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Comparative Analysis of SPP Staff Strawman Highway Byway Rate Making Methods

Comparative Analysis of SPP Staff Strawman Highway Byway Rate Making Methods. for the CAWG meeting in Kansas City, MO July 27 th , 2009. Modifications to SPP Staff Highway Byway Strawman. This Staff Highway proposal has been modified to incorporate: 345 kV radial lines

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Comparative Analysis of SPP Staff Strawman Highway Byway Rate Making Methods

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  1. Comparative Analysis of SPP Staff Strawman Highway Byway Rate Making Methods for the CAWG meeting in Kansas City, MO July 27th, 2009

  2. Modifications to SPP Staff Highway Byway Strawman • This Staff Highway proposal has been modified to incorporate: • 345 kV radial lines The result: all 345 kV lines are included. • 345 kV transmission transformers The result: all 345 kV transmission transformation substations are included. • SPP provides analysis of three different options included herein

  3. Analysis Objectives • Compare alternative Highway-Byway proposals to results of existing cost allocation methodologies for all cost allocated projects. • Use current cost allocation methodologies to establish base case ATRR. • Analyze the differences between proposed options when compared to the base case.

  4. Base Case: Current Methodologies Used to establish a baseline for comparison • Methods: Base Plan Funding (BPF) + Direct Assignment /Sponsored + Balanced Portfolio (BP) • Forms basis for future comparisons with other proposals • Calculations: • ATRR =  $ Project E&C * Host Zone Net Plant Carrying Charge (NPCC) • Allocated Zonal Base Plan Revenue Requirements = ATRR * (1/3 Zonal Load Ratio Share + 2/3 Zonal MW-mi impact) • Directly Assigned/Sponsored = $ Project E&C * Host Zone NPCC • Balanced Portfolio Revenue Requirements = 100% regionalized on a Load Ration Share (LRS) basis

  5. Option 1: Byway is Base Plan Funded • Highway: all 345kV and above facilities including 345 kV transmission transformers. Highway is 100% regionally allocated on a LRS basis. • Byway: revenue requirements are recovered by the current Base Plan Funding mechanism: 33% regional on a LRS basis + 67% zonal on a MW-mi basis.

  6. Option 2: Byway is Zonal using MW-mi Allocation • Highway: all 345kV and above facilities including 345 kV transmission transformers. Highway is 100% regionally allocated on a LRS basis. • Byway: all other projects are allocated to the zones on a MW-mi impact basis.

  7. Option 3: Byway is Geographically Assigned • Highway: all 345kV and above facilities including 345 kV transmission transformers. Highway is 100% regionally allocated on a LRS basis. • Byway: all other revenue requirements are assigned to the host zone where the facility is geographically located.

  8. Assumptions • Only committed projects from the updated STEP Project Lists with in-service dates between January, 2006 and June 2018 are included in this analysis • 765 kV not applicable • Credits not included • Balanced Portfolio transfers not included

  9. a

  10. Positive is an increase in ATRR Positive is increased ATRR Positive is increased ATRR

  11. Questions/Comments ?

  12. Pat BourneDirector, Transmission Policy(501) 614-3249pbourne@spp.orgDan JonesLead Regulatory Engineer(501) 688-1717djones@spp.org

  13. EXTRA NOTES on Rate Making Methods • “Base Case”: Current Methodology, all projects • Option 1: “Byway is Base Plan Funded”: Highway: 345kV and its associated transformation is 100% Regionalized on a LRS basis. Byway: all other projects forced to a 2/3:1/3 BPF method. • Option 2: “Byway is Zonal with MW-mi Allocation”: Highway: 345kV and its associated transformation is 100% Regionalized on a LRS basis. Byway: all other projects are allocated to the zones on the MW-mi. • Option 3: “Byway is Geographically Assigned”: Highway: 345kV and its associated transformation is 100% Regionalized on a LRS basis. Byway: all other projects 100% assigned to the host zone. • All Balanced Portfolio projects are treated as “Highway” projects. Options 1 , 2, and 3 are compared to Base Case. • Mike Proctor’s “two part rate” method has not been analyzed vs. the other options at this time. • OKGE and WERE’s “TO Option” has not been analyzed vs. the other options at this time.

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