Energy-Only Resource Planning Update

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2 Energy-Only Resource Planning Update Strategic Planning Committee Meeting January 18, 2017 Oklahoma City, OK 2

3 Perception Inequity of costs associated with market access and transmission expansion allocated to Load Serving Entities (LSEs) vs non-lse generation interconnection customers 3

4 Objective Develop and adopt policies that better align the GI, TS, and Planning processes to provide value proportional to cost when considering capacity and energy only resources Maintain value proposition throughout all downstream SPP processes 4

5 Key OATT Definitions Energy Resource Interconnection Service (ERIS) shall mean an Interconnection Service that allows the Interconnection Customer to connect its Generating Facility to the Transmission System to be eligible to deliver the Generating Facility's electric output using the existing firm or non-firm capacity of the Transmission System on an as available basis. Energy Resource Interconnection Service in and of itself does not convey transmission service. Network Resource Interconnection Service (NRIS) shall mean an Interconnection Service that allows the Interconnection Customer to integrate its Generating Facility with the Transmission System in a manner comparable to that in which the Transmission Owner integrates its generating facilities to serve Native Load Customers as a Network Resource. Network Resource Interconnection Service in and of itself does not convey transmission service. 5

6 Key Principles A Capacity Resource may choose either NRIS or ERIS in the GI process, but must go through the Aggregate Transmission Service Study (ATSS) process An Energy Resource may choose either NRIS or ERIS in the GI process, and generally does not elect to go through the ATSS process Any resource with firm transmission service will be included in the Integrated Transmission Planning process and may drive transmission expansion An LSE that owns firm service from a DNR has the ability of requesting a financial hedge against congestion 6

7 Some Stakeholder Concerns Equity Capacity Resources vs. Energy Resources LSEs with Capacity Resources must go through transmission service study process and pay for potential upgrades LSEs or Merchants with Energy Resources may bypass the transmission service study process and as a result pay for fewer transmission upgrades LSEs or Merchants with Energy Resources compete equally in the market with those that have Capacity Resources and incur typically less cost associated with market access Energy Resource dispatch may contribute to system congestion that increases cost risk if requested TCRs are not obtained Value Little difference in the treatment of ERIS and NRIS after the GI study process NRIS upgrade costs typically exceed those of ERIS, but NRIS provides minimal additional benefits Cost Allocation Upgrades may be identified in ITP that otherwise would be identified in GI GI: All costs are direct assigned to interconnection customer ITP: All costs allocated according to Highway/Byway 7

8 ERIS Current State Generator Interconnection: Study ERIS to the entire SPP footprint Cost assignment for projects with response factors of 20% or more Transmission Service: ERIS resources must go through the full ATSS process in order to secure Capacity Status for Reserve Requirements and to attain Candidate Auction Revenue Rights Integrated Transmission Planning: ERIS resources are studied with no distinction vs NRIS resources in the ITP and may require additional transmission expansion by comparison ERIS resources are included in Reliability Assessments performed on SPP Balancing Authority (BA) dispatch powerflow models ERIS resources are included in Public Policy and Economic Assessments performed on economic models 8

9 NRIS Current State Generator Interconnection: Study NRIS to the host zone No process or mechanism to award ARRs/TCRs for NRIS Transmission Service: NRIS resources must go through the full ATSS process in order to secure Capacity Status for Reserve Requirements and attain Candidate Auction Revenue Rights Integrated Transmission Planning: NRIS resources are included in Reliability Assessments performed on SPP Balancing Authority (BA) dispatch powerflow models NRIS resources are included in Public Policy and Economic Assessments performed on economic models 9

10 ERIS Modification Considerations Generator Interconnection: Study ERIS to the market with more focus on local impacts Consider studying resources to nearest Integrated Marketplace (IM) pricing hub Reduce system impact threshold below current value of 20% Establish and assess market access fee Based on usage of excess capacity Revenues distributed to Transmission Owners Transmission Service: ERIS Resources may continue to elect to become a DNR by attaining Transmission Service Integrated Transmission Planning: Exclude ERIS from Reliability & Public Policy Planning considerations Include ERIS in Economic Planning considerations Distinguish between benefits to ERIS Resources and to ratepayers when evaluating benefit/cost ratios for economic transmission investment 10

11 NRIS Modification Considerations Generator Interconnection: Study NRIS to the market and specific load with focus on local impacts Consider studying resources to nearest Integrated Marketplace pricing hub rather than TO fleet Develop process to award ARRs/TCRs for NRIS Transmission Service: Add incentives for NRIS Grant NRIS transmission service without participating in ATSS which qualifies as a capacity resource Relax baseplan funding restrictions for NRIS resources converted to DNRs Integrated Transmission Planning: Include NRIS resources in Reliability Economic & Public Policy Planning considerations 11

12 Next Steps Narrow list of considerations to add more focus Incorporate SPC feedback into whitepaper details Present draft whitepaper to SPC in April Provide recommendations on next steps to SPC 12