Arkansas Electric seeks approval to turn transmission control over to the SPP

Arkansas Electric Cooperative Corp. (AECC) on Jan. 13 applied to the Arkansas Public Service Commission for approval to transfer control of electric transmission facilities to the Southwest Power Pool, a Regional Transmission Organization (RTO).

AECC provides wholesale electricity to the seventeen electric distribution cooperatives in the state, which are AECC’s members. These distribution cooperatives, in turn, provide electricity at retail to approximately 500,000 consumers, primarily in Arkansas. The certificated service territories of AECC’s members extend into 74 of the 75 counties in Arkansas and cover approximately 60% of the state’s geographic area.

AECC is proposing to change its SPP membership status from Non-Transmission Owning Member to Transmission Owning Member. In order to make that change, SPP must have the authority to direct the day-to-day operations of the applicable transmission facilities.

“If the Commission approves AECC’s transfer of control to SPP, AECC will continue to own, operate and be responsible for maintaining any transmission facilities under SPP’s control,” said the application. “That said, by virtue of having functional control of such facilities, SPP will be able to direct the day-to-day operation of these transmission facilities and to administer transmission service over the facilities under the SPP Open Access Transmission Tariff (SPP OATT). The other functions that are included in SPP’s authority and that involve functional control include: scheduling authority over tariff facilities; determining the Available Transmission Capacity under the SPP OATT; coordinating with other regions; directing transmission construction under coordinated planning criteria or under the SPP OATT; reviewing and coordinating transmission maintenance schedules; and redirecting maintenance outage schedules for reliability reasons and providing compensation.

“AECC anticipates this change in membership will result in AECC receiving revenue of approximately $1.3 million from other users of AECC’s eligible transmission facilities. This increased revenue will increase AECC’s margins, which will help reduce AECC’s need for future rate increases as well as maximize the magnitude and/or ability for AECC to allocate patronage capital to AECC’s Members.

“AECC’s transfer of functional control to SPP will ensure that the administration of transmission service over current and future facilities is conducted independently from the owners of electric generation facilities in accordance with the relevant Orders of FERC. Further, it has the potential to increase wholesale competition in generation purchases and sales, consistent with FERC’s expressed desire to establish RTOs. Lastly, the increase in revenue will increase AECC’s margins, which will help mitigate the need and magnitude for rate increases and could allow for an increase in patronage capital allocated and paid to AECC members.”

AECC proposed the following procedural schedule regarding this application:

  • Staff/Intervenor Direct Testimony: March 25, 2016
  • AECC Rebuttal Testimony: April 8, 2016
  • Public Hearing, if not waived: April 26, 2016
  • Final Order Date requested: June 1, 2016

Andrew Lachowsky, the Vice President of Planning and Market Operations at AECC, said in Jan. 13 supporting testimony that AECC has assets of about $1.7 billion and annual energy sales of about $720 million, stemming from nearly 3,600 MW of installed generation. AECC also has purchase power agreements for an additional 735 MW. The loads and resources of AECC and its members are located in balancing authority areas operated by three entities:

  • SPP for transmission owned by American Electric Power‘s Southwestern Electric Power Co. (AEP/SWEPCO) and Oklahoma Gas & Electric (OG&E);
  • the Midcontinent ISO for transmission owned by Entergy Corp.’s Entergy Arkansas Inc. (EAI); and
  • the Southwestern Power Administration (SPA).

AECC relies on the transmission systems of AEP/SWEPCO, OG&E, EAI and SPA to serve its member loads on the respective entity’s transmission system, and thus is a transmission-dependent utility on the transmission systems of those entities.

Upon EAI’s integration into MISO in December 2013, AECC became a Market Participant in MISO’s day-ahead and real-time energy markets. AECC became a Transmission-Owning member of MISO in June 2014. AECC is also a Market Participant in the SPP Integrated Marketplace, which began March 1, 2014.

Lachowsky noted that at the regularly scheduled Jan. 6, 2016, board meeting, after a discussion of the possible revenue benefits, AECC’s Board of Directors approved changing its membership status in SPP from a Non-Transmission Owner Member to a Transmission Owner Member.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.