By Lisa Meiman
The Colorado River Storage Project Management Center and the Desert Southwest region have embarked on a joint initiative with their customers to explore the feasibility and desire for a combined transmission rate across their footprints.
“Between the two regions, we operate a huge transmission system,” said Program and Regulatory Advisor Brent Osiek. “It goes from the Rocky Mountains to the desert and everything in between. We have to ask ourselves, why wouldn’t we tie those two together? This initiative could improve transmission access for customers and ourselves.”
The initiative includes the transmission systems of the Parker-Davis Project, the Pacific Northwest-Southwest Intertie Project, the Central Arizona Project, the Electrical District 5-to-Palo Verde Hub Project and the Colorado River Storage Project.
The idea is not a new one for DSW and its customers, who have explored combining the transmission rates for its four projects in the past and identified a combined transmission rate as an important activity for 2020. The CRSP transmission system has now been included in the discussion as the rates for all five projects have converged and are now closely aligned. DSW and CRSP also share several customers.
“It’s important to remember that this initiative started originally as an idea from DSW customers several years ago,” said Project Manager Scott Lund. “Customers are forward thinking and see this as an opportune time to eliminate barriers to transmission use. The idea got all the better with the inclusion of CRSP.”
The goal of the effort is to improve efficient and flexible transmission use by permitting more efficient scheduling and use of a large segment of WAPA’s transmission system; providing rate stability while ensuring transmission cost allocations are appropriate for federal projects; reducing administrative expenses for WAPA to manage five different transmission rates; and eliminating rate pancaking from one WAPA transmission project to another.
Eliminating rate pancaking is of particular interest to employees and customers. Rate pancaking occurs when power crosses multiple transmission systems, each system adding a new rate to the bill. Rate pancaking can get expensive and charging two WAPA rates, including to itself with interproject purchases, doesn’t make much sense, Osiek commented.
Improving flexibility in preparation for an uncertain future is also a big driver for customers and WAPA alike.
“Conceptually, there’s so much change coming,” said Osiek. “Organized markets are coming. This gives WAPA an opportunity to figure out things internally and what makes the best sense for the customers and the projects. Although this effort is market agnostic, it is somewhat informed by those changes around us. When we do get into a market environment, we come in with a position with power when we are all aligned.”
Customer collaboration, input key to moving forward
CRSP MC and DSW began discussing the effort with their customers in March and held a customer meeting April 27 to introduce the project to customers and receive initial feedback.
“We have a great amount of customer support so far in this effort,” said Lund. “We see project and geographic differences, but we have customers that cross those artificial boundaries and their interests are the same. Customers aren’t constrained by our definitions.”
“Customers see us as one organization,” Osiek agreed. “We have put up artificial barriers internally, doing things differently depending on what project we are working on. And the question we have to ask is why. Do those barriers still make sense in this
day and age?”
On Sept. 24, CRSP and DSW held their first work group meeting on the initiative with customers. The meeting was largely devoted to discussing a preliminary transmission rate design and revenue-sharing methodology. Customers expressed interest in continuing discussions as well as scheduling additional meetings about operational issues. Following the meeting, WAPA posted its presentation along with a sample rate-calculation spreadsheet for customers to review.
“It went well,” said Osiek. “We were pleasantly surprised by the amount of customer engagement and curiosity about this. They had good questions. There are varying levels of support right now. Customers are thinking about opportunities, about what they
could use it for.”
WAPA is holding additional meetings with customers to answer questions and gain insight and feedback. Customers are already reaching out to their points of contact in the DSW and CRSP offices to discuss areas of specific interest or concern.
“We have appreciated a broad range of questions and input from customers so far,” said Lund. “They are thinking beyond their entity to how this could work as a whole. Customers want to learn about operational, financial, contractual and legal changes, among others. They are beginning to consider how to take advantage of the change today and how they could take advantage of this change tomorrow in a new construct.”
If CRSP and DSW determine a combined rate is beneficial, the tentative plan is to begin a formal rate-making process in 2021 with an effective date of Oct. 1, 2021.
“The dynamics of transmission use are changing,” said Osiek. “The era of large transmission contracts for decades-long durations is over. Utilities want hyper-flexibility so, for instance, they can send energy from Colorado to California easily. This initiative is one way we can look forward and create flexibility for future operations.”
Note: Meiman is a public affairs specialist.