1. Updated October 17, 2017

2. Our Mission
Helping our members work together to keep the lights on … today and in the future.

3. Our Beginning
SPP’s story began just after the attack on Pearl Harbor in 1941, when America had an immediate need to build airplanes. Aluminum is made from bauxite, and Arkansas had the largest bauxite deposit in the nation. A plant was opened at Jones Mill, Ark., to produce aluminum around the clock.
Jones Mill required 120,000 kW of power to operate at full capacity, 24x7. However, the total power installed in the entire state of Arkansas was only 100,000 kW. There wasn’t enough time to build new power plants. On December 14, 1941, 11 regional utilities formed the Southwest Power Pool. The pooled power allowed Jones Mill to produce aluminum throughout the war. The original 11 companies in SPP were: Arkansas Power and Light, Louisiana Power and Light, Mississippi Power and Light, Southwestern Gas and Electric Company, Public Service Commission of Oklahoma, Nebraska Power and Light, Texas Power and Light, Southwestern Power and Light, Oklahoma Gas and Electric, Kansas Gas and Electric, and Empire District Electric.
After the war, SPP continued to exist as a voluntary organization because our members recognized the growing interdependence of the electric grid, and realized the benefit in coordinating with neighboring utilities. Since World War II, one of SPP’s key roles has been to bring its members together to discuss and make decisions about issues that impact the region.
In 1941, 11 member utilities pooled electricity to power aluminum plant at Jones Mill needed for critical defense
Maintained after WWII to continue benefits of regional coordination

4. SPP At a Glance Located in Little Rock Approx. 600 employees
Jobs in IT, electrical engineering, operations, settlements and more
24x7 operation
Full redundancy and backup site
Was completed in July 2012.

5. Regulatory Environment
Incorporated in Arkansas as 501(c)(6) nonprofit corporation
Federal Energy Regulatory Commission (FERC)
Regulated public utility
Regional Transmission Organization
North American Electric Reliability Corporation (NERC)
Founding member
Regional Entity
SPP is regulated by the Federal Energy Regulatory Commission (FERC). SPP was approved as a FERC Regional Transmission Organization (RTO) in We operate subject to a tariff that is filed with and governed by FERC. This tariff contains over 5,000 pages of rates, terms and conditions for providing transmission service to our eligible customers to move wholesale electric power within and across our footprint.
SPP is a founding member of the North American Electric Reliability Council (NERC). We became a NERC Regional Entity in 2007, which gives us the responsibility of enforcing reliability standards for users, owners, and operators of the bulk power system in the SPP footprint. 5

6. North American Independent System Operators (ISO) and Regional Transmission Organizations (RTO)
This map depicts the 10 other FERC-approved Independent System Operators and Regional Transmission Organizations in the United States and Canada.

7. The SPP Footprint: Members in 14 States
Arkansas
Kansas
Iowa
Louisiana
Minnesota
Missouri
Montana
Nebraska
New Mexico
North Dakota
Oklahoma
South Dakota
Texas
Wyoming
The SPP Regional Transmission Organization manages the power grid in all or part of 14.

8. Operating Region Miles of service territory: 546,000
Population served: 17.5M
Generating Plants: 790
Substations: 4,835
Miles of transmission: 65,755
69 kV 16,808
115 kV 15,512
138 kV 9,471
161 kV 5,596
230 kV 7,518
345 kV 10,758
500kV 92

9. Our Major Services Facilitation Reliability Coordination
Balancing Authority
Transmission Service/Tariff Administration
Market Operation
Transmission Planning
Training
Standards Setting
Compliance Enforcement
We offer a number of services for our members, including:
Facilitating meetings and decision-making processes
Monitoring the grid to maintain electric reliability
Processing requests for use of the transmission grid under a tariff with consistent rates and terms for all participants
Operating a wholesale energy market
Ensuring that users, owners, and operators of the bulk transmission system are in compliance with federal reliability standards
Creating regional reliability standards
Planning for future transmission needs
With all of our services, we focus on being regional, independent, and cost-effective. Our overarching goal is maintaining electric reliability.
OUR APPROACH: Regional, Independent, Cost-Effective and Focused on Reliability

10. SPP’s 95 Members: Independence Through Diversity
SPP has one of the most diverse memberships of any Regional Transmission Organization. This diversity helps ensure independence; we carefully balance diverse interests in our decision-making processes.
Investor Owned Utilities: Traditional vertically-integrated utilities
Cooperatives: Rural electric cooperatives
Municipals: Cities
State Agencies: State-created agencies that own/operate facilities
Independent Power Producers/Wholesale Generation: Entities that develop and own generation, but don’t own transmission
Independent Transmission Companies - Entities that develop and own transmission, but don’t own generation
Marketers: Entities that own no facilities or transmission, but buy/sell excess capacity
As of April 12, 2017

11. Energy Capacity* by Fuel Type
* Figures refer to nameplate capacity as of 1/1/17

12. 2016 Energy Consumption by Fuel Type (266,442 GWh total)
The energy consumption number represents the summed hourly average of the amount of energy used by retail customers in the market footprint.

