TOSP Process UpdateBoard of Directors Education Session – June 14, 2016

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Agenda• CTPTF actions since April BOD Meeting

• Transmission Owner Selection Process Update

• IEP Lessons Learned

• Minimum Transmission Design Standards Task Force update

• Next Steps

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TOSP UpdateLessons Learned Process To-Date

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Actions Since April BOD MtgApril 27, 2016 – BOD awarded NTC for Walkemeyer

project

May 12, 2016 – CTPTF F2F meeting to discuss additional QRP Lessons Learned (extension from Jan 7 and Feb 12 Lessons Learned) and initial IEP Lessons Learned

May 24, 2016 - CTPTF call focused on Rate Analysis

May 31, 2016 - CTPTF call focused on proposed QRP/RFP convergence and update to IEP process

June 6, 2016 – CTPTF call focused on Rate Analysis

• June 15, 2016 – CTPTF F2F meeting to finalize points recommendations for SPC/MOPC

• July 7, 2016 – SPC Workshop – Order 1000

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Objectives of Process Improvement• Provide greater effectiveness of the process

Ensure we get the right information in the right format to evaluate the project proposals

Create specificity in the proposals to eliminate unneeded costs and burden during the bid development processes

Support the SPP approved Order 1000 process

Eliminate uncertainty in the selection criteria to further promote an “open, transparent, and fair” bidding process

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TOSP Process Update (Cont’d)

• Comments have been provided by members of the CTPTF, Qualified RFP Participants (QRP), and the Industry Expert Panel (IEP)

• Key Areas identified for improvement include:

Rate Analysis - Finance Annual Transmission Revenue Requirement (ATRR) template

Convergence of QRP and RFP Information

QRP qualifications – what areas do not need to be re-addressed in RFP?

RFP focused on specific project requirements

IEP Process and engagement

DPP effectiveness and potential process enhancements

Review Sponsorship Model vs. Competitive Bid Model. Is competitive bid model still appropriate for SPP?

Overall timeframe for the process

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TOSP Process Update (Cont’d)

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Transmission Owner Selection Process (TOSP) Improvements and Impacts

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Tariff ChangeStaff Only Implementation Policy Change

DPP Effectiveness & Results to-date

No changes

ATRR TemplateConvergence of

QRP and RFP information

RFP Focused on Specific Project Requirements

IEP Process and Engagement

Sponsorship Model vs. Competitive Bid

Model

Overall Timeframe of TOSP

DPP Effectiveness & Results to-date

Potentially Impacts Both

No changes No changes

Sponsorship Model vs. Competitive Bid

ModelImpacts Both

Overall Timeframe of TOSP

Potentially Impacts Both

Convergence of QRP and RFP information

Potentially Impacts Both

No changes

No changes No changes

No changes

TOSP Staff/Stakeholder Only Implemented Improvements

• ATRR Template improvements

CTPTF working with high levels of engagement to improve the template utilized in a RFP Proposal to represent the ATRR and NPV figures for a Proposal

Discussing the appropriateness of an incremental only cost or SPP as a whole cost response.

Should the Proposal reflect only what the incremental cost to build the project will be and not have cost figures impacted by an averaging effect of formula/stated rates?

OR

Is it appropriate to have the cost amounts reflected in a proposal be impacted by the existing portfolio of the developer?

Areas of improvement in template:

Standardizing how and what assumptions are presented in a Proposal

Increasing the comparability of Proposal rate analysis responses for evaluation purposes

Increasing the transparency of figures presented in the ATRR response for the RFP Proposal

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TOSP Staff/Stakeholder Only Implemented Improvements (Cont’d)• Convergence of QRP and RFP information and RFP

project specific information During the Walkemeyer RFP, due to the phrasing of questions in the RFP

Response Form, respondents duplicated data that was previously submitted in the QRP process.

CTPTF believes that working to improve the phrasing of questions in the RFP to drive more project specific results will increase the value of the responses and make for more appropriate evaluations.

There may remain items per the Tariff that would still be required to be duplicated in both processes. The CTPTF is working to determine if this is appropriate or if changes should be made to remove the requirements from either the QRP or RFP process in Attachment Y.

• Overall timeline of the TOSP Should the evaluation window for the IEP be extended or staff allowed to

have the flexibility to extend the window up to 180 days?

As discussed later in Policy shifts, an earlier seating of the IEP may be appropriate

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TOSP Potential Policy Shifts

• Two main questions:

1. Are Stakeholders and SPP receiving the intended benefits of the DPP process?

2. How would the BOD interpret DPP points in a close evaluation?

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TOSP Potential Policy Shifts (Cont’d)

• DPP effectiveness and process enhancements Implemented changes (Updates to BP7650) to better drive creative

and complete DPP solutions

DPP Submittal Form improvements

Efficiency with common fields and formats

Automation – resulted in significant reduction in onboarding time and effort of processing DPPs

• 90% reduction in hours for support staff

• 2015 DPP onboarding work (1,672 DPPs)

Support Staff – 468 hours

Contractors – 1,152 hours

• 2016 DPP onboarding work (1,664 DPPs)

Support Staff – 167 hours

Contractors – 0 hours

• Actual DPPs received

• 2015 ITP10 - 1,179

• 2015 ITPNT - 493

• 2016 ITPNT - 1,664

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TOSP Potential Policy Shifts (Cont’d)

• BOD interpretation of DPP points in a close evaluation

• The CTPTF is concerned with the level of time and money required from both Stakeholders and SPP Staff to submit and process DPPs. Is the DPP process bringing the value to the planning process as intended?

