone 300 kV and above100%0% above 100 kV and below 300 kV33%67% 100 kV and below0%100% Highway/ Byway

8 www.spp.org Les Dillahunty Senior Vice President, Engineering & Regulatory Policy 501.614.3215 ldillahunty@spp.org ldillahunty@spp.org 8

9 www.spp.org Priority Projects and Integrated Transmission Planning Bruce Rew Presentation for APSC June 3, 2010 9

10 www.spp.org April 2009 SPPT issues report calling for Integrated Transmission Plan, Priority Projects, and new Cost Allocation methodology January 2009 SPPT Created 10 Priority Projects Timeline September 2009 Staff issues Phase I Report that includes analysis of 10 projects, selected by MOPC from list of stakeholder- recommended projects Report discussed at technical conference October 2009 Report is updated and discussed at MOPC and SPC With SPC concurrence, staff recommends 4 projects for approval by BOD BOD approves these 4 projects and 2 others for further analysis, with oversight from SPC February 2010 Staff issues Phase II Report with two project groups Group 1 = 6 projects recommended by BOD Group 2 = Alternative 345 kV double circuit construction for Group 1 February 2010 Staff holds stakeholder technical conference and conducts further analysis based on feedback April 2010 Staff issues Phase II-Revision 1 Report including new and updated analysis Report recommends that BOD approve Group 2 projects April 27, 2010 BOD approve s Priority Projects

11 www.spp.org 11

12 www.spp.org 12 Total Priority Project Benefits – Group 2 B/C ratio of 1.78 No Benefits as a result of renewable resources added SPPT objectives met Reduce congestion: Levelization of LMP’s  Avg. LMP price spread reduces from +/- 35% to +/- 28% Improve the Aggregate Study and GI Study queues Integrate SPP’s west and east transmission systems

13 www.spp.org 13

14 www.spp.org 14 Wind Operation Overall job impacts: ~ 3,275 FTE-years Overall earnings: ~ $125 million Transmission Overall job impacts: ~ 7,475 FTE-years Overall earnings: ~ $368 million Tax impacts: ~ $34.4 million

15 www.spp.org 15

16 www.spp.org Integrated Transmission Planning 16

17 www.spp.org Integrated Transmission Planning 17 SPPT recommended ITP  Robust  Flexible  Cost Effective Integrated Transmission Planning (ITP) process  Integrates three areas of existing SPP transmission expansion EHV Overlay Balanced Portfolio Reliability Assessment (STEP)

18 www.spp.org 18 Integrated Transmission Planning Major Objective: Design transmission backbone to connect load centers to low-cost generation Other Objectives: Integrate SPP’s east and west regions Make transmission an enabler rather than constraint Strengthen ties to Eastern and Western Interconnections

19 www.spp.org Integrated Transmission Planning 19

20 www.spp.org Futures for ITP 20 Year Assessment 1.Base Case 2.Renewable Electricity Standard of 20% 3.Carbon Mandate 4.Energy Efficiency and Demand Response 20

21 www.spp.org 21 Next steps for ITP 4 futures approved by SPC for 20 yr plan Develop ITP Manual (process details) through stakeholder process Tariff updates made and filed with FERC Scope to begin for 10 yr assessment in June Analysis of 20 yr plan 20 yr plan submitted to BOD in January 2011 10 yr plan submitted to BOD in January 2012

22 www.spp.org Bruce Rew Vice President, Engineering 501-614-3214 brew@spp.org brew@spp.org 22

23 www.spp.org Status of SPP Activities Relating to FERC Order 719 Heather Starnes Presentation for APSC June 3, 2010

24 www.spp.org Order No. 719 and 719-A Activities 24

25 www.spp.org 25 October 17, 2008, FERC issued Order 719 April 28, 2009, SPP submitted a compliance filing to FERC in response to Order 719 proposing Tariff revisions July 16, 2009, FERC issued Order 719-A October 27, 2009, SPP submitted additional Tariff revisions to comply with those requirements established in Order 719-A Timeline of Order 719 Activities for SPP

