Recommendation From the Western Area Power Administration To Pursue Regional Transmission Organization Membership, 65641-65643 [2013-26079]

Agencies

• DEPARTMENT OF ENERGY
• Western Area Power Administration

[Federal Register Volume 78, Number 212 (Friday, November 1, 2013)]
[Notices]
[Pages 65641-65643]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-26079]


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DEPARTMENT OF ENERGY

Western Area Power Administration


Recommendation From the Western Area Power Administration To 
Pursue Regional Transmission Organization Membership

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of Western Area Power Administration Recommendation to 
Pursue Regional Transmission Organization Membership.

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SUMMARY: Western Area Power Administration (Western), Upper Great 
Plains Region (Western-UGP), a power marketing administration (PMA) of 
the Department of Energy (DOE), is publishing a recommendation to 
pursue formal negotiations with the Southwest Power Pool (SPP), a 
Regional Transmission Organization (RTO), concerning membership. 
Western is seeking public comment from Western's customers, Tribes, 
stakeholders, and the public at large. A decision to pursue 
implementation of the recommendation will be posted to Western's Web 
site.

DATES: To ensure consideration, all comments should be received by 
Western at the address below on or before 4 p.m. MST December 16, 2013. 
Western will present a detailed explanation of the recommendation and 
listen to customer and stakeholder comments in Lincoln, Nebraska, Sioux 
Falls, South Dakota, and Moorhead, Minnesota, or Fargo, North Dakota. 
The specific times and locations of these forums will be posted on 
Western's Web site at https://www.wapa.gov/ugp/powermarketing/AlternateOperationsStudy/AOS.htm.
    The information gathered and analyzed by Western subject matter 
experts, combined with stakeholder comments, detailed discussions with 
the Midcontinent Independent System Operator (MISO), and the SPP, 
formed the basis of the recommendation that is now being published for 
comment. A decision to pursue the recommendation will be informed by 
comments received in response to this Notice.

ADDRESSES: Send written comments to Western at: AOS@wapa.gov. 
Information regarding the recommendation, including comments, letters, 
and other supporting documents made or retained by Western are for the 
purpose of pursuing this recommendation. Comments may also be delivered 
by mail to: Upper Great Plains Region, Western Area Power 
Administration, 2900 4th Avenue North, Billings, MT 59101-1266.

FOR FURTHER INFORMATION CONTACT: Jody S. Sundsted, Power Marketing 
Manager, Upper Great Plains Region, Western Area Power Administration, 
2900 4th Avenue North, Billings, MT 59101-1266, telephone (406) 255-
2910, email sundsted@wapa.gov.

SUPPLEMENTARY INFORMATION: Western-UGP markets Pick-Sloan Missouri 
Basin Program--Eastern Division (P-SMBP-ED) hydroelectric power and 
energy to preference entities in Montana east of the continental 
divide, North and South Dakota, western Minnesota and Iowa, and eastern 
Nebraska. In 1998, Western-UGP, Basin Electric Power Cooperative, and 
Heartland Consumers Power District implemented the Integrated 
Transmission System (IS). The IS includes approximately 9,848 miles of 
transmission lines owned by Basin Electric Power Cooperative, Heartland 
Consumers Power District, and Western. Transmission service over the IS 
is provided under Western's Open Access Transmission Tariff, with 
Western-UGP serving as tariff administrator for the IS. Prior to the 
IS, the Joint Transmission System (JTS) was formed and documented in 
the Missouri Basin Systems Group (MBSG) Pooling Agreement dated January 
31, 1963. The IS comprises transmission facilities located on both the 
eastern and western electrical interconnected systems separated by the 
Miles City DC tie and the Fort Peck Power Plant. Western-UGP also 
operates two balancing authority areas, WAUW and WAUE, within the IS 
that are also separated by the Miles City DC Tie and the Fort Peck 
Power Plant.

RTO History

    RTOs are not a new concept within the utility industry. The concept 
of joint planning, joint power supply, cost sharing, and in some cases, 
joint transmission, has occurred for decades between utilities with a 
common mission and goal. In Western-UGP, the roots of RTO-like 
agreements can be traced back to the January 31, 1963, MBSG Pooling 
Agreement that was signed by the Assistant Secretary of the Interior 
and 105 utility systems across six states, for participation in the 
Federal transmission system. This agreement established the JTS, now

[[Page 65642]]

known as the IS, to plan, build, operate, and maintain a joint 
transmission system.
    Subsequent to the creation of the MBSG and JTS, Western's 
predecessor, the Bureau of Reclamation, also became a member of the 
Mid-Continent Area Power Pool (MAPP). MAPP was another entity formed to 
promote power pooling, transmission planning, reliability, and reserve 
pooling. Certain MAPP members, including Western-UGP, were later 
involved in RTO creation efforts, including a study from 2000 through 
2004 for creation of the Crescent Moon RTO. This was closely followed 
by another study effort from 2006 through 2008 known as the Mid-
Continent Systems Group. In 2008-2009, the IS owners and MISO jointly 
developed a new type of tariff service (Module F) that would have 
allowed the IS owners to place their generation and loads into the MISO 
organized market but keep the IS transmission system assets out of 
MISO. Ultimately, the Federal Energy Regulatory Commission rejected 
these tariff changes. During the 2008 to 2009 timeframe, many of the 
original MAPP Generation Reserve Sharing Pool members merged with MISO 
to share contingency reserves and formed the Midwest Reserve Sharing 
Group (MRSG). In 2009, the MRSG was renewing the sharing agreement and 
Western-UGP terminated its participation in the MRSG agreement for 
economic reasons. Prior to leaving MRSG, the IS owners were aware that 
providing contingency reserves on a stand-alone basis would have been 
cost prohibitive and began discussions with SPP to participate in SPP's 
reserve sharing group. Western-UGP then entered into a limited-term 
agreement with the SPP reserve sharing group effective with the 
termination of the MRSG agreement.

