Xcel manager: West’s interregional compliance proposal a ‘huge success’

The West’s interregional Order 1000 compliance filing represents an unprecedented coordinated effort, according to Susan Henderson, manager of regional transmission planning for Xcel Energy (NYSE:XEL) and chair of WestConnect‘s planning strike team.

“[F]rom Xcel’s perspective, this was a huge success,” she said at TransmissionHub’s TransForum West on July 16. “Trying to start this from scratch and going forward and figuring out how we’re going to all work together” was an impressive feat, she said. “[T]he Western Interconnection approached it very differently and we were able to have common tariff language for all four regions in the Western Interconnection. If you don’t think that’s a big success, think about getting together with 48 of your closest friends and trying to negotiate all of these issues out that meet everybody’s requirements.”

The Western Interconnection is the only area that has coordination tariffs spread over the entire interconnection; the Southwest Power Pool (SPP) and Midcontinent ISO (MISO) have only bilateral agreements with each of their adjacent regions, Henderson said.

The California ISO (Cal-ISO), Northern Tier Transmission Group (NTTG) and WestConnect in May and July jointly filed their interregional compliance filing with FERC. 

Xcel Energy participated in the interregional and regional compliance discussions in several regions, as the company operates in both the Eastern and Western Interconnections, including in SPP and MISO.

Different regional proposals resulted from the same questions

Though different regions may have arrived at different proposals for complying with FERC Order 1000’s regional requirements, the conversations that led to those proposals were all markedly similar, Henderson said.

Discussions about cost allocation, calculating benefits, cost recovery, right of first refusal (ROFR), how to involve stakeholders and how to select a project developer were consistently the same across the regions that Xcel Energy participated in, Henderson said.

“Discussion on cost allocation was the same in every region,” she said. “The calculation of benefits – do we use production cost modeling, avoided cost [methodology]? How far do we want to go? Do we want to include [things] like jobs or taxes? All of these regions that we participated in went down on those levels on how to discuss and what to include and what not to include.”

Likewise, all of the regions had similar discussions on how to consider choosing a developer for a proposed project.

“How do you deal with the removal of right of first refusal?,” she said, referencing those discussions. “Do we deal with it? How do you select a project? Are we going to be a sponsorship model? Are we going to have a competitively bid process? What are the pros of those processes, what are the cons of those processes? Do we even want to move to an obligation to construct?”

Henderson added that while some of the regions did not have the conversation about the obligation to construct, all talked about which proposal and structure for selecting a developer was best.

All of the regions struggled with cost recovery, specifically with respect to how it was going to take place and where the participation and how decisions would be made in each region, Henderson said. 

She also noted that involving stakeholders and regulators was paramount to them feeling vested in the process.

All regions discussed the involvement of stakeholders and regulators, how would they be included in order to get them vested in the process of resolving the many questions.

“We need to make sure that some of the processes on how we’re going to do it and [what] the decisions that are going to be made, that they’re good – we need the stakeholders and regulators vested in that process,” Henderson said. “And give them the opportunity to express their opinions and incorporate them. There are different business models with different recovery and they should all be accounted for and we think we’ve been very successful in the Western Interconnection and we also agree we’ve got a good mix in SPP and MISO.”

This article was modified on July 22, 2013, to reflect that Susan Henderson is a manager at Xcel Energy, and that the Western regions filed their Order 1000 compliance filings in May and July, not only in July. 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.