Benjamin Roubique, DNV GL Antoine Lucas, Southwest Power Pool May 2015

1. DNV GL © 2015 SAFER, SMARTER, GREENERDNV GL © 2015
FERC Order 1000
1
Understanding Transmission Planning in a New Paradigm
Benjamin Roubique, DNV GL
Antoine Lucas, Southwest Power Pool
May 2015

2. DNV GL © 2015
Welcome & Introductions
2
Ben Roubique
Lead Consultant
Transmission Planning & Economic Analysis
DNV GL
Antoine Lucas
Director of Planning
Southwest Power Pool

3. DNV GL © 20153
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& Distribution
Use
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Policy Production Transmission & distribution Use

4. DNV GL © 2015
What is FERC Order 1000?
 Federal Energy Regulatory Commission (FERC) issued order in 2011
– Interregional Coordination
– Public Policy Consideration in Transmission Planning
– Regional and Interregional Cost Allocation
– Removal of Right of First Refusal (ROFR)
 Defined principles but left implementation details to individual regions
– As a result, widely varying policies across North America
 Expands on Order 890
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5. DNV GL © 2015
FERC Order 1000 Principles
 Interregional Coordination
– Requires Transmission Providers (TPs) to develop formal procedures for studying and
coordinating transmission system improvements across regions
 Public Policy Consideration in Transmission Planning
– Transmission planning processes must consider the impact of needs driven by
established federal or local policies
 Regional and Interregional Cost Allocation
– TPs must have method for allocating costs for projects in regional transmission plan
– TPs in neighboring regions must have a plan on how to allocate costs for
inter-regional projects
– Cost allocation plans subject to a set of six principles defined by FERC
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6. DNV GL © 2015
Cost Allocation Principles
1. Costs allocated in a way roughly commensurate with benefits
2. No involuntary allocation of costs to non-beneficiaries
3. May use a benefit-cost ratio threshold
4. Allocation to be solely within the transmission region, unless those outside
voluntarily assume costs
5. Transparent method for determining benefits and identifying beneficiaries
6. Different methods for different types of facilities
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7. DNV GL © 2015
Removal of ROFR
 What is ROFR?
– The right of the incumbent transmission provider to build, own and propose
cost recovery for new transmission facilities that fall within its service territory
 Removal of ROFR
– Order 1000 requires providers to remove any provisions that assign the ROFR
for facilities selected in a regional plan that is eligible for regional cost allocation
 What does this mean?
– Allows non-incumbent transmission developers to build and construct projects
in regions that may have been previously unobtainable
– Regions have to develop requirements for developer qualification, project/bid
submission and evaluation
– Does not mean every project is opened up to other developers
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8. DNV GL © 2015
Transmission Planning in RTOs in
North America
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9. DNV GL © 2015
Traditional Transmission Planning Process Overview
RTO performs
independent
reliability
assessment
TO Develops
transmission
expansion plan,
submits to RTO for
review
RTO reviews TO
plans, checks if
additional
violations are
present
RTO develops
additional projects
if needed
RTO presents draft
plan for
stakeholder
comments
RTO finalizes plan,
submits to board
for approval
Board approves
plan, RTO directs
TOs to construct
upgrades
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10. DNV GL © 2015
New Planning Process under FERC Order 1000
10
RTO performs
independent
reliability
assessment
RTO posts list of
reliability needs,
requests solution
ideas
RTO evaluates
solution ideas,
selects projects
based on its
criteria
RTO presents plan
for approval
Board approves
plan
RFPs are issued
for competitive
projects
RFPs are
evaluated and
winning bidder is
selected
Winning bidder
directed to
construct project

11. DNV GL © 2015
Role of Cost Allocation
 With Order 1000, RTOs had to develop regional and interregional cost
allocation procedures
– Many of these allocate some portion of transmission expansion costs to the
region, typically on load-ratio-share (LRS)
 Not all projects are eligible for regional/interregional cost allocation
– Eligibility varies by RTO
– Often higher voltage projects or those with measurable benefits beyond the
local zone(s) are eligible
 The requirement for cost allocation methodology can help to ensure
larger projects get built
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12. DNV GL © 2015
Cost Allocation for Transmission Projects
12
CAISO SPP MISO PJM
Determined
By?
Voltage
Class
Voltage Class Project Type Project
Classification
Description >= 200 kV,
• 100%
regional
< 200 kV,
• 100%
local
>= 300 kV
• 100%
regional
< 300 kV
• 2/3 local
zone, 1/3
regional
< 100 kV
• 100% local
Market
Efficiency
Projects (MEP)
• 80% local,
20% regional
Multi-Value
Projects (MVP)
• 100%
regional
Regional
Projects
• 50%
regional,
50% DFAX
Local Projects
• 100% DFAX

