WAPA to announce whether it will join an RTO “shortly”

The Western Area Power Administration (WAPA) will announce “shortly” a proposal, which may involve moving to an RTO, specifically the Midcontinent ISO (MISO) or Southwest Power Pool (SPP), to address constraints in its upper Great Plains region.

“We’ve been looking at the issue since the 1990s in various forms and configurations,” Randy Wilkerson, spokesperson for WAPA, told TransmissionHub Sept. 5. “The problem comes with being able to deliver our power to markets due to transmission constraints and seams issues. As that becomes harder and harder to do, we look at different ways to resolve those issues.”

WAPA ramped up its study efforts about two years ago and has been evaluating the costs and benefits to joining MISO or SPP or to addressing the upper Great Plains constraints through other means, Wilkerson said.

“The kinds of things we’re looking at are primarily cost-related; certainly, that’s one of the big factors in the business case we make – what are our costs and what are our benefits from going this or that way or some other way?” he said. “A lot of the questions relate to the cost of participation [and] if there are any system modifications that may be needed. We have been studying that and expect to announce a proposal shortly.” Reports that WAPA is leaning toward joining SPP are incorrect, Wilkerson said. “Right now, no decision has been made, even in which direction to go,” he said.

Basin Electric Power Cooperative, which was created in 1961 to supply power to rural electric cooperatives whose growing needs were too great for WAPA to meet alone, is also making a determination about whether to move to MISO or SPP.

Basin Electric, WAPA and Heartland Consumers Power District, a South Dakota-based public power district, share a transmission system called the Integrated System (IS).

“Those three entities each own transmission that they jointly use together to provide service on, so we’ve been talking to them as parties together and individually,” Carl Monroe, SPP’s COO, said Sept. 5. “They are looking at the advantages of putting that [system] under an RTO tariff.”

Basin Electric is “still in the evaluation stage,” Daryl Hill, a spokesperson for the cooperative, said Sept. 6.

He added that nailing down a time to announce a decision about a move to an RTO has been difficult.

“At one time, we were looking at having the decision by this [past] spring,” he said. “That didn’t happen because this process takes a while, so whether it’s the end of this year or early next year, I just can’t say.”

As part of its existing joint operating agreement with SPP and separately from its evaluation of a move to MISO or SPP, WAPA is conducting a transmission integration study of the IS with Basin Electric and Heartland Consumers to determine what transmission upgrades may be needed for reliability. The study will likely assist with WAPA’s final decision, Wilkerson said.

“It’s fortuitous that it’s happening at the same time because certainly there will be information in the study that will help inform that decision,” he said.

The study is scheduled to be complete Oct. 22, but Wilkerson said WAPA’s decision could be announced before then.

“It probably could come sooner than the study comes out because they [will] probably have draft results that help them make that decision,” he said, referring to WAPA’s decision-makers.

WAPA’s proposal will appear in the Federal Register and go through a public comment process, at the end of which WAPA will make a decision, Wilkerson said. No regulatory approvals are needed for WAPA to move forward with its decision, he added.

MISO vs. SPP

WAPA and Basin Electric have been talking to SPP and MISO as they try to qualify and quantify the benefits of joining an RTO.

“In particular, they are looking at what it would mean to take the transmission system they own and put it under [an RTO] tariff,” Monroe said. “There’s a lot to that, of course, because of the tariff requirements, transmission owner requirements, what that means to their operations, to the planning they do for transmission.”

WAPA, for example, has preference power contracts that were a part of the original relationship with its customers.

“We don’t have anything that looks like a preference power contract in our market or in our tariff, so a question they would ask would be how would those contracts be treated in our market,” Clair Moeller, executive vice president of transmission and technology for MISO, told TransmissionHub Sept. 6.

Benefits to joining an RTO include access to energy and ancillary markets and reduced administrative costs, among others.

“For Western, with their hydro system, they could accrue benefits in using that hydro in our ancillary services market,” Moeller said. “The hydro is very flexible and the ancillary services portion of our energy market would allow them to monetize that flexibility, so that could help them manage their costs and push costs down for their customers.”

He added that during times of drought, WAPA would benefit from the ability to purchase low-cost energy from the MISO market.

One of the benefits to joining SPP, Monroe said, is the influence members have over decision-making processes.

“In and of themselves, they may not have the influence to make changes, but together with other entities in an organization like SPP, they can have a larger voice in whatever is going on,” Monroe said. “In SPP, they actually get a better voice in making decisions for themselves, because at least in our RTO, our members drive decisions.”

SPP also already has experience with working with a power marketing agency, Southwestern Power Administration, Monroe said.

“They participate with SPP under a contract; they’re not a member,” he said. “We provide them with the same types of services that we do to our other members through a contractual agreement, so we already provide services to a federal agency like WAPA.”

Monroe noted that there are fees and costs associated with joining any RTO, which WAPA is also taking into consideration.

Basin Electric’s priorities differ from WAPA’s

Hill also emphasized that while Basin Electric works closely with WAPA and Heartland Consumers, WAPA’s ultimate decision will not necessarily be Basin Electric’s decision.

“We are two separate entities and it’s our choice individually to join an RTO, Hill said. “In my mind, it doesn’t necessarily follow that one has to do what the other does.”

The two entities also have very different priorities, Moeller said. Because it has significant transmission investment opportunities in northwestern North Dakota to meet demand in the Bakken oil area, for example, Basin Electric has a bigger interest in the type of cost allocation methodologies in place in SPP and MISO. WAPA, by contrast, doesn’t share that same interest.

“Issues … about how transmission costs are allocated in the various RTOs are probably more important to Basin than they are to Western,” Moeller said. “We talk to them together and separately, and … those two organizations have different opinions about [their differences].”

Basin Electric is building six 45 MW gas-fired turbines at $65m each and is in the process of developing the $300m Antelope Valley Station to Neset transmission line, which will service demand from northwestern North Dakota. 

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.