SPP/Entergy Cost-Benefit Analysis Qualitative Impacts Areas of - PowerPoint PPT Presentation

SPP/Entergy Cost-Benefit Analysis Qualitative Impacts Areas of Impact July 13 Draft For July 20, 2010 Update meeting Ellen Wolfe Jack Ellis

Potential Impacts: Sample operational categories explored • Transmission Reservation/Energy Scheduling/Dispatch • Short run • Congestion Management reservation/energy scheduling and dispatch • Longer-run (e.g., • Transmission transmission interconnection) Planning/Interconnection/Cost Allocation • Ancillary Services • Outage Scheduling • Governance Note that categories are overlapping Also note that some additional details/references are provided as End Notes (annotated as “EN” in this presentation) 2

Inherent challenges in this analysis • Comparing the known of current Entergy and SPP configuration with unknown of SPP • Want to avoid panacea or “grass is greener” effect • Given that, hard to characterize in apples-to-apples • And otherwise acknowledge risks of unknown 3

Potential Impacts: Areas of Impact for Operational Changes • [Facilitate Development of] Competitive Market • [Minimize] Discriminatory Environment • [Increase] Efficiency of Production • [Promote] Efficient Resource Expansion • [Promote] Efficient Grid Expansion • [Reduce] Opportunities to Exercise Market Power • [Enhance] Grid Reliability • [Facilitate] Ability to Conduct Business • [Minimize] Costs and Administrative Burdens 4

Short-term transmission/dispatch/congestion management - Description Base Case Change Case • Entergy: • Entergy & SPP • • Participants schedule transmission Self scheduled energy consistent with service rights reservations cleared • • WPP market for energy dispatch Day 2* market re-optimizes for incremental/decremental • Entergy unit redispatch energy offers • TLRs for real time congestion • Entergy likely continues • SPP: WPP to serve Entergy load • Transmission reservations • Redispatched for SPP converted to financial rights D2 market? • Day-2 market*: • EIS and TLRs (fewer?) for • Optimizes all units that bid RT congestion • EIS and TLRs for real-time congestion 5 * Assumes Day 2 market in place

Short-term transmission/dispatch/congestion management - Pros Base Case Change Case • Pros: • Pros: • • Transparency w.r.t. network One-stop shop for long-term and model short term transmission • • Maintain operational control Transparency w.r.t. operating guides, gen/dispatch orders, • Mechanisms for Entergy to issues hedge • Theoretical global optimization • Status quo; avoidance of (captured in quantitative analysis) changes and new burdens • and risks of RTO and D2 Fungible transmission rights market (tradable TCRs and/or earn revenues if not scheduled) • SPP and user operational efficiencies of one SPP process (e.g., no ITC) – coordinate with quantitative analysis 6

Short-term transmission/dispatch/congestion management - Cons Base Case Change Case • • Cons: Cons: • No financial hedge available • Network model access restricted/cumbersome • General transparency concerns (EN1) • Dispatch uncertainties (e.g., QFs • WPP redispatch has limitations included or not?) • model is not transparent (EN2, EN3); Limited • info (dispatches, prices) Market close at 4 pm; too late for gas & • other business transactions Currently limited to peak hrs (EN2) • Perception that ICT model may • ARRs/TCRs perceived as more risky oversubscribe transmission than current mechanisms to hedge (for Entergy) • Due to incomplete info about loop flow, or about generation, or • Historically a lot of TLRs in SPP’s EIS • Due to Base Case overloads in conjunction market* with ICT running 3 yr models? (EN5) • Risk of no must-bid/must-offer • Historically a lot of TLRs in Entergy’s service area* requirement • Inefficiencies regarding transmission service • Incents owners to start units prior to day-ahead requests (EN6) market • Uncertainty about RMR treatment: e.g., how reliability met, how generators are compensated, how costs are allocated. *See next slide for TLR discussion 7

