With the power industry seeing changes in technology and markets, the Western Area Power Administration (Western) is going through its own transformation to ensure its nearly $160m in capital investments planned for 2016 and future infrastructure spending strengthens the power grid for the benefit of consumers, Western said in a recent report.
The Feb. 19 report mentioned that Western’s Transmission Asset Management (TAM) program is evolving to provide the federal power marketer with a more data-driven planning and investment program to maximize the value of Western’s transmission assets. The goal is to use data analysis to evaluate critical assets, determine the best timing for equipment replacement and reduce the chance of inadvertent outages, Western said.
The “2016 State of the Assets” report provides updates on various activities in the five Western regions – Upper Great Plains (UGP), Rocky Mountain, Desert Southwest, Colorado River Storage Project and Sierra Nevada.
In the Desert Southwest, the region is conducting several joint transmission planning studies and will host at least four technical discussions during 2016 to review capital investment plans, Western said, noting that the replacement of aging grid infrastructure has put upward pressure on rates charged for transmission service. The region will work with customers to explore techniques to maintain affordable rates into the future, the report said.
The Desert Southwest also is home to the planned Southline Transmission Project, a project that would provide up to 1,000 MW of capacity across southern New Mexico and southern Arizona over two segments. A final environmental impact statement was issued for the project in November 2015, and a record of decision is anticipated in 2016, Western said in the report.
Addressing physical and cybersecurity needs, aging grid infrastructure and challenging environmental conditions such as the drought in the West has made Western adjust its operations and processes to account for those outside forces, Western Administrator and CEO Mark Gabriel said in a statement in the report.
“Western is not as it was five years ago,” and it “must adapt so we can continue to be one of the lowest-cost providers of electricity and transmission in the nation,” Gabriel said. “This requires creativity in our thinking and operating and agility in our planning.”
Changes in grid planning “will not always be comfortable,” as sometimes costs may rise in the short term to provide long-term benefits, but Western will maintain its focus to reliably deliver hydropower from federal resources and related services, he said.
Several Western regions and utilities are exploring the development of a Mountain West tariff to reduce pancaked transmission rates in the West. The group expects to make a determination whether or not to move forward with the effort by the middle of 2016, the report said.
Western’s Rocky Mountain, Sierra Nevada and UGP regions have significant capital investment projections for transmission lines in the coming 10 years, according to the report. The Rocky Mountain region includes a lot of replacement and rebuild projects in the near term, while the Sierra Nevada region is forecast to see spending jump starting in fiscal year 2022.
Over the 10-year period from FY16 to FY25, about $738m in expenditures have been identified in the Sierra Nevada region, with 75% of that tied to three possible projects: the San Luis Transmission Project, the Colusa-Sutter Transmission Project and the Hurley-Tracy No. 1 and No. 2 Reconductoring Project.
Should a decision be reached to construct the San Luis or Colusa-Sutter projects, neither would be funded using third-party sources nor considered for repayment, and “as a result, no rate impacts are anticipated for either proposal,” Western said.
The report also touches on the Western energy imbalance market (EIM) of the California ISO (Cal-ISO) and the expansion of the Southwest Power Pool (SPP) to include the UGP region, which took place in October 2015.
Western’s decision to have the UGP region participate in the SPP market came from the challenge of operating next to two different regional transmission organizations and followed a detailed analysis of what is most beneficial for Western customers, according to the report. A similar analysis in 2013 resulted in a decision not to participate in the Cal-ISO EIM, although several transmission owners in the region have since announced plans to join that market, Western noted.
In the coming year, the Desert Southwest region “will refresh the work it did in 2013 to evaluate potential benefits to its customers participating in the [Cal-ISO] EIM, working with those customers and Western’s other regions to explore areas of potential benefit such as a Joint or Common Transmission Tariff,” the report said.
Western addressed the drought in the West and the drought’s impact on hydropower operations. At the Colorado River Storage Project Management Center, Western staff is working with stakeholders in the region to minimize the risk of Lake Powell and the Glen Canyon Dam near Page, Ariz., falling below minimum power pool levels under severe drought conditions. Various entities are working on a plan that, if required, would combine water conservation activities and timely transfer of water from upper basin reservoirs into Lake Powell to preserve water elevation levels, the report said.
The Glen Canyon Dam finished FY15 at a water level elevation of 3,606 feet, about 116 feet above the minimum generation level and 94 feet below the maximum generation level, the report said.
Lake Mead and Hoover Dam finished FY15 at 1,078 feet, roughly 28 feet from the minimum generation level and 141 feet below full storage level, which contributed to purchased power expenses for the Desert Southwest region to exceed $5.5m compared with projected purchased power expenses of nearly $3m, the report said.
Since 2014, Western has published a “State of the Assets” report in the first quarter of each calendar year, Western noted in a Feb. 19 press release.
“We are dedicated to expanding our transparency and continuing to evolve to meet our customer needs,” Gabriel said in the release.