SPP/Entergy Cost-Benefit Analysis Qualitative Impacts Areas of - - PowerPoint PPT Presentation

SPP/Entergy Cost-Benefit Analysis Qualitative Impacts

Areas of Impact July 13 Draft For July 20, 2010 Update meeting Ellen Wolfe Jack Ellis

• Transmission Reservation/Energy

Scheduling/Dispatch

• Congestion Management
• Transmission

Planning/Interconnection/Cost Allocation

• Ancillary Services
• Outage Scheduling
• Governance

Note that categories are overlapping

Also note that some additional details/references are provided as End Notes (annotated as “EN” in this presentation)

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Potential Impacts: Sample operational categories explored

• Short run

reservation/energy scheduling and dispatch

• Longer-run (e.g.,

transmission interconnection)

• Comparing the known of current Entergy and SPP

configuration with unknown of SPP

• Want to avoid panacea or “grass is greener” effect
• Given that, hard to characterize in apples-to-apples
• And otherwise acknowledge risks of unknown

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Inherent challenges in this analysis

• [Facilitate Development of] Competitive Market
• [Minimize] Discriminatory Environment
• [Increase] Efficiency of Production
• [Promote] Efficient Resource Expansion
• [Promote] Efficient Grid Expansion
• [Reduce] Opportunities to Exercise Market Power
• [Enhance] Grid Reliability
• [Facilitate] Ability to Conduct Business
• [Minimize] Costs and Administrative Burdens

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Potential Impacts: Areas of Impact for Operational Changes

Base Case

• Entergy:
• Participants schedule transmission

consistent with service rights

• WPP market for energy dispatch
• Entergy unit redispatch
• TLRs for real time congestion
• SPP:
• Transmission reservations

converted to financial rights

• Day-2 market*:
• Optimizes all units that bid
• EIS and TLRs for real-time

congestion

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Short-term transmission/dispatch/congestion management - Description

Change Case

• Entergy & SPP
• Self scheduled energy

reservations cleared

• Day 2* market re-optimizes

for incremental/decremental energy offers

• Entergy likely continues

WPP to serve Entergy load

• Redispatched for SPP

D2 market?

• EIS and TLRs (fewer?) for

RT congestion

* Assumes Day 2 market in place

Base Case

• Pros:
• Transparency w.r.t. network

model

• Maintain operational control
• Mechanisms for Entergy to

hedge

• Status quo; avoidance of

changes and new burdens and risks of RTO and D2 market

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Short-term transmission/dispatch/congestion management - Pros

Change Case

• Pros:
• One-stop shop for long-term and

short term transmission

• Transparency w.r.t. operating

guides, gen/dispatch orders, issues

• Theoretical global optimization

(captured in quantitative analysis)

• Fungible transmission rights

(tradable TCRs and/or earn revenues if not scheduled)

• SPP and user operational

efficiencies of one SPP process (e.g., no ITC) – coordinate with quantitative analysis

Base Case

• Cons:
• No financial hedge available
• General transparency concerns (EN1)
• WPP redispatch has limitations
• model is not transparent (EN2, EN3); Limited

info (dispatches, prices)

• Currently limited to peak hrs (EN2)
• Perception that ICT model may
• versubscribe transmission
• Due to incomplete info about loop flow, or

about generation, or

• Due to Base Case overloads in conjunction

with ICT running 3 yr models? (EN5)

• Historically a lot of TLRs in Entergy’s service

area*

• Inefficiencies regarding transmission service

requests (EN6)

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Short-term transmission/dispatch/congestion management - Cons

Change Case

• Cons:
• Network model access

restricted/cumbersome

• Dispatch uncertainties (e.g., QFs

included or not?)

• Market close at 4 pm; too late for gas &
• ther business transactions
• ARRs/TCRs perceived as more risky

than current mechanisms to hedge (for Entergy)

• Historically a lot of TLRs in SPP’s EIS

market*

• Risk of no must-bid/must-offer

requirement

• Incents owners to start units prior to day-ahead

market

• Uncertainty about RMR treatment: e.g.,

how reliability met, how generators are compensated, how costs are allocated.

*See next slide for TLR discussion

SPP EIS and Entergy leads to Firm Service TLRs with similar frequency

10 20 30 40 50 60 70 80 Reconfiguration (Type 4) Reallocation (Type 5a) Curtailment (Type 5b) Emergency (Type 6) 55 75 18 1 32 77 24

Frequency

TLRs Affecting Firm Service (2009)

Entergy SPP EIS

SPP EIS Leads to many more Non-Firm service TLRs

200 400 600 800 1000 1200 1400 1600 Reallocation (Type 3a) Curtailment (Type 3b) 82 35 383 1467

Frequency

TLRs Affecting Non-Firm Service (2009)

Entergy SPP EIS

Base Case

• Entergy:
• Uses queuing process for studies

for interconnection

• Utility-centric transmission planning
• Entergy has more stringent voltage

control requirements

• SPP:
• Uses batch process with open

season for interconnection

• Regional transmission planning

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Transmission planning/interconnect/cost allocation - Description