26 www.spp.org 26 November 20, 2009, FERC issued an order accepting in part and rejecting in part SPP’s Order 719 Compliance Filing and directed SPP to submit a compliance filing by February 18, 2010, to comply with the November Order December 15, 2009, SPP filed a motion with FERC to request an extension of time to file certain compliance filings related to Order 719 and 719-A Timeline of Order 719 Activities for SPP (continued)

27 www.spp.org 27 December 23, 2009, FERC granted SPP an extension of time up to and including May 19, 2010, to comply with the demand response requirements set forth in section III.B.1 of the November 20 Order and the demand response requirements ordered in Order 719-A and further directed that SPP submit its demand response reports on May 20, 2009, as required by the November 20 Order. Timeline of Order 719 Activities for SPP (continued)

28 www.spp.org 28 February 18, 2010 and May 19, 2010, SPP submitted compliance filings at FERC in response to the November 20 Order May 20, 2010, SPP filed with FERC its Report on Remaining Barriers to Demand Response for the SPP RTO and SPP Market Monitoring Unit As of May 26, 2010, FERC has not issued an order addressing SPP’s compliance filings for Order 719-A and the November 20 Order Timeline of Order 719 Activities for SPP (continued)

29 www.spp.org 29 09-090-U - Arkansas Public Service Commission 10-GIME-215-GIE – Kansas Corporation Commission EW-2010-0187 – Missouri Public Service Commission PUD201000043 – Oklahoma Corporation Commission State Dockets Open For Order 719

30 www.spp.org Demand Response Activities 30

31 www.spp.org Major components of the May 19 th Demand Response Compliance Filing as required by the November 20 th Order Establishment of a customer baseline methodology and alternative methodology for demand response resources (“DRR”) Incorporation of bidding parameters for DRRs that are currently found in the SPP Market Protocols Elimination of requirement for ARCs to provide a “declaration” from its regulatory body that it can offer DRR into the SPP wholesale market 31

32 www.spp.org Current Demand Response in SPP Real-time energy imbalance is currently the only SPP market DRRs are recognized as generators, dispatchable every five minutes Current amount of Demand Response is in excess of 1500 MW Majority of the Demand Response is “behind-the- meter” and co-generation Load reduction accounts for approximately 50 MWh 32

33 www.spp.org Aggregators of Retail Customers (“ARC”) in SPP ARCs are treated as any other Market Participant ARCs are able to represent demand response as any other resources that are responsive to dispatch instructions ARCs must register as any other Market Participant and certify to SPP that the relevant retail regulator does not prohibit participation 33

34 www.spp.org Issues/Concerns with Demand Response and ARCs The ability of retail providers to invoice a ratepayer for unmetered consumption (amount of DR) for load reduction DRR Without resolution, ratepayer may “double dip” or collect from the wholesale market for performance and not be billed for the retail consumption that would have occurred For ARCs, measurement and validation becomes more difficult as a single interconnection point is divided among many Market Participants since SPP’s Market is settled nodally 34

35 www.spp.org Summary of Demand Response Activities in SPP SPP Market supports Demand Response and currently 1500 MW participates Additional Tariff revisions were filed on May 19 in compliance with the November 20 Order on demand response and ARCs and are pending approval at FERC Demand response is being incorporated into the Future Market Design in compliance with Order 719 requirements 35

36 www.spp.org Heather Starnes Manager, Regulatory Policy 501-614-3380 hstarnes@spp.org

37 www.spp.org Entergy – SPP Seams Agreement Update Carl Monroe Presentation for APSC June 3, 2010 37

38 www.spp.org SPP Footprints Regional Entity SPP members as defined in the SPP Membership Agreement plus SPA via contract 16 BAs Reliability Coordinator 26 BAs - all BAs in SPP RE plus 7 BAs in SERC and 3 BAs in MRO Reserve Sharing Group 29 BAs - all BAs with load in the SPP RC footprint plus AECI, EES, SMEPA, and WAPA Regional Tariff TOs participating in the SPP OATT 13 BAs EIS Market TOs participating in the SPP OATT with the exception of CUS Includes all generation and load connected to those TOs 15 BAs 38

