SPP issues report on proposals for North Liberal to Walkemeyer project

The Southwest Power Pool (SPP) board is scheduled to address a report selecting the winning proposal to build the 21-mile North Liberal to Walkemeyer transmission project in western Kansas at an April 26 meeting, SPP said April 12.

The North Liberal to Walkemeyer project, which SPP has said is needed for regional reliability, with construction planned for the 2018-2019 timeframe, involves construction of a new 21-mile, 115-kV line from the existing North Liberal substation to the existing Walkemeyer substation in Seward County, Kan.

The report, from an industry expert panel (IEP), selected the top two proposals that scored the best among various criteria listed in the SPP tariff, but the parties sponsoring the 11 proposals that were evaluated were not identified in the report.

“The winning proposal and identity of its submitters will be announced by SPP after the board’s vote,” an SPP spokesperson told TransmissionHub April 18.

The top proposal in the IEP report listed a 40-year net present value cost of $10.57m, while the second-best proposal listed 40-year net present value cost of $10.15m. The average figure among the 11 proposals was $15.9m, according to the April 12 report.

The top proposal listed an engineering and construction cost of $8.3m, and the second-best proposal listed an engineering and construction cost of $8.4m, both of which were below the average of $11.1m, the IEP report noted.

The top two proposals received the highest points under the SPP scoring system for its request for proposals (RFP) process, but they did not score the highest in most of the five scoring categories, the report said.

“This reflects the approach in the SPP tariff, which allocates points across the five scoring categories, which has the effect of requiring strong performance across the five categories to secure the most points rather than strong performance in any one area,” the report said.

SPP’s issuance of the IEP report marks a big step in several years of work to comply with FERC Order 1000 and competitive transmission development, including a standard RFP process, SPP said in an April 12 press release.

“We’ve successfully met the requirements of FERC Order 1000 while balancing the confidentiality and equity inherent to a competitive process with our own organization’s values of collaboration, efficiency and transparency,” Paul Suskie, SPP executive vice president of regulatory policy and general counsel, said in the press release.

Because SPP has required the SPP board to be “blind” as to which parties submitted proposals in the RFP process, the selection of the winning proposal presents some challenges to SPP’s transparent and collaborative stakeholder process, SPP Chairman Jim Eckelberger said in a letter accompanying the IEP report.  The letter laid out ex parte communications rules and a three-phase process leading up to the April 26 SPP board meeting for consideration of the IEP report and selection of the winning bidder.

No entity is to have any communication with the members of the SPP board about the substance of any proposals under consideration or the IEP report, Eckelberger said in the letter. The SPP board will select the entities that will become the designated transmission owner and an alternate designated transmission owner for the project.

“No SPP stakeholder will be allowed to participate in the debate or discussion” of the IEP report at the SPP board meeting, Eckelberger said.

The purpose of the restrictions is to ensure that no questions about the IEP process or report could be used, either intentionally or unintentionally, to disclose the identity of the parties that have submitted proposals, Eckelberger said.

The top proposal received 893 points, while the second-best proposal received 786 points under the SPP scoring system. The third-best score was 760 points, with the lowest-scoring proposal among the 11 at 487 points, according to the IEP report. The top proposal was one of two proposals that qualified for “detailed project proposal” incentive points, although the top proposal would have had the most points even without those incentive points, “which demonstrates the comparative strength of its proposal,” the IEP report noted.

Five of the proposals did not meet a minimum design standard, and were assigned 50 demerit points because their costs were not reflective of what would be required to build the facilities needed to have a successful project, the report said.

None of the RFP respondents reported any material on hand, assets on hand or rights of way ownership or control that would have had the effect of reducing project risk and merit the awarding of discretionary points, the reported noted.

Two of the proposals – the fourth-best and fifth-best listed in the IEP report – contained cost guarantees and were awarded discretionary points for those guarantees, but one of the cost guarantees was above the median net present value for all of the proposals and another was on a dollar/mile basis. Given the nature of the area in Kansas between the two known points for the planned transmission line, the risk of a material cost increase due to a longer route was deemed low, the IEP report said.