Climate and energy

Back before the holidays, there was indeed a KETA meeting. It lasted all day. I ended up with 14 pages of highly technical notes. That’s a lot of trees – but really, the meeting itself was about KETA doing its absolute best to take a step back and look at the forest. So we’ll honor their wishes and try to write it up from that direction instead.

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I’m very familiar with two particular hearing rooms on the fifth floor of the Capitol. One is always hot. The other is always freezing. I read the notice of the meeting wrong and did not dress appropriately for the  weather.

But oh well! Anyway. Context: As everyone (who cares about transmission lines) knows, we have been experiencing a small transmission controversy in Kansas. The state that couldn’t ever get anyone to build or majorly improve transmission now has two companies duking it out over who gets to build part of the so-called “V plan.”

That’s the good news. The bad news is that because of the conflict, the building process has stalled out.

The two companies competing to build the line are ITC Great Plains, and Westar Energy (which joined up with AEP, a Buffet company, to form Prairie Wind.) The line in question is part of the Southwest Power Pool (SPP) approved EHV system.

EHV stands for… oh no… Extra High Voltage, I believe – these are massive giant export lines that take wind to large urban markets. The EHV line in question is part of the V plan (don’t let EHV and V confuse you, the V plan just describes the Kansas section of the EHV overlay). The V plan runs from Spearville to Wichita, through prime wind country.

How the line gets there, though, depends on who wants to build it. Encouraged by KETA, ITC worked with stakeholders (especially wind developers) and proposed their line a while back. The SPP approved the route.

However, said route ran through 10-20 miles (I’ve heard different numbers) of Westar territory. Westar came to the Kansas Corporation Commission,  challenged the ITC route, and proposed their own. Theirs is not yet approved by the SPP,and the line does not follow the same route as ITC’s but dips down into Oklahoma.

Basically, KETA thought they had this line taken care of, and they thought it could get built fast. Fast is good, because that’s how wind development is moving, and Kansas wants as much KS electricity on those lines as possible. It’s not that we don’t like OK and TX electricity, but we are kind of in a race here.

However, the process has now stalled before the KCC. Turns out, there is no statutory limit on how long the KCC takes to make this sort of decision.

There has been debate and acrimony over the KCC timetable to resolve the dispute. There has been debate and acrimony over the SPP cost allocation working group (CAWG) progress, which the KCC would like to see resolved first (ie, how are these lines going to be paid for, and what will the impact be on ratepayers?) before they do their thing.

The relationship between the SPP and the KCC processes is murky, at best; the federal and state interests/ jurisdictions in planning transmission lines are governed by (currently) unclear federal legislation, although that seems poised to change under Obama. Currently, as outlined the KCC resolution process will take about a year, which would lead to a project delay of almost two years total.

Basically, KETA is facing an industry stalemate on one hand, a regulatory stalemate on the other, and a timetable that is not to their liking. Their job is to get transmission built in Kansas, so this is not cool. In the words of Rep. Annie Kuether, “We started out ahead of the game, and now we’re falling behind.”

Since the process is a problem (for whatever reasons), KETA has pressured ITC and Westar to resolve the dispute outside of said process. The day before the KETA meeting, the KCC came out with an order and a revised timetable that in effect strongly suggested the same thing. In fact, the first settlement conference is scheduled for mid January.

ITC had proposed a compromise a while back and never heard back from Westar. A few weeks ago, Westar announced a compromise, which surprised ITC. Westar then reannounced a compromise proposal which got interesting reactions from many (read more below).

So, that is basically where the KETA meeting got started.

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Given all that drama, the atmosphere in the room was actually fairly cheery. The holiday spirit probably helped. People I never expected to have funny, happy Christmas neckties wore them with pride. In the down moments, most talked about plans with family. Lots of kids back from college already, lots of grandkids already out of school and visiting grandparents.

There was a full slate of testimony. This time all the players were either there in person, or called in on the phone line. Larry Holloway of the KCC was first up. As a member of the SPP CAWG, he was there in a dual capacity. SPP was also on the phone, Jay Caspary in particular.

Actually – my notes show me that Holloway did not discuss the KCC process at all (which he did at the last KETA meeting). Rather, he was there to answer questions about the CAWG process.

Background: You need to understand what has happened to the SPP over the last couple years. Basically, when it came to wind power there was a sudden market revolution, and it caught regional transmission operators (RTOs), state regulators, everyone, completely off guard. The SPP had been in the middle of a major planning process that they more or less had to throw out and start over because the amount of wind development in their “queue” (the line you stand in to build a wind farm) simply exploded.

