Public Service Company of Colorado Generation Interconnection Queue Reform Post-Meeting Stakeholder Comment Form

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1 Public Service Company of Colorado Generation Interconnection Queue Reform Post-Meeting Stakeholder Comment Form Thank you for participating in the May 18, 2018 stakeholder meeting. Please use this form to provide comments or questions regarding PSCo s proposed reforms to its Large Generator Interconnection Procedure ( Queue Reform ). We encourage stakeholders to submit comments, and will accept comments received on or before June 4, Please submit the completed form to the PSCo interconnection box at: PSCoInterconnection@xcelenergy.com. Thank you. Name: Mark Detsky Company/Affiliation: Dietze and Davis, P.C. Address: mdetsky@dietzedavis.com Date: 6/4/2018 COMMENTS OF THE COLORADO INDEPENDENT ENERGY ASSOCIATION TO PROPOSED REFORMS CONCERNING PUBLIC SERVICE COMPANY OF Introduction COLORADO S LARGE GENERATOR INTERCONNECTION PROCEDURES The Colorado Independent Energy Association ( CIEA ) appreciates the opportunity to comment on Public Service Company of Colorado s ( PSCo ) proposed reforms to its Large Generator Interconnection Procedures ( LGIP ) of its Open Access Transmission Tariff ( OATT ). CIEA acknowledges PSCo s perceived shortcomings of the current process and shares PSCo s concern regarding the large size of the queue driven by its most recent electric resource plan ( ERP ). Independent Power Producers ( IPPs ) agree that an LGIP should be adjusted when necessary to make the interconnection process fair and transparent and to mitigate delays in processing studies. The IPP community is ready and willing to work with PSCo to come to consensus-driven results that improve the processing of interconnection requests while honoring principles of open access and just and reasonable tariffs. CIEA also appreciates the time and effort that PSCo has put into the proposed redlines and tariff changes to effectuate its proposed reforms. But while PSCo has spent months on this process, CIEA and other stakeholders have had only a few weeks to digest the breadth and scope of the proposed changes and to identify potential pitfalls 1

2 PSCo may not have considered. CIEA viewed the May 18, 2018 presentation and discussion as an overview of the reforms PSCo has considered. In a similar vein, these comments are intended to be an initial overview of CIEA s concerns. CIEA reserves the right to supplement these comments as more information becomes available. For the same reason, CIEA s principle comment is for PSCo to allow for a robust stakeholder process and to extend the timeline of the filing of queue reforms to so accommodate. CIEA cautions PSCo not to proceed to submit its proposed reforms to the Federal Energy Regulatory Commission ( FERC ) on the timeline it proposed at the May 18 th meeting, but to accept its proposal to extend the stakeholder process and to submit consensus-driven reforms that the IPP community can support. Comment 1: The announced timeline should be delayed. PSCo s anticipated schedule for filing the proposed queue reform should be delayed at least until after the conclusion of the utility s pending ERP with the Colorado Public Utility Commission ( COPUC ). PSCo s Phase II ERP Report is due to be filed on June 6, A COPUC decision on the ERP is set for September 4, 2018, with a final decision expected in October. As discussed below, the proposed queue reforms, if implemented in September, may undermine the COPUC ERP decision. In the months after a COPUC final decision, as projects in the queue progress to the next required deposit or milestone in the LGIP, it is likely that some percentage of the queue will remove their interconnection requests. While this impact is unknown at this point, and to Ms. Eaton s point may not be significant, it is nevertheless worthwhile to have that data rather than proceeding now, when the queue is likely to be at its apex just as the ERP short list is submitted. A significant drop of capacity in the queue may negate the need for some of the proposed changes, but other impacts may also inform PSCo s decision-making. On the other hand, proceeding without knowing the post-erp queue picture may result in premature decisions that have a negative impact on development of resources in Colorado that ultimately affect PSCo ratepayers. Thus, as set forth in comment 2, below, CIEA believes that a consensus-driven filing at the FERC requires a stakeholder process with multiple iterations of the proposal based on a feedback loop process. Extending the timing to allow multiple meetings and comment opportunities to produce consensus drafts will make the ultimate product more robust, comprehensive, and acceptable to the FERC. Recommendation: CIEA requests that the June filing timeline for queue reform be delayed and PSCo commit to a more robust stakeholder engagement timeline. 2

