January 29, 2019

Southwest Power Pool board outlines 2019 goals, approves new rate schedules and endorses 2018 transmission planning report

LITTLE ROCK, AR — At the Jan. 29 Southwest Power Pool (SPP) Board of Directors and Members Committee meeting in New Orleans, stakeholders got a preview of the organization’s primary goals for the upcoming year, elected several new representatives, approved the preliminary design of mechanisms to modernize SPP’s cost-recovery processes and endorsed a list of proposed transmission upgrades to be constructed over the next five years.

President and CEO Nick Brown said the organization will focus on the following projects in 2019:

  • Implementing RC services in the west, scheduled to go live in December.
  • Replacing our settlements system, which processes more than $20 billion per year in revenues that flow through our markets.
  • The Schedule 1A Task Force’s work to revamp how we collect fees to support SPP’s administrative services.
  • The Holistic Integrated Tariff Team’s review of SPP’s transmission planning, markets and cost-allocation processes to look for improvements.
  • The Value and Affordability Task Force’s analysis of how we recover costs for transmission investments and the ongoing benefit members receive from SPP and transmission infrastructure.
  • Continuing to improve our study process that facilitates connecting new generation to the grid.

The group elected three representatives to the Members Committee for three-year terms. American Electric Power’s Peggy Simmons will represent the investor-owned utility sector. Basin Electric Power Cooperative’s Tom Christensen and Tri-County Electric Cooperative’s Zac Perkins will represent the cooperative sector.

The board and Members Committee approved a rate structure recommended by the Schedule 1A Task Force and previously approved by SPP’s Finance and Markets and Operations Policy Committees. The task force developed new cost-recovery schedules that are simple in design and appropriately charge and compensate users of SPP’s markets and transmission systems.

“SPP’s current method of cost recovery is based on a two-decade-old structure that no longer aligns with actual use of our system,” Brown said. “Our staff and stakeholder representatives have worked hard over the course of two years to reach consensus on an elegant solution that we hope modernizes and future-proofs our rate design.” The task force will present proposed tariff revisions later this year.

The board endorsed the 2019 SPP Transmission Expansion Plan Report that contains a comprehensive list of planned transmission projects in the SPP region and projects completed in 2018. Projects estimated to cost nearly $1.8 billion will be constructed over the next five years in 13 states, according to the report. Last year, SPP’s member companies completed 98 transmission system upgrades in seven states estimated to cost $779 million. These projects will benefit the region by:

  • Facilitating connection of new generators, including large amounts of wind energy, to the transmission system.
  • Ensuring low-cost electricity is delivered to consumers.
  • Facilitating connection of new sources of electricity demand, such as data centers and gas and oil infrastructure, to the transmission system.
  • Solving power grid issues that, if not addressed, could impact the reliable delivery of electricity or cause power outages.

“Our members’ investments in the regional transmission system are one reason SPP’s energy market offers among the lowest prices for wholesale energy in the country,” said Lanny Nickell, SPP vice president of engineering. “We are continually analyzing and upgrading our power grid to ensure customers can receive reliable, affordable energy now and in the future.”

Projects that were completed in 2018.

Derek Wingfield, (501) 614-3394, dwingfield@spp.org