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Comparative Analysis of SPP Staff Strawman Highway Byway Rate Making Methods

This analysis compares alternative Highway-Byway proposals to existing cost allocation methodologies. It includes modifications made to the SPP Staff Highway Byway proposal and aims to establish a baseline for comparison using current methodologies. Three different options are evaluated to determine their impact on allocated project costs.

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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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