Change Case

• Batch process with open

season for interconnection

• Regional transmission

planning, including Entergy

• Uncertain highway/byway

cost allocation implications

Base Case

• Pros:
• Entergy has shorter turn-

around on interconnection request

• Entergy makes network

model available

• TO perceived benefit of

avoiding unnecessary bulk system upgrades

• Entergy’s ability to focus on

specific local reliability issues

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Transmission planning/interconnect/cost allocation - Pros

Change Case

• Pros:
• Improved efficiencies and better
• ptimization in transmission

planning processes (e.g. no separate Entergy & SPP processes)

• Explicit process exists
• + Elimination of other Basecase

“cons” not mentioned

Base Case

• Cons:
• Perception that Entergy system has been under

built/insufficiently upgraded given interpretation

• f NERC non consequential firm load provisions

that shifts cost from native load to network customers (Note B type Base Case overload impacts) (EN7, EN8)

• Concern over Entergy’s inclusion of only 3-years
• f upgrades in its construction plan
• May be able to refine discussion following

SPP’s system review (C*)

• Concerns about load-shedding effects on

Entergy customers

• Possibility that these issues may not get

resolved absent move to SPP (e.g., through E- RSC activities?)

• Costs of projects not reported in Entergy’s T

planning process

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Transmission planning/interconnect/cost allocation – Cons

Change Case

• Cons:
• Time delay in interconnection requests;

slow/cumbersome(A*) T planning process

• Risks/cost shifts for Entergy from EHV policy
• Perceived high risk given sensitivity to

wind assumptions(B*)

• Expected costs shifts of highway/byway

given high load share (E*)

• E.g., Affected by Base Plan project costs

in Balanced Portfolio if projects are close to Entergy service area

• Lack of full transparency into T planning

process (e.g., model is not available, “black box” (D*) feel to outcome, unclear focus on local issues)

• Further burdens SPP staff

Note: “Pros” and “Cons” very interrelated for this issue; “pros” of status quo case are “cons” of change case and vice-versa – bear with artificial distinction here

• Ancillary services sharing arrangements already in place
• No operating reserve changes anticipated
• May be able to reduce regulation requirements under SPP
• Also may be less expensive solution for contingency reserves
• Can purchase ancillary services or self-provide in both Entergy and

SPP

• Operating reserves and regulation impacts captured in quantitative

analysis

• Will coordinate with Ralph and Bruce to capture in qualitative analysis

those impacts incremental to those captured in quantitative analysis

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Ancillary Services

• Existing seams agreements provide for transmission outage

coordination

• Outages are posted publicly on OASIS
• ITC is coordinating outages now
• = > not much change expected if Entergy joins SPP

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Outage Management

• Perception that ICT governance is not sufficiently strong to overcome pre-

existing challenges. (EN9)

• Mismatch in expectation regarding the independent role of the ICT (EN10)
• Impression that ICT sides with Entergy (EN11)
• Significant efforts have identified a number of possible areas of improvement

even in absence of Entergy joining SPP (EN12)

• General perception that if Entergy joins SPP more access/control will be

available to users of Entergy’s system

• However, under SPP governance users will not likely have more

representation as a result of Energy joining SPP

• Small users may continue to feel under-represented
• At same time Entergy has a significant shift in its control if it is part of SPP

Bottom line: In SPP, final decision-making authority shifts away from Entergy to the more diverse SPP decision-making structure, but Entergy users may not ultimately have more leverage with Entergy under SPP

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Governance

• Pros
• Entergy’s transmission customers get more visibility into operations within the

Entergy service area

• Entergy’s transmission customers benefit from additional transmission that will

have to be built

• More transparency into SPP long-term transmission planning
• Cons
• WPP mechanism will still be required to gain access to Entergy native load
• Entergy (and perhaps its customers) take on a significant cost and

administrative burden by joining SPP, including a share of regional transmission

• Less transparency into SPP grid operations
• Long-term transmission planning and interconnection requests may take

longer and be more cumbersome

• Transmission customers may not have any more influence than they do today

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Summary of Qualitatiave Impacts of Entergy joining SPP

• General concern about administrative burden
• Would apply to Entergy users who are not already active in SPP
• Will continue to coordinate with Ralph to capture here what impacts are

not quantified

• Impacts of potential delays in Day-2 market
• User risk regarding planning
• Actual cost if occurs

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Other

• Written comments to Doug Roe and Ellen Wolfe (ewolfe@resero.com)

by August 6

• Input today best captured in written comments to ensure inclusion
• Qualitative analysis draft report included in draft CBA report
• Qualitative analysis finalized in Final Report