SPP EIS and Entergy leads to Firm Service TLRs with similar frequency TLRs Affecting Firm Service (2009) 77 75 80 70 55 60 50 Frequency 40 32 24 30 18 20 10 1 0 0 Reconfiguration Reallocation Curtailment Emergency (Type 4) (Type 5a) (Type 5b) (Type 6) Entergy SPP EIS

SPP EIS Leads to many more Non-Firm service TLRs TLRs Affecting Non-Firm Service (2009) 1467 1600 1400 1200 1000 Frequency 800 600 383 400 82 200 35 0 Reallocation (Type 3a) Curtailment (Type 3b) Entergy SPP EIS

Transmission planning/interconnect/cost allocation - Description Base Case Change Case • Entergy: • • Uses queuing process for studies Batch process with open for interconnection season for interconnection • • Utility-centric transmission planning Regional transmission planning, including Entergy • Entergy has more stringent voltage • control requirements Uncertain highway/byway cost allocation • SPP: implications • Uses batch process with open season for interconnection • Regional transmission planning 10

Transmission planning/interconnect/cost allocation - Pros Base Case Change Case • Pros: • Pros: • • Entergy has shorter turn- Improved efficiencies and better around on interconnection optimization in transmission request planning processes (e.g. no separate Entergy & SPP • Entergy makes network processes) model available • Explicit process exists • TO perceived benefit of • avoiding unnecessary bulk + Elimination of other Basecase “cons” not mentioned system upgrades • Entergy’s ability to focus on specific local reliability issues 11

Transmission planning/interconnect/cost allocation – Cons Note: “Pros” and “Cons” very interrelated for this issue; “pros” of status quo case are “cons” of change case and vice -versa – bear with artificial distinction here Base Case Change Case • Cons: • Cons: • • Perception that Entergy system has been under Time delay in interconnection requests; built/insufficiently upgraded given interpretation slow/cumbersome(A*) T planning process of NERC non consequential firm load provisions • Risks/cost shifts for Entergy from EHV policy that shifts cost from native load to network • Perceived high risk given sensitivity to customers (Note B type Base Case overload wind assumptions(B*) impacts) (EN7, EN8) • Expected costs shifts of highway/byway • Concern over Entergy’s inclusion of only 3 -years given high load share (E*) of upgrades in its construction plan • E.g., Affected by Base Plan project costs • May be able to refine discussion following in Balanced Portfolio if projects are close SPP’s system review (C*) to Entergy service area • Concerns about load-shedding effects on • Lack of full transparency into T planning Entergy customers process (e.g., model is not available, “black • Possibility that these issues may not get box” (D*) feel to outcome, unclear focus on resolved absent move to SPP (e.g., through E- local issues) RSC activities?) • Further burdens SPP staff • Costs of projects not reported in Entergy’s T planning process 12

Ancillary Services • Ancillary services sharing arrangements already in place • No operating reserve changes anticipated • May be able to reduce regulation requirements under SPP • Also may be less expensive solution for contingency reserves • Can purchase ancillary services or self-provide in both Entergy and SPP • Operating reserves and regulation impacts captured in quantitative analysis • Will coordinate with Ralph and Bruce to capture in qualitative analysis those impacts incremental to those captured in quantitative analysis 13

Outage Management • Existing seams agreements provide for transmission outage coordination • Outages are posted publicly on OASIS • ITC is coordinating outages now • = > not much change expected if Entergy joins SPP 14

Governance • Perception that ICT governance is not sufficiently strong to overcome pre- existing challenges. (EN9) • Mismatch in expectation regarding the independent role of the ICT (EN10) • Impression that ICT sides with Entergy (EN11) • Significant efforts have identified a number of possible areas of improvement even in absence of Entergy joining SPP (EN12) • General perception that if Entergy joins SPP more access/control will be available to users of Entergy’s system • However, under SPP governance users will not likely have more representation as a result of Energy joining SPP • Small users may continue to feel under-represented • At same time Entergy has a significant shift in its control if it is part of SPP Bottom line: In SPP, final decision-making authority shifts away from Entergy to the more diverse SPP decision-making structure, but Entergy users may not ultimately have more leverage with Entergy under SPP 15