By Tom Kleckner
TULSA, Okla. — SPP’s Board of Directors on Tuesday sided with stakeholders’ recommendation to cancel a major 345-kV line but promised a new study to address congestion in the footprint.
The board directed staff to pull Southwestern Public Service’s Potter-Tolk line in the Texas Panhandle from the 2017 Integrated Transmission Planning 10-year assessment’s portfolio. The project was originally identified as reducing congestion and adjusted production costs (APC), avoiding future reliability projects, and improving thermal and voltage stability margins.
However, the board in January asked SPP staff to further evaluate the project after SPS argued against the need for the line, saying it was “the wrong time” for it. The additional analysis and modeling changes revealed a 6.5% decrease in the region’s APC savings, and a third-party review added $29 million to the project’s $144 million projected cost after more detailed routing assumptions lengthened the line from 90 miles to 109. (See “Members OK Removing SPS Line from 2017 ITP10,” SPP Markets and Operations Policy Committee Briefs.)
The board’s move came following a lengthy discussion that raised questions about SPP’s planning processes, the reliability of stakeholder data being provided for studies and the amount of additional wind energy that will eventually be built in the area.
Getting the Red and Yellow Out
“This hurts me to take this out of the portfolio, but that damn yellow and red has been in that area of Texas ever since we can remember,” said Board Chair Jim Eckelberger, alluding to the shades used to denote high prices — often driven by congestion —on SPP’s price contour map. “We’ve got to get rid of it. There’s nothing blue [low-cost] down there. It’s just congested all the time.”
Eckelberger was able to mollify members by also asking SPP to conduct a high-priority study in a “thoughtful way” to “do away with the yellow.” Staff will report back to the board and Members Committee in July with its study assumptions and scope for an analysis to be completed no later than April 2018. That would also allow additional time to see how much additional generation is developed in the Panhandle.
“By the time we see the end result, we’ll see an awful lot of what is actually being built in that area,” Eckelberger said. “I’ll be damned if we’re going to have that yellow in there for the long term.”
The motion passed easily, drawing only opposition from independent transmission provider ITC-Great Plains and an abstention from West Texas’ Golden Spread Electric Cooperative.
Stuart Solomon, president of American Electric Power subsidiary Public Service Company of Oklahoma, asked the board to broaden its view and study congestion in other areas of the SPP footprint. “The Texas Panhandle is not the only place we’re seeing extreme congestion,” he said.
“As long as we’re going through this process, why not?” Eckelberger responded.
The Potter-Tolk line would have run southwest of Amarillo to connect with an SPS power plant being re-evaluated for continued operation. Initial studies showed the line would reduce congestion in a frequently constrained area (FCA), but new load projections showed a reduction of almost 800 MW in the area.
In March, SPS parent Xcel Energy announced wind projects totaling 1,230 MW in New Mexico and Texas north of the FCA. Another 8.8 GW of wind projects, based on SPP’s generation interconnection queue, have been proposed in the northern Panhandle.
“Based on these recent revelations and some of the uncertainty about these revelations, there’s too much uncertainty to proceed with Potter-to-Tolk,” SPP Engineering Vice President Lanny Nickell said. “The projects that have already been approved and come into service will dramatically reduce the congestion in the area. It doesn’t eliminate it but reduces it.”
PTC Impact
Steve Gaw, who represents the Wind Coalition, noted some of the study scenarios did not assume additional wind generation would be built. He said the phase-out of the production tax credit will lead to additional wind energy coming online after the first results of SPP’s new transmission planning process are released and before it can be considered. Projects that begin construction this year will receive 80% of the PTC value, a percentage that will fall to 60% in 2018 and 40% in 2019.
Gaw said it is unrealistic to assume there will be no additional wind growth, considering 4 to 5 GW of wind generation sites have approved interconnection agreements, the queue contains a potential 27 GW of wind energy and the PTC deadlines.
“If the assumption here is to stay exactly as we are today … to me, that’s an unreasonable assumption,” he said. “That does not adequately encompass what wind development is going to do. I’m concerned that if we don’t do something more … we’re going to run into a significant issue without having properly prepared for it.
“Yes, there’s a risk of building a project that’s not needed. There’s also a risk of not building a project that is needed.”
“If you look back at … various studies over the years, you’ll find we’ve been very conservative, probably too conservative, in forecasting the expansion of renewable generation in the footprint,” ITC-Great Plains’ Brett Leopold said. “It results in inefficiencies in planning.”
Kicking the Can?
Golden Spread’s Mike Wise filed a letter with SPP raising concerns about the project’s withdrawal, noting it was the only FERC Order 1000-eligible project in ITP10. The letter was cosigned by Hunt Transmission Services’ Bill Bojorquez and distributed to members an hour after the board meeting began.
Wise and Bojorquez said that the conclusion that the only Order 1000 project was no longer needed “should raise several red flags to the board.” They criticized the increased cost estimate (“We … were not shown sufficient evidence … the original cost estimate was unreasonable.”); the “highly suspect” change in load projections; and a new generation plan for “new wind generation that lacks regulatory approval.”
Wise’s main point of contention was SPP’s inability to relieve a north-south constraint that staff admitted costs the area about $38 million a year in congestion.
“For many years, a lack of transmission in this area has caused the establishment of the FCA and this constrained flowgate,” Wise and Bojorquez wrote. “The result is significantly higher LMPs for all network consumer loads in the south part of the system, and the ITP process of SPP has not identified or offered a solution.”
“We’re really anxious to get not just the flowgate alleviated, but this FCA … eliminated,” Wise told the board and members. “If not today, then when? If this isn’t the line, then what is going to resolve the FCA and this flowgate? We can’t just kick the can down the road another year and look at it again. That’s what we’ve said for 10 years now.”
Bill Grant, director of strategic planning for SPS, defended his company. “We didn’t ask SPP to go out and use new assumptions,” he said, referring to load projections that may not have been in the 2017 models.
“We need to continue to look at this area,” he said. “If the wind does develop, some of that wind will be identified in the GI study. We’re building generation too, so we might be paying for some of these projects as well. If we’re the ones adding wind, that’s the proper thing to do.”