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Next Steps

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End Notes

1 "ESPY’s Review of the ICT Independence and Authority – Findings and Recommendations" dated June 29, 2010, reports on perceived transparency concerns throughout the report. 2 See for example June 2010 ICT Quarterly Performance Report, p. 34, indicating that: “stakeholders have expressed frustration about the lack of detailed information about the WPP results.” It continues that: "Due to the strictures of Attachment V, however, the results of the WPP are considered confidential. Therefore, SPP cannot disclose any details about the WPP results that are not publicly available under the Tariff." 3 See also for example the ICT June 30, 2010 Quarterly Report Attachment 5 communications indicating that details associated with Network Resource Designation errors that were not provided in Entergy's filing. 4 See for example 2010 ICT Quarterly Performance Report, attachment 2 p. 3, indicating challenges with the WPP implementation of off-peak hours: "Mr. Lucas also provided an update on the WPPIWG action item for the ICT to investigate the inclusion of off‐peak

• ffers in the WPP. Mr. Lucas reported that the ICT had completed testing of expanding the
• n‐peak offer period and reported the results of this testing to the WPPIWG. Mr. Lucas

stated the testing showed that while more offers were selected with the expanded on peak

• ffer period, constraint violations increased as well. Mr. Lucas stated that this specific

round of testing did not compel the ICT or WPPIWG to recommend expansion of the on peak offer period in the WPP at this time. Stakeholder questioned whether it was the ICT’s final recommendation not to expand the on peak offer period or if this was still an issue

• pen for further evaluation. Mr. Lucas clarified that this particular issue was still open for

further evaluation by the ICT."

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End Notes

5 See for example Recommendation by Long-Term Transmission Issues Working Group to “Eliminate the Negative Impact of Base Case Overloads on Transmission and Generation Interconnection Service Customers" dated July 11, 2007. (included in June 2010 ICT Quarterly Report as Attachment E.) See also comments filed in conjunction with the June 24, 2009 Technical Conference (e.g., "An LSE Perspective on the Results of the ICT Experiment", Presented to FERC/State Commission Technical Conference, by Lafayette Utilities System" filed in Docket ER05-1065-000). See also, for example, Union Power Partners, L.P. Comments of February 21, 2008. filed in Docket ER05-1065-000 (e.g., pp. 14 - 24). For example on page 21 the comments reflect that the Entergy OATT Base Plan upgrades that would not be initiated in the forthcoming three years resulted in Supplemental Upgrades charged directly to customers requesting transmission service. 6 Entergy explains the alternative application of the NERC requirements with respect to limited interruptions of non-consequential load and identifies the fact that the ICT does not include such contingencies in their Base transmission planning process, whereas Entergy does consider these in their construction planning process. See Entergy's Comments in response to the June 24, 2009 Technical Conference, dated July 20, 2009, filed in Docket ER05-1065-000, pp. 7-9. 7 See for example Operational Efficiency Task Force meeting notes from March 16, 2010 stating that at the Entergy/SPP seam there are inefficiencies potentially due to inconsistent load flow models, lack

• f synchronism between study and reservation procedures, issues identifying generation dispatch

alternatives, and/or unnecessary customer transaction costs. Also see the June 30, 2010 ICT Quarterly Report referencing several efforts to improve efficiency for customers, including the Transmission Request Advocacy Assistance and Coordination Function ("TRAAC") described in Attachment 3, and the Customer Assistance Process described in Attachment 4. 8 Entergy's data suggest Entergy has made significant historical investments to their transmission

• system. See for example, Entergy's Comments in response to the June 24, 2009 Technical

Conference, dated July 20, 2009, filed in Docket ER05-1065-000, page 6.

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End Notes

9 See for example comments filed in conjunction with the June 24, 2009 Technical Conference (e.g., "An LSE Perspective on the Results of the ICT Experiment", Presented to FERC/State Commission Technical Conference, by Lafayette Utilities System" filed in Docket ER05-1065- 000). Comments indicated that ICT lacked the authority to require grid improvements and modify the tariff, that the ICT was out resourced by Entergy, and that the ICT-Entergy contractual relationship inhibits ICT from being "too agressive". Comments of others support these independence issues (e.g, Union Power Partners, L.P. Comments of February 21, 2008). Entergy in its comments following the technical conference, acknowledged that the ICT currently does not have the authority to require Entergy to build transmission, and that this was an explicity functional division acknowledged by FERC. Entergy nonetheless raises the possibility of modifying this division of authority in the future. Entergy post conference comments filed in Docket ER05-1065-000, July 20, 2009, pp. 52-54) 10 "ESPY’s Review of the ICT Independence and Authority – Findings and Recommendations" dated June 29, 2010, 5th page. 11 "ESPY’s Review of the ICT Independence and Authority – Findings and Recommendations" dated June 29, 2010, 5th page. 12 See for example recommendations to the E-RSC from ESPY Energy Solutions, LLC, in memo: "ESPY’s Review of the ICT Independence and Authority – Findings and Recommendations" dated June 29, 2010. Recommendations include shifting authority to the ICT for AFC/ATC calcs, the WPP, and expanding dispute resolution to address SPP/Entergy disputes.