CAWG Discussion Paper

Presented by

Mike Wise – Golden Spread Electric Cooperative 1-3-2007

Factors for SPP to consider for granting a waiver due to a Lack of Competitive Resource Alternatives

  1. Does the Market offer the Transmission Customer an opportunity without new transmission construction to maintain a reliable and a balanced resource portfolio with adequate shaft diversity?
  2. Base Load
  3. Intermediate
  4. Peaking
  5. Contracts available that can imitate a balanced portfolio
  1. What is the new designated network resource (or PPA) replacing?
  2. Current PPA
  3. Retired unit
  4. Nothing…serving load growth
  1. Does the Transmission Customer (peak load) have sufficient size to self build the type of resource needed their portfolio
  2. Base load is very problematic (500 to 800 MW units)
  3. Only very large TCs
  4. Shaft diversity is important for serving load
  5. 12% reserve margin allows a big TC to survive a loss of a large unit. Not so a small TC.
  6. Lack of ATC and the opening of EIS market increase the exposure of small TCs to high cost emergency energy.
  7. Intermediate resources include CCs – self build is generally possible for all except the smallest TCs. Shaft diversity issues remain.
  8. Peaking units are of such a size (40 to 150 MW) that all TCs can self-build. Shaft diversity issues remain.
  1. Does the TC have competitive options within the Control Area?
  2. ATC sufficient to allow contract power into the CA to serve them?
  3. Does the CA’s marketing affiliate have “market power” within their CA?
  4. Does sufficient capacity exist and is it available to serve the TC within the CA?
  1. Without sufficient ATC into the CA, a TC is limited to 3 options
  2. Negotiating a PPA with the marketing affiliate of the BA, if the affiliate has the capacity and desire to provide such service
  3. Generation/Transmission market power
  4. Inability to get waiver from SPP for transmission buildout is considered an additional cost that the BA marketing affiliate can use to determine the cost of the TC’s alternatives, thereby adding to their offer price.
  5. Find another entity within the CA to co-own a self build unit
  6. Self Build Viability
  7. Small TC cannot be expected to self build baseload
  8. Greenfield baseload units generally take 8.5 to 10 years to develop
  1. What are the Baseload options available to the TC?
  2. Any current projects under development available to the TC within the CA?
  3. Baseload projects available outside the CA
  4. If transmission must be built to support any import
  5. SPP must consider what regional solution is best
  6. TC should be given waiver for at least the minimum build-out cost required to deliver power from outside the CA (minimum regional solution that works)
  7. Use, as evaluation alternatives, transmission plans that would bring requested power from all new announced base load plants within the SPP
  8. SPP should grant additional consideration to the waiver if it helps develop the official SPP expansion plan earlier than anticipated
  1. Additional Considerations
  2. SPP should discuss the impact of the transmission under consideration with the IMM to determine if additional benefits will be realized by the EIS market.
  3. Reduction of congestion
  4. Reduction of VRLs
  5. Does it help reduce LIPs or the LIP volatility in the market
  6. Does it help support wind projects and other renewable generation?
  7. Other benefits?