Basically, the original conservative wind numbers slowed the whole process down, and then the SPP staff got overwhelmed by the wind buildout, which has been massive.

And then, the whole model of transmssion is changing – it’s moving from smaller, localized lines to a colossal interstate export system. And big lines are more expensive up front, in the construction costs. They pay you back bigtime (in both $$$ and system reliability), but you have to wait longer.

Okay, the CAWG. Their job is to decide how the transmission lines will be paid for. We already know who will pay for them – everybody in the SPP footprint will pay, rather than just the communities where the lines will be built. (Tiny communities, big huge transmission lines, rural America can’t possibly afford to build transmission on its own.) The CAWG is hassling over the details of who EXACTLY will pay, for what size of transmission system, and in what time frame.

To make a long story short, the CAWG is debating two models, a small build out and a big one. Right now, it kind of looks like they will recommend the small one to the SPP board. That intimation received mixed reactions from KETA members. The small one just didn’t look like it could get the job done. However, it could probably be paid for through the existing tarriff.

Senator Lee and Rep. Kuether both asked about the reaction of other states within SPP (if the EHV buildout takes a new tariff, then all member states – which now include Nebraska – will have to approve it). Kuether pointed out that transmission lines mean economic development, and surely everyone wants that. Holloway said the economic development potential of wind is not spread equally across the SPP footprint, and Arkansas for example could need a little bit of dealing before they would agree to the plan.

Something I found interesting – KETA members kept pointing out that transmission lines have other values that the CAWG process wasn’t necessarily considering. Economic development was one. National security was another, and so was system reliability. Ernie Lehman of Midwest Energy also brought up  that at some point, with so much wind coming online load-serving utilities will be able to see capacity benefits, rather than just the hour by hour or environmental benefits.

These points all went relatively unanswered.

Another reaction from KETA – what’s the timeline for this decision? Answer: hopefully January. Or maybe the middle of next year. Unclear. While the CAWG can indeed make a decision in January, their recommendation then has to jump thru SPP and other state hoops as well. The SPP presentation followed Holloway’s, and the timetable stayed about as clear as mud.

Basically, if KETA and the KCC are depending on SPP to resolve their cost allocation scheme as a trigger to resolving the ITC/ Westar transmission dispute, they could be waiting a really long time.

SPP seemed to feel that the EHV issue does indeed go beyond the borders of SPP, and that transmission in general will take a national plan and leadership.

Caspary did point out that at most, all the costs being discussed here will only affect the average ratepayer’s bill by 1%.

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It’s worth taking a moment – don’t let the frustration dominate the transmission story. Sure, there is that, but at the same time there are other elements of the tale that are fascinating to watch unfold.

Some of this gets super-technical so I will summarize, but there are incredibly neat things also going on. Yes, the sheer scale of wind development caught everyone a little flat-footed. At the same time, though, people are coming up with neat new solutions.

Examples – smaller voltage collection systems for the 765 kV lines. You can’t tap into those mega-lines just anywhere, socollection systems are like entrance ramps onto that highway. ITC is working out a super-cool plan for how collection systems will work (ahead of SPP planning, actually, which raises a potentially interesting chicken/ egg issue. What are the advantages and disadvantages of doing collection system planning when the backbone of EHV network isn’t finalized yet?).

Also, since the queue is such a clogged disaster, SPP is coming up with cluster analyses for doing the Generation and Interconnection (G&I) studies that get wind developers online. Wind integration studies are another example of cool new developments – where folks are figuring out how to deal with the variability of distributed wind power in a grid that traditionally depends on dispatchable fossil fuel generation.

Neat things are happening. One on hand, they’re happening really fast. On the other hand, not fast enough.

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So that’s the big picture. Back to Kansas, which is naturally what KETA cares about most. Basically, SPP can’t give KETA a carrot or stick to help out with our particular transmission controversy, and that’s really what KETA needs.

KETA was established in a time when no one could get transmission development to happen in Kansas. Thus, they were designed to offer incentives. Now they are faced with sorting out a transmission dispute, but they don’t have any sticks to get the parties to respond.

Luckily for KETA, they are also legislators, and legislators know how to remedy that kind of problem. For example, they are drafting at least two pieces of legislation that might help accelerate the KCC timeline. KETA can’t change the timeline for a case already under dispute, but they can put a limit on the appeals process. They can also put a timeline in place for future cases should those arise.

KETA is also making strong suggestions about compromise to the companies involved.

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Yes. So how about that compromise? How’s it going?

ITC and Westar both reported on their side of the story. Letters and responses and non-responses and media releases, etc., have whizzed back and forth over the past few months, from pretty much everyone involved. Many of those pieces of paper were also handed out.