3 Comment 2: Stakeholder engagement requires a longer timeline and more focused meetings. The timeline proposed by the Company in its May 18 th meeting does not contemplate a robust stakeholder process. CIEA asks the Company to reconsider this approach. The May 18 th meeting was solely a scoping review; PSCo was not even able to cover all of the proposed changes during the time allotted. A stakeholder process will provide PSCo with meaningful feedback and result in compromise changes. Instead, under PSCo s proposed timeline, the reform s changes will be litigated which could cause significant delay while exacerbating the identified need for reform. PSCo in late March proposed, without stakeholder input, to modify its suspension provisions in its LGIA. Without a stakeholder process, the proposed reforms were onesided in removing developer flexibility. PSCo attempted to accommodate parties input in its Answer, but it was not a substitute for a stakeholder process. As the FERC stated in rejecting PSCo s proposed suspension reform, any proposed LGIP reforms must be demonstrated to be consistent with or superior to the pro forma LGIP. 1 As the FERC found, similar MISO reforms were approved, in part, because the package of reforms balanced transmission provider certainty with interconnection customer flexibility [and] MISO s proposed reform was the culmination of over a year of stakeholder meetings. 2 To the extent that suspension reform is warranted, that outcome is now delayed longer than would have been the case by first engaging in a stakeholder process. As set forth in the remainder of this initial comment, PSCo s draft proposal is not consistent with or superior to the pro forma LGIP/LGIA. The proposal will increase uncertainty and decrease flexibility for interconnection customers. As a result, PSCo should consider a goal of getting queue reform right the first time in order to be in a position to submit a consensus filing similar to that which the FERC approved in the MISO tariff reform. Recommendation: CIEA proposes that a stakeholder process include: 1) breakout meetings on the PISIS, DISIS, and transition steps at a minimum, and 2) publishing of iterative drafts of the LGIP reforms before filing with FERC in an effort to solicit feedback from IPPs, as well as PSCo s merchant function. CIEA requests broad meetings associated with the submission of new drafts and smaller, more specific meetings on LGIP decision points aimed at developing good faith stakeholder engagement FERC 61,146, at Id. at 33. 3

4 Comment 3: The proposed cluster study process is not workable. The proposed cluster study process in the queue reform initial draft has two primary obstacles: 1) the minimal resource need and lack of a market in the PSCo and WACM Balancing Authority Areas (BAAs) will cause the majority of the energy in the study to be assumed as exported where that is a physical fiction and thus could present a fatal flaw to the cluster study approach, and 2) the available transfer capacity on the PSCo system is so limited that any significant amount of generation will produce unusable results by interconnection customers in the cluster study, causing successive re-studies and exacerbating current delays in queue processing. PSCo has stated that its load is approximately 7000 MW out of approximately 8500 MW load in its BAA. In its pending ERP, the native load growth that PSCo will acquire resources to serve is approximately 450 MW. The remaining large utilities in Colorado, to the extent that they are acquiring resources at all, are doing so at approximately MW of capacity (on a cumulative basis) in the foreseeable future. 3 PSCo s BAA has no significant connectivity to neighboring states or markets. Colorado itself has no liquid market for energy and PSCo rejected the effort to join a market in the near term. With respect to point 1, above, PSCo states that the current queue is approximately 23,000 MW. Under the draft proposal, the first DISIS queue may include a large portion or all of that capacity. Assuming the PSCo resource need is filled by its ERP, then if the initial cluster study is greater than as a little as 250 MW, all energy above that amount will by necessity be considered in cluster studies to be exported, based on PSCo s response at the May 18 th meeting. Due to the lack of resource need, market access, or transfer capability to surrounding BAAs, this outcome is physically impossible. Therefore, the initial cluster study, and possibly others subsequent, will not produce results that can provide meaningful information to both PSCo and IPPs in the cluster. With respect to point 2, above, PSCo s available transfer capacity on its current transmission system is very limited. According to information included in PSCo s pending ERP, at most substation locations other than the Rush Creek Gen-Tie (which is not considered part of the network), available capacity is less than 250 MW, and at most nodes is less than 50 MW. This is especially true in areas that are considered beneficial 3 For example, Black Hills Colorado Electric is building a 60 MW wind project, Colorado Springs Utilities has solicited an RFP for approximately 100 MW, and Tri-State Generation and Transmission Association s ERP shows no resource need into the 2020s. 4

5 energy resource zones under Colorado law where renewable energy resource capacity is identified as being the most significant. 4 Given the known system constraints due to the lack of transmission development in Colorado, the results of cluster studies will overwhelm the powerflow models and produce either results that do not resolve, require network upgrades of new high voltage transmission lines, or require a rebuild of the Denver metro transmission system. For example, the recently completed Rush Creek Transmission Task Force Study by PSCo s transmission planning department showed that at above 2000 MW of total interconnected generation on the Rush Creek Gen-Tie (achieved by networking the gentie), large upgrades to the bulk transmission system were required to handle the power, even with re-dispatch of other generation. Assuming the Rush Creek Gen-Tie is largely filled in the pending ERP, the second or third contingencies identified in the Rush Creek Task Force studies will immediately become necessary for future interconnections. So, if on top of the generation to be connected as a result of the pending ERP, the DISIS-queued projects form a cluster study at any significant amount of capacity (certainly much less than 23K MW), the results are likely to show that the transmission networks in southern, eastern, or western Colorado must be reinforced with large high voltage lines to carry power to Denver. If the amount of generation in the cluster is not considered exported due to the lack of load or connectivity to so export, then each cluster may show the need to rebuild significant parts of the Denver metro ring system. This would produce results that require perhaps multiple re-studies or unrealistic network upgrades costing hundreds of millions of dollars. Given the high likelihood of unrealistic or unreliable results, re-studies will be required in order to develop an indication of actual network upgrades required for individual projects. The cluster study process could likely be stuck before it even gets going and exacerbate current queue processing delays. Recommendation: CIEA encourages PSCo to consider revisions to its cluster study approach. In either eventuality detailed in this section, the lack of meaningful results of the initial cluster studies could have a cascading effect that renders the queue reform unworkable. As a result, considerable revisions may be required, and proceeding to filing with the proposed cluster study approach may cause further delay without addressing these fundamental concerns. Comment 4: The proposed queue reform may affect the pending PSCo ERP. PSCo s queue reform is tied to the PSCo ERP, regardless of the legal separation between PSCo s merchant and transmission functions. The queue ballooned in See, , C.RS. 5

