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DNV GL © 2015 SAFER, SMARTER, GREENER1 DNV GL © 2015
FERC Order 1000Understanding Transmission Planning in a New Paradigm
Benjamin Roubique, DNV GL
Antoine Lucas, Southwest Power Pool
May 2015
DNV GL © 20152
Welcome & Introductions
Ben RoubiqueLead Consultant Transmission Planning & Economic Analysis DNV GL
Antoine LucasDirector of PlanningSouthwest Power Pool
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Policy ProductionTransmission
& DistributionUse
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Renewables advisory services
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Energy market and policy design
Energy management and operations services
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Policy Production Transmission & distribution Use
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What is FERC Order 1000?
Federal Energy Regulatory Commission (FERC) issued order in 2011
– Interregional Coordination
– Public Policy Consideration in Transmission Planning
– Regional and Interregional Cost Allocation
– Removal of Right of First Refusal (ROFR)
Defined principles but left implementation details to individual regions
– As a result, widely varying policies across North America
Expands on Order 890
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FERC Order 1000 Principles Interregional Coordination
– Requires Transmission Providers (TPs) to develop formal procedures for studying and coordinating transmission system improvements across regions
Public Policy Consideration in Transmission Planning
– Transmission planning processes must consider the impact of needs driven by established federal or local policies
Regional and Interregional Cost Allocation
– TPs must have method for allocating costs for projects in regional transmission plan
– TPs in neighboring regions must have a plan on how to allocate costs for inter-regional projects
– Cost allocation plans subject to a set of six principles defined by FERC
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Cost Allocation Principles
1. Costs allocated in a way roughly commensurate with benefits
2. No involuntary allocation of costs to non-beneficiaries
3. May use a benefit-cost ratio threshold
4. Allocation to be solely within the transmission region, unless those outside voluntarily assume costs
5. Transparent method for determining benefits and identifying beneficiaries
6. Different methods for different types of facilities
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Removal of ROFR
What is ROFR?
– The right of the incumbent transmission provider to build, own and propose cost recovery for new transmission facilities that fall within its service territory
Removal of ROFR
– Order 1000 requires providers to remove any provisions that assign the ROFR for facilities selected in a regional plan that is eligible for regional cost allocation
What does this mean?
– Allows non-incumbent transmission developers to build and construct projects in regions that may have been previously unobtainable
– Regions have to develop requirements for developer qualification, project/bid submission and evaluation
– Does not mean every project is opened up to other developers
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Transmission Planning in RTOs in North America
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Traditional Transmission Planning Process Overview
RTO performs independent
reliability assessment
TO Develops transmission
expansion plan, submits to RTO for
review
RTO reviews TO plans, checks if
additional violations are
present
RTO develops additional
projects if needed
RTO presents draft plan for stakeholder comments
RTO finalizes plan, submits to board
for approval
Board approves plan, RTO directs TOs to construct
upgrades
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New Planning Process under FERC Order 1000
RTO performs independent
reliability assessment
RTO posts list of reliability needs, requests solution
ideas
RTO evaluates solution ideas, selects projects
based on its criteria
RTO presents plan for approval
Board approves plan
RFPs are issued for competitive
projects
RFPs are evaluated and
winning bidder is selected
Winning bidder directed to
construct project
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Role of Cost Allocation
With Order 1000, RTOs had to develop regional and interregional cost allocation procedures
– Many of these allocate some portion of transmission expansion costs to the region, typically on load-ratio-share (LRS)
Not all projects are eligible for regional/interregional cost allocation
– Eligibility varies by RTO
– Often higher voltage projects or those with measurable benefits beyond the local zone(s) are eligible
The requirement for cost allocation methodology can help to ensure larger projects get built
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Cost Allocation for Transmission Projects
CAISO SPP MISO PJM
Determined By?
Voltage Class
Voltage Class Project Type Project Classification
Description >= 200 kV,• 100%
regional
< 200 kV, • 100%
local
>= 300 kV• 100%
regional< 300 kV• 2/3 local
zone, 1/3 regional
< 100 kV• 100% local
Market Efficiency Projects (MEP)• 80% local,
20% regionalMulti-Value Projects (MVP)• 100%
regional
Regional Projects• 50% regional,
50% DFAXLocal Projects• 100% DFAX
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What are the Impacts on Transmission Planning?
Renewed focus on value-based planning
Interregional planning processes underway
Additional time in planning window for solution submittal/evaluation
Large number of solutions to be evaluated by RTO/ISO
Additional lead time for developer selection
Project cost estimates and cost control play a larger role
Project cost allocation becomes even more important
Ideal results is innovative solutions at a lower cost for ratepayers
These processes are still in their early stages. Full impact of these new procedures is not fully known right now.