ITC stated its basic principles for a compromise. (1) It should respect the rights of all incumbent transmission owners, ie, those who own the substations at either end, and those who provide the lines in between (in this case, Westar, ITC, and Sunflower Electric). (2) It should respect the projects already in the SPP queue, and other ITC projects in the state are NOT on the table for negotiation (ie, the Spearville to Axtell line), and (3) the line should respect the SPP V plan, because regional cost recovery follows from the regional planning process. They argued that Westar’s proposed line is not the V plan, so it doesn’t fall into that category. ITC stated that they had never heard back from Westar on their own compromise proposal, and Westar did not contradict this.

Westar did not state its principles for a compromise as much as it defended itself on many counts.(1) Yes, the Westar route does qualify as part of the SPP planning process so they will get cost recovery. (2) The KCC process hasn’t slowed anything down for Westar’s part of the transmission planning process (no mention of ITC, which was further along in their own process), (3) Westar does have the right of first refusal to transmission coming through their territory, and that right in turn allows them to start a whole new process.

Senator Lee really got into gear, here – she’s always in gear, but she kicked it up even further. She asked ITC to define a compromise. Carl Huslig answered quick – it’s when all parties come together and walk away with something of value. Then she asked Westar to define a compromise, got a non-answer, pressed, and finally received one – it’s a give and take, a communication with trust and fairness, and the result will likely not make either party happy.

“Ah,” said Lee. “So a compromise is not simply offered by one party. What Westar put out was not a compromise, it was a proposal. It was one way only.” She also questioned their comments on how no responsible party would proceed on transmission planning without assured cost recovery.

Then Rep. Kuether got going. More or less, between the two of them, Lee and Kuether managed to make it clear that a compromise should not involve the Spearville to Axtell line, because it was not on the table and thus not within the scope of a compromise. And that the compromise was not about mileage, it was about siting, and the siting at issue was the Spearville to Wichita line. The Spearville to Axtell line was not part of the three ITC/ Westar dockets before the KCC, not in any way shape or form, so leave it out of the compromise proposal, please.

Is the Westar proposal part of the V plan – a lot could turn on this point. What does SPP say?

Chairman Holmes asked directly. All Jay Caspary would say: “Regional funding is based on regional planning.” Holmes followed up by asking if the Westar route was picked over the ITC route, would it require a new GI study as part of the planning process, and thus take even more time? Caspary said that was unknown, but that they hoped not.

There was also an interesting interlude in there when both ITC and Westar laid claim to having approval from “environmentalists.” ITC has Sierra Club, Westar has the Nature Conservancy and the KS Department of Wildlife and Parks…? That last one really surprised me, but that’s what they said. (I didn’t know a state agency could take an active position on this line…? but what do I know.)

And who knew, apparently environmentalists can occasionally be useful.

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After all that, what is the result? The result is that we still don’t know the timeline for getting the poles in the ground. According to the math of one KETA member, the original KCC timeline for sorting out ITC v. Westar was about 500 days. Now it’s about 360 days.

In the opinion of Chairman Carl Holmes, the timeline should be 60-90 days at most.

Hmm.

At any rate, getting it all figured out by December 2009 sounds highly optimistic.

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Don’t think for a minute that KETA is stumped. Rather, they are strategizing. Options include: (1) intervening in the KCC process between Westar and ITC, (2) KETA revising its business plan to act as a sponsor for the dadgum Wichita to Spearville line themselves, and (3) I’m sure that’s only the beginning.

KETA also discussed formally expressing their approval of SPP’s V plan route. It is unknown what that would do to Westar, since the Westar version of the V plan does not look like SPP’s or ITC’s. If it looks different from KETA’s, too, are they sunk? Or is that yet another point that could be litigated into infinity?

Also, someone else (can’t remember who) suggested that ITC and Westar look into FERC mediators, settlement law judges,  sorting out their dispute. That would be a third party who knows all about the transmission business and the issues, but is not an involved party like KCC, SPP, and/or KETA.

There were some interesting reactions to that.

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A few notes. KETA is losing Senator Jay Emler but is gaining Senator Pat Apple, the new Chair of the Senate Energy and Utilities Committee.

Emler was there at the meeting for a while though, and in his new capacity as head of the budget committee (so sorry, running on fumes and can’t recall the exact title) confirmed that KETA was indeed at risk of losing its $1 million development fund due to no current transmission projects going on, and this being a cataclysmic budget year for the state.

There! More than you ever wanted to know about transmission in the state of Kansas. Tune in for the next KETA meeting on January 9.

Never a dull moment.

— Maril Hazlett, www.climateandenergy.org