13. Milestones
1968 Became NERC Regional Council Implemented telecommunications network Implemented operating reserve sharing Incorporated as nonprofit Implemented reliability coordination
1968: NERC was formed in response to a blackout in the northeast. SPP was a founding member.
1980: SPP’s members implemented a telecommunications network to facilitate information sharing.
1991: Reserve sharing allows all member systems to rely further on each other, reducing the reserves they each have to hold and making more power available for sale.
: SPP added more services to provide regional benefit: reliability coordination, tariff administration, and scheduling : SPP began offering services on a contract basis.
SPP did not even exist as a legal entity until 1994, and from the SPP membership agreement was one paragraph. Many of our member companies have been working together for decades; these relationships are SPP’s foundation and why being relationship-based is a key corporate strategy.

14. Milestones
Implemented tariff administration Became FERC-approved Regional Transmission Organization
2007 Launched EIS market; became NERC Regional Entity
2009 Integrated Nebraska utilities
2010 FERC approved Highway/Byway cost allocation methodology and Integrated Transmission Planning Process
1968: NERC was formed in response to a blackout in the northeast. SPP was a founding member.
1980: SPP’s members implemented a telecommunications network to facilitate information sharing.
1991: Reserve sharing allows all member systems to rely further on each other, reducing the reserves they each have to hold and making more power available for sale.
: SPP added more services to provide regional benefit: reliability coordination, tariff administration, and scheduling : SPP began offering services on a contract basis.
SPP did not even exist as a legal entity until 1994, and from the SPP membership agreement was one paragraph. Many of our member companies have been working together for decades; these relationships are SPP’s foundation and why being relationship-based is a key corporate strategy.

15. Milestones 2012 Moved to new Corporate Center
2014 Launched Integrated Marketplace
Became regional Balancing Authority
2015 Integrated System joins SPP
1968: NERC was formed in response to a blackout in the northeast. SPP was a founding member.
1980: SPP’s members implemented a telecommunications network to facilitate information sharing.
1991: Reserve sharing allows all member systems to rely further on each other, reducing the reserves they each have to hold and making more power available for sale.
: SPP added more services to provide regional benefit: reliability coordination, tariff administration, and scheduling : SPP began offering services on a contract basis.
SPP did not even exist as a legal entity until 1994, and from the SPP membership agreement was one paragraph. Many of our member companies have been working together for decades; these relationships are SPP’s foundation and why being relationship-based is a key corporate strategy.

16. Growth in Responsibilities
$ TRANSACTIONS (IN MILLIONS)

17. SPP Expenses:
Even as our staff and operating expenses have grown, our administrative fee (the amount SPP charges our members for the services we provide) has remained low compared to other ISOs/RTOs. The fees are estimates.

18. The VALUE OF SPP
Transmission planning, market administration, reliability coordination, and other services provide net benefits to SPP’s members in excess of more than $1.7 billion annually at a benefit- to-cost ratio of 11-to-1.
A typical residential customer using 1,000 kWh saves $5.71/month because of the services SPP provides.
As SPP works diligently to ensure the supply of the most reliable and cost-efficient electric power for our entire region, we create value for our members through our expertise and the economies of scale afforded by our business model. Transmission planning, market administration, reliability coordination, and other professional services provide net benefits to SPP’s members in excess of $1.4 billion annually at a benefit-to-cost ratio of more than 10-to-1. This means for the typical end-use customer using 1,000 kWh per month, a $100 bill would be $ without the services SPP provides.
In 2014, we launched our Integrated Marketplace – arguably the biggest and most impactful single effort in our organization’s history – and we did so on time and on budget with the highest degree of quality, something no other Regional Transmission Organization accomplished. In their first year of operation, SPP’s markets delivered $380 million in net savings to our members and their customers, paying for themselves in less than a year. Analysis has shown the continued value of our markets, with nearly $500 million in benefits annually.

19. Market Facts 185 participants 790 generating resources
2016 Marketplace Settlements ~ $20 billion
50,622 MW coincident peak load (7/21/16)
Wind penetration record: 54.22% 00:55)

20. The SPP Difference Relationship-based Member-driven
Independence Through Diversity
Evolutionary vs. Revolutionary
Reliability and Economics Inseparable
Our relationships with our members are very important to us. Our members drive SPP’s major decisions and plans for the future. We have a diverse membership and an independent Board of Directors that make decisions in an evolutionary rather than revolutionary way. Our members’ needs have changed over the years, and a deliberate evolutionary process has guided our growth. We believe that we can’t discuss electric reliability without also discussing economic issues that impact us all. As a single organization addressing both reliability and economic issues, we provide cost-effective choices and bring efficiency to our members and our region.