• If the IEP recommendation was for a Proposal that did not receive 100 incentive points for a DPP submittal, would the BOD elect to approve a different Proposal that earned a higher total point score simply because of incentive points?

• Is there a better process to drive creative solutions while rewarding participants in the planning process?

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TOSP Potential Policy Shifts (Cont’d)

• IEP process and engagement

Earlier Seating of IEP

IEP evaluation and scoring methodologies should be disclosed to RFP Respondents as far in advance of the bid submittal deadline as possible

SPP would select IEP members for an RFP earlier during the RFP window

Selected IEP members would decide on evaluation and scoring methodologies

IEP evaluation and scoring methodologies would be shared publicly

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TOSP Potential Policy Shifts (Cont’d)

• Sponsorship Model vs. Competitive Bid Model

Stakeholders discussing and evaluating the appropriateness of the SPP Order 1000 implemented model

Is it working as intended to produce the type of process desired?

Should a different model be considered for the TOSP?

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TOSP Tariff Required Changes

• DPP effectiveness and process enhancements as discussed earlier under Policy Shifts could have Tariff impacts to Attachment(s) O and/or Y.

• Would require the Revision Request process and filings at FERC to implement.

• Convergence of QRP and RFP information as discussed earlier under Staff changes could have Tariff impacts and require updates to Attachment Y. Would require the Revision Request process and filings at

FERC to implement.

• Sponsorship Model vs. Competitive Model discussion would result in Tariff changes to Attachment O and Y if a shift in Order 1000 implementation model was pursued. Would require the Revision Request process and filings at

FERC to implement.

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TOSP Tariff Required Changes (Cont’d)

• Overall timeframe of the TOSP could have tariff changes depending on what the updates were.

If the evaluation window was modified this would require an update to Attachment Y, using the Revision Request process and FERC filings.

Earlier seating of the IEP would not require Tariff changes only policy or process changes

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IEP UpdateLessons Learned Process To-Date

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IEP Process Update• Industry Expert Panel Lessons Learned

IEP went through a lessons learned process with SPP Staff after completing its evaluation and recommendation report

• Key Areas identified for improvement include:

Agreed with CTPTF that the RFP Response Form should be based in a Word format where possible

Agreed with CTPTF that as part of the Rate Analysis, the ATRR and NPV templates should be improved for consistency in response format across all Proposals

RFP proposals should be more “project specific” in nature and contain fewer generalized responses

Would like to explore the opportunity to have longer evaluation window if needed

Would like to explore the idea of having an opportunity to meet with respondents F2F

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IEP Process Update (Cont’d)• Agreed with CTPTF that the RFP Response Form should be

based in a Word format where possible

• The CTPTF is currently reviewing an updated Word version of the RFP Response Form. All questions and answers for the RFP Response Form have been moved to Word, except for Engineering Design responses, ATRR, and pro-forma financial statements.

• The intention is to use this format for the next TOSP project

• Agreed with CTPTF that as part of the Rate Analysis, the ATRR and NPV templates should be improved for consistency in response format across all Proposals

• The CTPTF is currently working on modifying the ATRR and NPV templates that would require all Proposals to submit the information within the same format. This will ensure better consistency and comparability in responses thereby making the evaluation process more straightforward

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IEP Process Update (Cont’d)• RFP proposals should be more “project specific” in nature and

not contain as much generalized responses

Similar comments were received from the CTPTF. Currently they are evaluating how to have the RFP ask more specific questions to promote more relevant and specific answers to the project

• Would like to explore the opportunity to have longer evaluation window if needed

The IEP noted that for a more complex project, the evaluation period may need to be increased to allow a thorough review and recommendation

• Would like to explore the idea of having an opportunity to meet

with respondents F2F

The IEP noted that in traditional RFP situations, bidders meet with decision makers to discuss the project and proposal

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MTDS Update

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MTDS Update• Minimum Design Standards Task Force (MDSTF) is finalizing

version 2 of the Minimum Transmission Design Standards

(MTDS)

• The Project Cost Working Group (PCWG), MTDSF, and CTPTF

are working together to improve the MTDS and RFP documents for consistency.

• Areas of focus:

Clarify what standards and assumptions should be used in selecting a conductor

Provide stronger language to require items in a response instead of just “consider” items. For example, losses on the line, galloping of the line, etc. should be required in a RFP Proposal.

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Next Steps• Develop recommendations for SPC on July 7, 2016

• Continue improvement efforts for the ATRR template

• Continue improvement efforts for the RFP Response Form

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