Kan. regulators raise questions about Southwest Power Pool expansion

Source: Jeffrey Tomich, E&E reporter • Posted: Thursday, June 12, 2014

Kansas utility regulators want the Southwest Power Pool to demonstrate how consumers in the state would benefit from the grid operator more than doubling the size of its footprint with the addition of the Upper Great Plains Region of the Western Area Power Administration.

The three-member Kansas Corporation Commission ordered the investigation on the request of the commission staff, which in a Monday memo raised concerns about SPP membership terms for WAPA-Upper Great Plains and two other entities that jointly operate a regional transmission system known as the Integrated System.Those concerns include whether retail electric customers in Kansas could end up paying more than their fair share for regional transmission projects under exemptions to SPP’s open access transmission tariff, bylaws and membership agreement.”The commission specifically requires SPP to provide evidence that the benefits to Kansas retail electric ratepayers will exceed the increased costs of serving the integrated system,” the order said.

The order came on the same day that SPP, the grid operator for all or parts of nine states in the South and Midwest, approved changes to accommodate membership for WAPA-Upper Great Plains and the other entities that make up the backbone of the high-voltage transmission grid in the Upper Great Plains region of eastern Montana, North Dakota and South Dakota.

WAPA said in January that its Upper Great Plains Region would pursue formal negotiations for membership with SPP, a combination that would expand SPP’s footprint by 378,000 square miles across all or part of six states — Nebraska, Iowa, Minnesota, North Dakota, South Dakota and Montana.

It would be the first time that any part of a federal power marketing administration’s territory has joined a regional transmission organization.

WAPA-Upper Great Plains, the largest of four WAPA operating regions, has studied participation in an RTO since the 1990s. Three years ago, the integrated system entities took a closer look at membership in either SPP or the Midcontinent Independent System Operator or continuing operations on a stand-alone basis, and they determined joining SPP provided the greatest benefits.

WAPA said membership of its largest operating region in SPP would yield $11.5 million in first-year savings, an amount that would grow to more than $14 million annually in later years (EnergyWire, Feb. 28).

The Kansas Corporation Commission staff memo, however, said SPP had provided “insufficient data” and time to analyze what the addition of WAPA-Upper Great Plains and the other two entities would mean for consumers and electric rates for other RTO members.

“Staff believes some of the proposed tariff revisions are potentially detrimental to Kansas retail ratepayers and would set undesirable precedents if SPP’s membership continues to grow,” the memo said.

The Kansas commission said SPP operates as a regulated utility in the state under a 2006 order that gives the RTO authority to manage and coordinate use of certain transmission facilities. The commission has authority to require the RTO to make filings and conduct investigations.

Pete Hoelscher, an SPP spokesman, said the Little Rock, Ark.-based grid operator had no comment on the order.

Randy Wilkerson, a spokesman for WAPA-Upper Great Plains, said major steps to becoming SPP members include FERC approval of the changes approved by SPP and implementation of a membership agreement, all of which could be completed by October 2015.

WAPA-Upper Great Plains is not a formal party to Monday’s order from the Kansas commission and has no comment, Wilkerson said.

According to Monday’s order, SPP has 30 days to “show cause” why the addition of the integrated system entities would benefit Kansas retail ratepayers.