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FERC Order 1000 Implementation
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Order 1000 Competitive Process Overview
Competitive Process broadly one of two types:
1. Direct Sponsorship
– RTO/ISO identifies the need and developers submit solutions, winning solution is awarded to the develop who submitted it (PJM, NYISO, ISONE)
2. Competitive Bidding
– RTO/ISO identifies the solution(s) and developers bid to construct, own and operate those facilities. (CAISO, SPP, MISO)
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CAISO
California ISO uses a Competitive Bidding process
– CAISO identifies the needs and develops solutions
– Bidders compete to build selected solution
What projects are eligible for competition?
– All projects regional projects > 200 kV
– Some regional projects < 200 kV
Current competitive projects:
– 2014-2015 Cycle
– No competitive projects for this cycle.
– 2013-2014 Cycle
– Harry Alden – Eldorado 500 kV project recently announced as competitive.
– 4 reliability projects identified
– 1 economic project
– 1 policy driven project
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SPP
SPP uses a Competitive Bidding model, with some elements of Direct Sponsorship
– During the planning cycle, SPP requests solutions from interested parties. Parties who submitted the solution that was selected receive an advantage in the bidding process.
– Once projects are selected and approved, bids are requested for competitive projects.
What projects are eligible for competition?
– Greenfield facilities > 100 kV and;
– Need date > 3 years in the future
Current Projects
– SPP BOD recently approved Walkemeyer – N. Liberal 115 kV project for bid
– RFP issued May 5, 2015
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MISO
MISO uses a Competitive Bidding model
– Bidding advantage is awarded for participating in the planning process (including submitting solutions when requested)
– Bids requested for competitive projects, once projects are selected & approved
What projects are eligible for competition?
– Projects designated as either Multi-Value Projects (MVP) or Market Efficiency Projects (MEP)
– Generally speaking, projects > 345 kV that provide economic benefit with B/C > 1.25 or that provide value across multiple areas within the MISO footprint
Current competitive projects:
– None identified in 2014 planning cycle
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PJM
PJM uses a Direct Sponsorship model
– PJM identifies the need and requests solutions
– Party who submits the winning solution is awarded the project
What projects are eligible for competition?
– Projects with need date of 4 years or greater in the future
– Rebuilds and facilities using existing ROW can be eligible for competition
Current Projects:
– Artificial Island
– Project recently awarded to non-incumbent developer
– 2014 RTEP and ME projects currently being evaluated
– RTEP 2015 Window 1 expected to open in June
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Order 1000 Bidding Process Overview
In those regions where developers bid on solutions, processes are being established to evaluate the bids, score them and select a winning developer.
There is a developer qualification system in most regions – interested parties will need to be pre-qualified with most RTOs to be able to bid on projects
Most regions have a developed set of criteria that projects will be scored on. For example, MISO considers the following categories:
– Planning process participation
– Cost & Design
– Project Implementation Capabilities
– Operations and Maintenance
Bids reviewed and scored by RTO or third-party and approved by RTO board
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How to Participate in Order 1000 Processes
Most RTOs/ISOs have a developer pre-qualification process
– Application typically required one year prior to RFP issuance
– May also require membership in the RTO/ISO
– Based on experience, management, financial criteria
Get involved in the transmission planning process, attend stakeholder forums
Submit solutions into open windows
DNV GL can walk you through these processes and also help to develop transmission solutions!
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FERC Order 1000 Challenges
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Challenges
Limited number of competitive projects being selected
– One project identified in most recent SPP planning cycle; none in last MISO planning cycle; none in last CAISO planning cycle; several potential opportunities in PJM
Limited time and information to put together solutions and proposals
– Depending on the ISO and planning process involved, may only have 30 days to submit proposals including modeling data/study results and cost estimates
Varying processes, requirements, timelines throughout the RTOs/ISOs
– Widely varying processes and models can make it difficult to keep up and to ensure that submitted projects are meeting the requirements of the region
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Rising up to the Challenges
Limited solutions
– Develop unique and cost-effective solutions to submit to the RTOs.
– Get involved in RTO processes, work to change some procedures and criteria
Limited time/information
– Front-load effort as much as possible, be familiar with the processes involved.
– Review draft models, use preliminary information to get some ideas of what might be coming when the windows open
Varying processes/requirements/timelines
– Requires in-depth knowledge and close monitoring of all regions
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DNV GL’s Order 1000 Approach
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The DNV GL Advantage
• Our team has extensive experience in all types of transmission studies.