21. Facilitation
More than 500 stakeholders are involved in SPP’s organizational structure of committees, working groups, and ad hoc task forces. This member involvement drives SPP’s decision-making and strategic direction.
Any and all opinions are heard loudly and clearly in organizational group meetings. The rosters of our organizational groups match the diverseness of the membership, requiring representatives from across the footprint and recognizing different member types and sizes.

22. Our Strategy
The 2014 Strategic Plan establishes a strategic direction for SPP, positioning SPP to fulfill its Mission Statement over the next decade and beyond. The Plan recognizes that the future is uncertain and that depending upon circumstances, responses must be conditioned upon cooperation, industry knowledge, technology, and the interdependence of neighboring regions as well as other fuel resources for generation. This plan introduces a fourth foundational strategy, Reliability Assurance, as its bedrock. With Reliability Assurance as its basis, the plan revises the 2010’s three foundational strategies which are anchored in the Mission Statement and the five components of SPP’s Value Proposition to its members. The strategic initiatives related to each of the four interdependent Foundational strategies will position SPP for the future while balancing operational priorities and financial considerations.
Reliability is the bedrock of SPP’s business. During the planning horizon, SPP may begin to experience a shift toward greater reliance on variable energy resources while during the same time consumers may begin shifting to less predictable load patterns from the use of their own intermittent technologies, like distributed generation, price-responsive demand, and energy efficiency.
The 2010 SPP Plan focused on the build out of a “robust” transmission system which was described as one containing an optimal mix of “highways” (300 kV+) and byways (below 300 kV) and minimizes future transmission constraints without over-investing in transmission capacity. A robust system creates immense new value for SPP members and end users in the SPP region.
SPP implemented its Integrated Marketplace (Marketplace) on March 1, This centralized unit commitment across 16 former BA Areas that have consolidated operations into a single BA — known as the SPP RTO BA. The Marketplace is a five‐minute, security‐constrained economic dispatch in order to provide Real‐time balancing activities, while also providing centralized commitment of resources through the end of the operating horizon.
SPP continually strives to improve the value it delivers to its members. In addition to the Strategic Initiatives noted above, SPP will create and continually improve work processes to ensure they are efficient and effective.

23. transmission Planning at spp
Services

24. Finding Balance SPP Today Less Investment More
Minimum for Reliable Delivery to Customers
Expand Transmission
More Transmission Needed
Less Investment More
Our goal is to achieve an optimum balance between long-term transmission investment and congestion costs. As appropriate investments in new transmission are made, the amount of congestion costs to which customers are exposed decreases.
No Limits to Low Cost Delivery
Customer Energy Cost
Less Amount of Transmission More 24

25. Why We need more Transmission?
In the past, built least-cost transmission to meet local needs
Today, proactively building “highways” to benefit region
Traditionally, we have built transmission infrastructure in a reactive way – building just enough least-cost transmission to keep the lights on at the local level. We forecast future demand, planned generation to meet that demand plus reserves, then provided the least-cost transmission that minimally meets electric reliability standards.
Our members are now shifting to a new vision of enabling transmission. We want to proactively build a cost-effective, robust “transmission highways” that will benefit customers not just of one utility, but across the entire region.
SPP analyses demonstrated that large-scale, extra high voltage “highways” provide benefits across a wider region than lower-voltage “byways”.
Benefits of added transmission include:
Improving electric grid reliability, making it better able to withstand disruptions including those associated with storms;
Ability to meet increases in demand for electricity;
- More transmission means more lower-cost energy is accessible in the wholesale market, enabling SPP’s current and future energy markets to be more competitive and robust;
- Possibly reducing amounts of energy that must be held in reserve for emergencies, allowing more generation into the wholesale energy market;
- Reducing land use impacts by anticipating future needs and building one large line rather than incrementally building several smaller lines;
- Investment in infrastructure contributes to economic success beyond the electric industry;
- More transmission means more efficient use of existing generation – which will improve utilization of the existing fleet and may even reduce the need for new generation;
- Facilitating adding new generation to the grid, including renewable energy, in a more cost-effective manner. Added renewable energy may contribute to a reduction in carbon emissions; and
 - Improving operational efficiencies. Larger transmission delivers more energy with fewer losses and improves dynamic performance and system security.