6 when the PSCo ERP completed Phase I and the proposed Colorado Energy Plan ( CEP ) request for proposals ( RFP ) was released. PSCo, as the Transmission Provider and the incumbent load serving entity in its BAA, must review the transmission adequacy of its system through its LGIP, but also through its resource planning function to produce an ERP that can be approved by the Commission. In its approved solicitation documents in its pending ERP, PSCo s resource planning function directed bidders not to enter the queue. As a result, there may be viable or competitive projects in PSCo s ERP that do not have an interconnection request in the queue. However, the proposed queue reform will not impact PSCo s ability to resolve any impasse created by that error. As PSCo stated at the May 18 th meeting, under its current and its proposed tariff revisions, an RFP cluster must respect the queue position of all generation in the current queue. PSCo suggested the remedy might be to create an RFP cluster before the first DISIS cluster. This result would be an immediate violation of the proposed new tariff. Although PSCo s queue reform is driven by the transmission function and not the resource planning function of the utility, it remains true that the proposed queue reform will not be able to be implemented prior to the Commission s expected final decision in Q and so PSCo should instead consider a longer timeline for this process that is independent of the ERP timeline. PSCo s resource function should inform the COPUC of any obstacles to implementation of its ERP that may require FERC action to resolve. In addition, moving to implement the queue reform in Q may involve potential damages to existing bidders including, but are not limited to, the following: If PSCo moves the existing queue into the first DISIS queue in September as proposed, then projects will lose their queue positions and their interconnection cost estimates on which they have based their bids. If re-studies are required, the delayed results could threaten projects ability to achieve in-service dates to qualify for federal tax incentives on which they have based their bids. Finally, the costs of the portfolios presented by PSCo to the COPUC may have to be adjusted. Comment 5: PSCo s proposed backtracking of projects that have already entered into Facilities Study Agreements may not be legally possible. In its revisions, PSCo proposes that projects that have entered into a facilities Study Agreement with PSCo, but have not yet received a Facilities Study from PSCo, will be required to re-enter the DISIS queue and essentially backtrack in the LGIP. PSCo should be advised that executed Facilities Study Agreements represent binding contracts governed by PSCo s current tariff. PSCo may not unilaterally rescind such contracts without creating liability risk for itself. In addition, it would be unduly discriminatory and unjust and unreasonable for IPPs to have to pay additional study 6

7 costs to enter the DISIS queue when such projects have already paid significant sums and received studies or entered into contracts to receive studies under the current process. Existing contracts and previous study payments must be honored in any transition process. Request for clarification: CIEA requests that PSCo clarify whether such projects that have received a System Impact Study or executed a Facilities Study Agreement will have to pay DISIS fees or whether such projects will be refunded deposits or fees previously paid for existing System Impact Studies of Facility Study Agreements. Comment 6: The proposed changes should reflect appropriate incentives and signals to IPPs that assist decision points in managing the queue. As mentioned by several IPP representatives at the May 18 th meeting, the proposed queue reforms create incentives and disincentives in the process that may not match the intended result. As one example, PSCo s proposal for the $0 deposit for projects with a PPA failed under basic scrutiny because it is possible that projects that may sign a PPA but not be able to achieve financing and then withdraw from the queue creating cascading re-studies without penalty. These examples also include the penalties for withdrawal from the DISIS queue, and are too numerous to detail in the short period to submit these initial comments. Recommendation: CIEA encourages PSCo to meet with stakeholders to specifically review incentives and disincentives to IPPs given the initial proposal. This is a primary reason why CIEA is requesting additional time for consideration of comments and additional stakeholder meetings specifically walking through PISIS and DISIS decision-point topics within the broader queue reform proposal. Comment 7: PSCo s reliance on PNM, SPP, and MISO is misplaced. PSCo is primarily relying on the Public Service Company of New Mexico ( PNM ) queue reform process to justify their actions, and to a lesser extent the reforms of MISO and SPP. However, CIEA does not agree that the PNM situation is analogous. PNM is a different system in that it is connected to ERCOT and CAISO, in particular, at the Four Corners. PNM also has an interface with SPP. This is important in CIEA s view because PSCo s cluster studies will rest on the presumption that all MW included in the cluster above PSCo s actual resource need will be presumed to be exported to other utilities. As discussed above, PSCo generally cannot significantly export to utilities outside of Colorado. This is fundamentally different than in PNM, MISO, or SPP. 7