• Dedicated team working on FERC Order 1000 studies
Team of Planning Experts
• Direct experience working with and in the various RTO environments.
• Continued engagement in RTO stakeholder processes
Experience in RTO Planning
Processes
• Proprietary tools and processes to help screen multiple transmission solutions• Databases and methods to help replicate RTO calculations
Unique Tools
• Success in securing transmission projects for non-incumbents in several regions• Successful identification of key projects during RTO planning processes
Proven Track Record in Transmission
Development Support
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DNV GL Approach for Transmission Development Support
Transmission Opportunity
Identification & Development
Comprehensive benchmarking of
system needs
In-depth understanding of regional planning
processes
Unique tools to screen
transmission solutions
Optimal & cost-effective
solutions – Project Submittal
Technical and strategic support
through stakeholder
process
Project approval
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Summary
Order 1000 brings major changes to the transmission landscape!
– Interregional Planning
– Cost Allocation
– Introduction of Competition in Transmission Planning/Development
– Innovative Solutions at Lower Cost
Processes are still new, and challenges are present on the RTO as well as the developer side of transmission project development
Opportunities are out there, but it requires high-quality projects along with competitive pricing to win solutions
DNV GL has the capabilities to help you and your organization navigate this space and develop and submit winning projects
DNV GL © 201529
SAFER, SMARTER, GREENER
www.dnvgl.com
How can DNV GL help you with FERC Order 1000?
- Attend our FERC Order 1000 Panel DNV GL’s Utility of the Future Leadership Forum June 2–3 Washington, DC www.dnvgl.com/UofF2015
- Contact us at [email protected] to schedule time with our experts Ben Roubique, [email protected]
FERC Order 1000 and the Transmission Owner Selection Process
May 13, 2015Antoine Lucas
SPP Process - Highlights• All entities desiring to participate in the SPP TOSP
must apply to become Qualified RFP Participants (QRPs)
• Detailed Project Proposals (DPP) received for solutions in the planning process
• Competitive Upgrade projects approved for construction now require RFPs prior to NTCs
• A panel of Industry Experts will review, rank and score all RFP responses and make recommendation to SPP Board
• SPP Board will select Designated Transmission Owner (DTO) and issue NTC 31
QUALIFIED RFP PARTICIPANT (QRP)
32
Qualified RFP Participant• Qualified RFP Participant (QRP): An entity that has been determined by
SPP to satisfy the qualification criteria set forth in the Order
• Any Entity can qualify to be a QRP and participate in the TOSP
• Only approved QRPs can participate in the TOSP
• All interested entities must apply
• Application fee applies to all applicants
Timetable
• Annual Open Enrollment period for QRPs: April 1st - June 30th
• SPP will post all applicants by July 15th
• SPP will notify Applicants by September 30th of any QRP deficiencies
• 30 day cure period for any deficient applications
• SPP will post all QRPs for following year by December 31st
33
Qualifying for QRP Status• Each Applicant must demonstrate that they meet qualification criteria
in order to be approved as a QRP
• The qualification is based on categories detailed in Attachment Y of the SPP Tariff:
Membership Criteria
Financial Criteria
Managerial Criteria
• Applications for QRP will be evaluated by SPP to assess if the Applicant meets the qualification criteria and make the final determination
• Qualified QRP Status good for 5 years– Must re-certify annually no later than June 30th
• If QRP qualifications change– Must notify SPP for determination of status
34
DETAILED PROJECT PROPOSAL (DPP)
35
What is a DPP?• Information about a proposed transmission project in
the ITP process– Sufficient info to allow SPP to evaluate the proposed
project– Encourage innovative ideas
• Required to qualify for 100 incentive points in the competitive bidding process
• Current avenues remain available to propose a transmission project
36
DPP Submission• Any entity may submit a DPP
• Specific data requirements– SPP Tariff Att. O Section III.8.b(i)– Business Practice 7650
• 2015 ITP10 – 1179 DPPs submitted– 27 different submitters
• 2015 ITPNT - 436 DPPs submitted– 24 different submitters
37
DPP Analysis ProcessTransmission
Planning Response Window
• 30 Day Window
DPP Submission
Staff Verification for Timeliness & Completeness
Notification of Completeness
and Opportunity for
Resubmission
ITP Study Process
DPP submitter notified if project is
selected / not selected
38
Att. Y, Section I.1 – Determining Competitive Projects
39
1) As determined in accordance with Section I.2 of this Attachment Y, the Transmission Provider shall designate a Transmission Owner in accordance with the process set forth in Section III of this Attachment Y for transmission facilities approved for construction by the Transmission Provider after January 1, 2015 that meet all of the following criteria:
a) Transmission facilities that are ITP Upgrades or high priority upgrades;
b) Transmission facilities with a nominal operating voltage of greater than 100 kV;
c) Transmission facilities that are not a Rebuild of an existing facility and do not use rights of way where facilities exist;
d) Transmission facilities located where the selection of a Transmission Owner pursuant to Section III of this Attachment Y does not violate relevant law where the transmission facility is to be built;
e) Transmission projects that do not require both a Rebuild of existing facilities and new transmission facilities; and
f) Transmission facilities that are not a Local Transmission Facility.