Market to Non-Market Challenges

    Approximately 50 percent of Western-UGP's preference load is beyond 
the edge of the IS and delivered across third-party transmission 
systems in the MISO and the SPP predominately under arrangements made 
by those preference customers. This separation creates market to non-
market seams between Western-UGP, MISO, and SPP and impacts both 
Western-UGP's and other local utilities' marketing of power across the 
seams. To address certain transmission congestion in the MISO and SPP 
footprints, the reliability coordinator cuts power schedules in and out 
of those RTOs under Transmission Loading Relief (TLR) protocols in 
addition to re-dispatching generation within its footprint. Western-UGP 
has experienced many TLR schedule cuts on short-term sales and 
purchases, as well as firm power schedules necessary to meet its 
obligations. Western-UGP has few options to avoid TLRs. These TLR 
impacts are directly related to Western-UGP and the IS owners' unique 
footprint in relation to energy markets. In addition to the MISO and 
SPP seams on the east and south, Western-UGP is constrained by limited 
access to the Canadian markets to the north, as well as to western 
markets, due to limitations of available capacity for energy transfers 
through the AC-DC-AC interconnection ties. Historically, Western-UGP 
has had opportunities to sell and purchase short-term energy from many 
different entities in response to hydro-generation variability. 
However, with entities joining MISO and its organized energy market, 
Western-UGP has seen those opportunities decrease significantly. With 
the SPP Integrated Marketplace planned to become operational in 2014, 
Western-UGP anticipates substantial reduction in bi-lateral short-term 
energy trading opportunities. Western-UGP recognizes the variability of 
the hydro-generation and the historic need Western-UGP has had for 
access to energy markets to realize the lowest cost energy purchases 
and optimized short-term energy sales. As a result, Western-UGP has 
performed an assessment of the costs, benefits, and risks of 
alternative operating models while continuing to reliably serve our 
firm power commitments.

The Alternative Operations Study (AOS)

    For purposes of this assessment, Western is considering placing 
only the portion of the IS located in the eastern electrical 
interconnected system within an RTO market. The options for future 
operating models analyzed included a Stand Alone configuration, Join 
MISO, and Join SPP.
    The Cost/Benefit Analysis (CBA) for this study measured and 
compared six criteria in each of the three options.

1. RTO Trade Benefit
2. Administrative Costs
3. Transmission Expansion
4. Capacity Benefits
5. IS Transmission Revenue--Cost Shifts
6. Drive-Out Impacts

    There were significant monetary separations in the CBA results. The 
CBA results have shown the Join SPP option provides more benefits than 
the other two options.
    Qualitative risks were analyzed through the use of a Multi-Criteria 
Decision Analysis (MCDA) tool. The MCDA uses marketing plan and rate 
stability, and agreements as major criteria to assess the options with 
multiple metrics for each. Weight factors were assigned to each of the 
criteria and each of the metrics based on the relative importance of 
the criterion or metric to the overall decision. Each metric was rated 
according to the qualitative scale to determine the appropriate risk 
rating, and the risk score associated with each option was subsequently 
developed through application of the weighting of the risk. The risk 
score for the Join SPP option was the lowest and, therefore, the most 
favorable option from a qualitative risk standpoint. Further 
information regarding the CBA and the MCDA can be found in the 
recommendation documents referenced in the Availability of Information 
section below.
    Based on the analysis performed, Western-UGP concluded that the 
potential benefits of the Join SPP option are significant enough for 
Western-UGP to solicit feedback from customers and other stakeholders 
regarding its recommendation to pursue formal negotiations with SPP 
regarding membership. Timing considerations are such that these actions 
should proceed quickly.
    The information gathered and analyzed by Western subject matter 
experts, combined with stakeholder comments, formed the basis of the 
recommendation that is now being published for review. A decision to 
pursue the recommendation will be informed by comments received in 
response to this notice. A decision by Western to move forward with 
formal negotiations with SPP will result in detailed membership 
discussions consistent with Western-UGP statutory requirements as 
captured in the AOS assumptions. Western's Administrator has been 
designated as the appropriate Federal regulatory authority with respect 
to transmission facilities within the PSMBP-ED in accordance with 
Section 1232(a)(1)(A) of the Energy Policy Act of 2005, codified at 42 
U.S.C. 16431.

Availability of Information

    The recommendation is available for review and comment on Western's 
Web site at https://www.wapa.gov/ugp/powermarketing/AlternateOperationsStudy/AOS.htm. The recommendation and supporting 
documents contain information that pertains only to Western-UGP. 
Western is seeking comments on the substance of the recommendation and 
its proposal to

[[Page 65643]]

pursue the Join SPP option. Comments submitted in response to this 
notice should include the following information:
    1. Name and general description of the entity submitting the 
comment.
    2. Name, mailing address, telephone number, and email address of 
the entity's primary contact.
    3. Identification of any specific recommendation the comment 
references.

Environmental Compliance

    In compliance with the National Environmental Policy Act (NEPA) of 
1969 (42 U.S.C. 4321-4347), Council on Environmental Quality 
regulations (40 CFR parts 1500-1508), and DOE NEPA regulations (10 CFR 
part 1021), Western is in the process of determining whether an 
environmental assessment or an environmental impact statement should be 
prepared or if this action can be categorically excluded from those 
requirements. Further environmental review actions will be posted to 
https://www.wapa.gov/ugp/Environment/default.htm.

    Dated: October 29, 2013.
Mark A. Gabriel,
Administrator.
[FR Doc. 2013-26079 Filed 10-31-13; 8:45 am]
BILLING CODE 6450-01-P