TheSouthwest Power Pool Inc.has for the first time selected the developer of a needed transmission projectthrough competition. The grid operator's board chose as thedeveloper and owner of a roughly 22.6-mile, 115-kV line known as the "Walkemeyer"project, running from Walkemeyer to North Liberal in western Kansas.
subsidiary was selected as the alternate developer.
Alsoon April 26, the SPP board of directors approved lowering its planning reservemargin from 13.6% to 12%, reducing capacity requirements in the region by about900 MW. The RTO said the action would save its load-serving members around $90million annually, or $1.4 billion over the next 40 years.
SPPsaid three primary factors allowed it to lower its planning reserve marginwhile maintaining reliability: nearly $6 billion of transmission grid additionsin the last decade; the expansion of its service territory into all or part of14 states as of October 2015; and its market success, which includes 700generating resources.
TheSPP decision on the Walkemeyer project came after the board received arecommendation from an industry expert panel that assessed bids. In a reportreleased earlier in April, the expert panel assessed 11 proposals to complywith FERC's requirement to remove federal rights of first refusal for certaintransmission projects, also known as Order 1000. None of the bidders wereidentified in the report, but potential applicants included new publicpower-focused developer GridLiance Holdco LP, backed by , and a jointventure between BerkshireHathaway Energy and WestarEnergy Inc., both of which receivedformula rate approvalsfrom FERC last year.
"Lastyear, after FERC had adopted our Order 1000 requirements, we had our firstproject that needed to be competitively bid under our tariff," SPP GeneralCounsel Paul Suskie, also the grid operator's executive vice president ofregulatory policy, saidin an interview."In April last year, the board approved an upgrade that would requirecompetitive solicitation. In May, as per our tariff, as required by FERC, SPP issuedan RFP in which 43 entities had the opportunity to submit responses to competefor that project."
SPPthen contracted with independent experts who formed a pool, and a subset of thepool became a panel that scored the projects, according to Suskie. He saidunder the scoring system, which is approved by FERC, proposals were calculatedon a 1,000-point scale, with 200 points given for engineering design, 200 points for projectmanagement/construction, 250 points for operations, 225 for rate analysis and125 for finance.
Suskie said SPP's first timethrough the new process has "gone well," but the RTO is alwayslooking for ways to improve it, and will meet with stakeholders once theprocess is complete for feedback.
Constructionof the Walkemeyer project will now follow SPP's standard process, in which SPPstaff will issue Mid-Kansas Electric a notification to build the approvedproject, SPP said.
Theboard also approved 86 transmission upgrades totaling $363 million in newengineering and construction costs, seven of which will be evaluated further,the RTO said. The planned development will include a $20.5 million project inthe Tulsa, Okla., area, a $30.5 million project near Woodward, Okla., whichincludes a new substation and 138-kV line, and $145.7 million to build newsubstations and 115-kV lines in northwestern North Dakota to meet demand in theBakken Shale.
SPPsaid the evaluation of the projects is projected to be completed in July.