39 www.spp.org Seams Agreement Components Reliability Coordinator Data Exchange Operations Coordination Activities Emergency Procedures Transmission Provider Data Exchange Transmission Service Coordination Joint/Collaborative Planning Cost Allocation Market Operator Market Flow Calculation Market-to-Market Congestion Management 39

40 www.spp.org Reliability Coordination Seams Data exchange Forecast and real-time 1.Scada data 2.Model exchange 3.Transmission Service Reservations 4.Load forecast 5.Schedules (Dynamic, Static) 6.Forced and planned outages Emergency procedures Schedule checkout Voltage/Reactive coordination 40

41 www.spp.org Transmission Provider Seams Joint/Collaborative Planning Document and synchronize each party’s planning processes Involve stakeholders Data exchange Develop joint plan Cost allocations 1.Upgrades to support other party 2.Upgrades at the seams Economic analysis 1.Cost allocation 41

42 www.spp.org Transmission Provider Seams (cont) Coordination of Transmission Service Long-term 1.Syncing up processes so Customer gets a timely answer 2.Different standards of reliability and analysis 3.Upgrades on other party to support service - Cost Allocation 4.Parallel Flow compensation Short-term – use Congestion Management Process (CMP) 1.Coordinate ATC/AFC through Flowgate allocations A.For granting short-term service B.Sharing allocations/Compensation 2.TLR/Market Flow – For curtailments A.Redispatch for other party B.Redispatch between parties 42

43 www.spp.org Transmission Provider Seams (cont) Coordination of Interconnection Studies Coordination of Market Operations Coordination of Schedules/Market Flow Short-term – Use of CMP Medium-term – Shared redispatch Long-term – Joint/Common Markets 43

44 www.spp.org 44 Seams Agreement Status Reliability Coordinator Transmission Provider Market OperatorNotes AECI N/A Does not include CMP CLECO N/A Entergy N/A Does not include CMP MISO Have not begun market-to-market WAPA N/A Progress Started on TP-TP TVA N/A Some TP coordination exists through CMP ERCOT N/A WECC N/A ComprehensiveSome Elements MissingUpdate NeededJust Started

45 www.spp.org Entergy – SPP Seams Agreement Transmission Provider Seams Covers 1.Coordination of Transmission Expansion Planning 2.Coordination of Transmission Service & Generation Interconnection Studies 3.Sharing real-time data for AFC/ATC Coordination Additional discussions 1.Cost Allocation – Sharing of Costs when both Benefit A.Reliability B.Economic 2.One-Stop Shopping – Transmission Service & Generation Interconnections 3.Near-Term Proactive Transmission Service Coordination 4.Market to Pseudo Market 45

46 www.spp.org SPP Seams Steering Committee Current Activities Discussion on COOPER_S flowgate issue - April 1st Conf Call 1.SPP presentation 2.Discussions A.MISO activities B.Wind Impacts April 23rd Meeting 1.Discussion of Group Organization Next meetings June 15th 10:00 AM – 3:00 PM – Dallas 46

47 www.spp.org Carl A. Monroe Executive Vice President & COO 501-614-3218 cmonroe@spp.org cmonroe@spp.org

48 www.spp.org SPP Future Markets Update Debbie James Presentation for APSC June 3, 2010 48

49 www.spp.org Agenda Overview of Future Markets Future Markets Updates Next Steps 49

50 www.spp.org Overview of Future Markets 50

51 www.spp.org Why Future Markets? The current success of the Energy Imbalance (EIS) Market resulted in the membership requesting development of a “Day 2” market. The Cost/Benefit Study sponsored by the Regional State Committee (RSC) estimated a net benefit averaging $100 million per year from Future Markets. The benefits are primarily due to centralizing the startup decision of generation and is the primary objective of Future Markets. 51

52 www.spp.org What is Future Markets? Future Markets consists of the following major design elements: Day-Ahead Market (DA Market) Operating Reserve Market (OR Market) 1.Regulation Up/Down 2.Spinning 3.Supplemental Reliability Unit Commitment (RUC) Real-Time Balancing Market (RTBM) Transmission Congestion Rights (TCRs) Consolidated Balancing Authority (CBA) 52