Transmission Facility approved for construction after 1/1/2015
Upgrade Determination
Rebuild of an existing
facility?
No
Yes Operating voltage > 100 kV?
Yes NoITP or High
Priority Upgrade or Interregional
Project?
Yess
ROW wherefacilitiesexist?
YesNC
NoNo
Location violates relevant
law?Yes
No Includes new and Rebuild?
Yes
No
Figure 2
Local Transmission Facility?
Yes
No
TOSP
4
NC - Non-Competitive
NC NC
NCNC
In-service date within
3 yrs or less?
Yes
No
NC
STR Project Process
No
Transmission Facilities approved for construction after 1/1/2015 that require both a Rebuild of existing facilities and new transmission facilities
Competitive Upgrade Determination
5
Rebuild Cost >=80% of Total Project Cost?
YesNC
Divide project into parts
REBUILD
NC
TOSPNEW
Pursuant to the criteria in Att. Y, Section I.1 found on Figure 1.
NC - Non-Competitive
REQUEST FOR PROPOSAL (RFP)
42
RFP Process
• RFP will be issued for each competitive upgrade after study reports have been published and the list of recommended upgrades has been approved by the SPP Board of Directors
• Each competitive upgrade will have 180 days* from the issue date for the QRPs to complete their RFP response
• Each completed RFP response will be analyzed and scored by the IEP– If the QRP had a selected DPP for this upgrade, the 100
point bonus would apply at this time*In accordance with the SPP Tariff, as approved by SPP stakeholders and Board, the Transmission Provider may determine that a time period shorter than 180 days but no less than 90 days may be necessary for specific upgrades.
43
INDUSTRY EXPERT PANEL (IEP)
44
Industry Expert Terms Defined
• Industry Expert Pool: Group of industry experts recommended to the SPP BOD by the Oversight Committee
• Industry Expert Panel: 3 -5 person group of industry experts selected from the pool by the Oversight Committee who are engaged to review and evaluate proposals submitted in response to the Transmission Owner Selection RFP. The SPP BOD may approve the use of multiple industry expert panels.
45
Industry Experts
IE Panel
3 – 5 Experts per IE Panel
IE Pool Approved Experts in IE Pool
Industry Expert Pool Process• Industry Expert applicants must complete an application and submit it to
SPP
• The Industry Expert candidate shall have documented expertise on file with SPP in one or more of the following areas:
1. Electric transmission engineering design
2. Electric transmission project management and construction
3. Electric transmission operations
4. Electric transmission rate design and analysis
5. Electric transmission finance
Timetable
• The proposed application period for Industry Expert candidates for 2015: June 1 – September 1, 2014
• The Oversight Committee will recommend pool to the SPP BOD in October 2014
46
Designated Transmission Owner Selection• IEP reviews RFP responses, rank and score solutions
– Each submitted RFP response is scored according to established criteria
– Panel provides a recommendation to the SPP Board of Directors Respondent information is redacted
• SPP Board of Directors chooses selected RFP response and an alternate– NTC issued to Board-chosen RFP response
47
Helpful SPP Web Links• SPP Order 1000 Process
– Contains links to the applications and forms for the QRP, DPP, and IEP processes, and has documents from the Order 1000 Summits and ITP10 and ITPNT Model and Needs Assessment dates
• SPP Order 1000 Exploder– Receive emails on Order 1000 dates and information
related to the Order 1000 processes
• Competitive Transmission Process Task Force– Contains meeting materials and documents for the
committee
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DNV GL © 2015
SAFER, SMARTER, GREENER
www.dnvgl.com
How can DNV GL help you with FERC Order 1000?
- Attend our FERC Order 1000 Panel DNV GL’s Utility of the Future Leadership Forum June 2–3 Washington, DC www.dnvgl.com/UofF2015
- Contact us at [email protected] to schedule time with our experts
49
Ben Roubique, [email protected]