26. How SPP Makes Transmission Decisions
Integrated Transmission Planning process
Generation Interconnection Studies
Determines transmission upgrades needed to connect new generation to electric grid
Aggregate Transmission Service Studies
Determines transmission upgrades needed to transmit energy from new generation to load
Shares costs of studies and new transmission
Specific transmission studies
One of SPP’s responsibilities as a Regional Transmission Organization is to create regional transmission expansion plans. SPP doesn’t build transmission, though our Open Access Transmission Tariff contains rules that govern transmission planning. We work with our members to create planning models and studies to determine what new transmission will be needed to maintain reliability, provide economic benefit, and help meet public policy needs. Rather than looking at the needs of just one member, we assess needs from a larger, regional perspective. What new transmission infrastructure would provide the most benefit to the most members?
Any new generation - fossil fuel or renewable- has to go through SPP’s generation interconnection process to be added to the transmission grid. The generation interconnection queue represents customers’ requests for SPP to study what new transmission is needed to connect new generation to the electric grid. The studies do not consider transmission service – use of transmission lines once the generation is connected.
SPP conducts aggregate studies to help customers determine what transmission upgrades may be needed to meet requests for long-term transmission service. Rather than studying just one request at a time, SPP aggregates transmission service requests entered during an “open season” and generates one report for all requested projects.

27. Who Pays for Transmission Projects?
Sponsored: Project owner builds and receives credit for use of transmission lines
Directly-assigned: Project owner builds and is responsible for cost recovery and receives credit for use of transmission lines
Highway/Byway: Most SPP projects paid for under this methodology
In June 2010 FERC approved the Highway/Byway method of sharing costs for new electric transmission in the SPP region. This approach, which assigns costs of high-voltage transmission regionally and lower-voltage locally, will help SPP and its members build a stronger transmission grid that will benefit the entire region. Highway/Byway is the result of years of incremental work by our Regional State Committee. SPP analyses demonstrated that large-scale, extra high voltage “highways” provide benefits across a wider region; thus, costs will be assigned to electric utilities across the SPP footprint. Lower-voltage “byways” benefit smaller areas within the region; a formula is used to assign costs more directly to the utility in whose service territory (zone) the project is located and that will receive the most benefit from the project.
The Highway/Byway cost allocation applies to transmission expansion projects approved by the SPP Board of Directors after June 19, 2010.
Any entity can propose a transmission expansion project. If the project will be connected to transmission facilities under the SPP Tariff, SPP needs to analyze the project’s impact on reliability. If SPP determines there is no harm or that the harm can be remedied by additional transmission which the sponsor funds, then the project can proceed. However, that “sponsored” project isn't eligible for rate recovery via SPP mechanisms. The sponsor is provided revenue credits for subsequent transmission service SPP is able to sell because of the upgrades.
Voltage
Region Pays
Local Zone Pays
300 kV and above
100% 0%
above 100 kV and below 300 kV
33%
67%
100 kV and below 27 27

28. THE VALUE OF TRANSMISSION

29. Spp’S 2015 VALUE OF TRANSMISSION STUDY
Study Scope:
Assessed 348 projects from , representing $3.4B of transmission investment
Based on the first year of operation of Integrated Marketplace from March through February 2015

30. Study results BENEFIT-COST RATIO OF 3.5 TO 1
APC Savings calculated at more than $660k/day, or $240M/year.
Overall NPV of all benefits for considered projects are expected to exceed $16.6B over 40 years.
BENEFIT-COST RATIO OF 3.5 TO 1

31. brattle group review
“The SPP Value of Transmission study is a path-breaking effort…”
“… A more accurate estimate of the total benefits that a more robust and flexible transmission infrastructure provides to power markets, market participants and, ultimately, retail electric customers.”
“Estimated present value of the production cost savings in the SPP study likely is understated…”

32. This map depicts projects constructed 2005-2012.

33. This map depicts projects constructed 2005-2012.

35. Wind Energy Development
SPP’s “Saudi Arabia” of wind: Kansas, Oklahoma, Nebraska, Texas Panhandle, and
>17,000 MW of wind in-service at interconnection points
55,573 MW wind in all stages of development
Includes Generation Interconnection queue and executed Interconnection Agreements
The SPP region is rich in wind resources. There is more potential wind energy in the footprint than SPP could absorb.
NOTE: We do not have a way to track wind that doesn't or hasn't gone through the SPP planning process - such as wind that predates different stages of our generation interconnection process and wind that is not SPP-jurisdictional (including distribution wind).

36. Annual Average Wind Speeds
This map reflects the expected footprint of SPP after the Integrated System becomes a member.

37. Solar in the U.S.
This data represents annual solar resource potential for all 48 contiguous states.
Solar is the next frontier. SPP has the best solar resources in the Eastern Interconnection in eastern New Mexico and the western portion of the central and south plains. SPP has very little solar on its system or in its queue, but the future is very bright. SPP is seeing significant oil/gas development in NM, TX and some in OK and KS. The transmission needed to serve loads in NM/TX will provide a great collector system for solar development in the future.
This map reflects the expected footprint of SPP after the Integrated System becomes a member.

38. Updated April 12, 2017