53 www.spp.org Overview of Key Energy and Operating Reserve Market Functions 53

54 www.spp.org Overview of TCR Markets Structure 54

55 www.spp.org Future Markets Updates 55

56 www.spp.org Future Markets Program Roadmap Market Design includes: Conceptual design, specific business rules and requirements. Development includes: Vendors developing software systems for SPP; and Market Participants developing their software systems. Testing & Market Trials include: Internal SPP system testing; Market Participant system testing; and Joint SPP & Market Participant system testing (Market Implementation). Implementation 56 Market Design Develop- ment Testing & Market Trials Implement -ation

57 www.spp.org Future Markets Design Activities Notable Future Markets Design Activities within the Past 12 Months: Information sessions conducted & Design Decision Matrix drafted Mid-Level Design document complete Future Markets Core Protocols developed * Full membership review of Mid-Level Design conducted Design elements where discussion was very close at Market Working Group (MWG) were escalated to the Market & Operations Policy Committee (MOPC) for full membership discussion. 57 Info Sessions Mid-Level Design Document Protocol Review Require- ments Vendor Selection * Subject to Market Working Group (MWG) final review and Regional State Committee (RSC) input.

58 www.spp.org Mid-Level Design Items Escalated for MOPC Guidance 1.Marginal vs. Average Losses 2.Voluntary Offers vs. “Must Offer” Requirement in the DA Market 3.Third-Party Participation vs. Transmission Customers Only in the TCR Auction 4.5-Minute vs. Hourly Settlements 5.Zonal vs. Average Cost Allocation for Operating Reserves 58

59 www.spp.org Mid-Level Design Items Escalated for MOPC Guidance 6.After-The-Fact Single Settlement of Reserve Obligation vs. Demand Bid based Operating Reserve Market 7.Revenue Neutrality Uplift vs. Cost Causation Allocation 8.“No Carve-Out” vs. “Carve-Out” of Grandfathered Agreements 59

60 www.spp.org Recap of the MOPC Decisions After discussion by the entire membership of the MOPC, none of the original MWG Future Markets design positions were changed. The MOPC approved the Future Markets design decided by the MWG unless definitive direction given by the MOPC. 60

61 www.spp.org Recap of February 2010 CAWG Meeting In February 2010, Richard Dillon presented an educational session to the Cost Allocation Working Group (CAWG) on TCRs and the responsibilities of the RSC. Specifically, this included the following topics: Design of Transmission Congestion Rights (TCR) Overview of the TCR Process Allocation of TCRs Regional State Committee (RSC) and TCRs 61

62 www.spp.org Recap of March 2010 CAWG Meeting In March 2010, Richard Dillon presented the following to the CAWG: Education on counterflow and why it is necessary. 1.Although counterflow TCRs result in a charge to the holder, choosing to not take them reduces the credits that can be issued. Discussion on the equivalency of TCRs to the current EIS market congestion hedging mechanism. Discussion on the obligation to confirm Long-Term Firm Transmission Rights (LTFTRs). 1.LTFTRs are required under the Energy Policy Act of 2005. 2.These will be offered eventually, but current intentions are to implement after Future Markets. 62

63 www.spp.org Next Steps 63

64 www.spp.org Upcoming Future Markets Milestones 64 Upcoming Key MilestoneEstimated Completion Date MWG Finalize Core ProtocolsJune 2010 MWG Checkpoint with MOPCJuly 2010 MWG Finalize Non-Core ProtocolsJuly 2010 MWG Finalize ProtocolsSeptember 2010 MOPC Approval of ProtocolsOctober 2010 BoD Approval to Proceed with Development October 2010

65 www.spp.org Debbie James Manager, Market Development 501-614-3577 djames@spp.org djames@spp.org 65

66 www.spp.org Additional Information Les Dillahunty Presentation for APSC June 3, 2010 66

67 www.spp.org 67 Additional Issues DR & EE Variable Resources Cost Effective Transmission Solutions EIPC SPP’s Commitment to Arkansas and Little Rock


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