13. DNV GL © 2015
What are the Impacts on Transmission Planning?
 Renewed focus on value-based planning
 Interregional planning processes underway
 Additional time in planning window for solution submittal/evaluation
 Large number of solutions to be evaluated by RTO/ISO
 Additional lead time for developer selection
 Project cost estimates and cost control play a larger role
 Project cost allocation becomes even more important
 Ideal results is innovative solutions at a lower cost for ratepayers
These processes are still in their early stages.
Full impact of these new procedures is not fully known right now.
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14. DNV GL © 2015
FERC Order 1000 Implementation
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15. DNV GL © 2015
Order 1000 Competitive Process Overview
 Competitive Process broadly one of two types:
1. Direct Sponsorship
– RTO/ISO identifies the need and developers submit solutions, winning
solution is awarded to the develop who submitted it (PJM, NYISO, ISONE)
2. Competitive Bidding
– RTO/ISO identifies the solution(s) and developers bid to construct, own and
operate those facilities. (CAISO, SPP, MISO)
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16. DNV GL © 2015
CAISO
 California ISO uses a Competitive Bidding process
– CAISO identifies the needs and develops solutions
– Bidders compete to build selected solution
 What projects are eligible for competition?
– All projects regional projects > 200 kV
– Some regional projects < 200 kV
 Current competitive projects:
– 2014-2015 Cycle
– No competitive projects for this cycle.
– 2013-2014 Cycle
– Harry Alden – Eldorado 500 kV project recently announced as competitive.
– 4 reliability projects identified
– 1 economic project
– 1 policy driven project
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17. DNV GL © 2015
SPP
 SPP uses a Competitive Bidding model, with some elements of Direct
Sponsorship
– During the planning cycle, SPP requests solutions from interested parties.
Parties who submitted the solution that was selected receive an advantage in
the bidding process.
– Once projects are selected and approved, bids are requested for competitive
projects.
 What projects are eligible for competition?
– Greenfield facilities > 100 kV and;
– Need date > 3 years in the future
 Current Projects
– SPP BOD recently approved Walkemeyer – N. Liberal
115 kV project for bid
– RFP issued May 5, 2015
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18. DNV GL © 2015
MISO
 MISO uses a Competitive Bidding model
– Bidding advantage is awarded for participating in the planning process (including
submitting solutions when requested)
– Bids requested for competitive projects, once projects are selected & approved
 What projects are eligible for competition?
– Projects designated as either Multi-Value Projects (MVP) or Market Efficiency
Projects (MEP)
– Generally speaking, projects > 345 kV that provide economic benefit with B/C >
1.25 or that provide value across multiple areas within the MISO footprint
 Current competitive projects:
– None identified in 2014 planning cycle
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19. DNV GL © 2015
PJM
 PJM uses a Direct Sponsorship model
– PJM identifies the need and requests solutions
– Party who submits the winning solution is awarded the project
 What projects are eligible for competition?
– Projects with need date of 4 years or greater in the future
– Rebuilds and facilities using existing ROW can be eligible for competition
 Current Projects:
– Artificial Island
– Project recently awarded to non-incumbent developer
– 2014 RTEP and ME projects currently being evaluated
– RTEP 2015 Window 1 expected to open in June
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20. DNV GL © 2015
Order 1000 Bidding Process Overview
 In those regions where developers bid on solutions, processes are being
established to evaluate the bids, score them and select a winning developer.
 There is a developer qualification system in most regions – interested parties will
need to be pre-qualified with most RTOs to be able to bid on projects
 Most regions have a developed set of criteria that projects will be scored on. For
example, MISO considers the following categories:
– Planning process participation
– Cost & Design
– Project Implementation Capabilities
– Operations and Maintenance
 Bids reviewed and scored by RTO or third-party and approved by RTO board
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21. DNV GL © 2015
How to Participate in Order 1000 Processes
 Most RTOs/ISOs have a developer pre-qualification process
– Application typically required one year prior to RFP issuance
– May also require membership in the RTO/ISO
– Based on experience, management, financial criteria
 Get involved in the transmission planning process, attend stakeholder
forums
 Submit solutions into open windows
DNV GL can walk you through these processes
and also help to develop transmission solutions!
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22. DNV GL © 2015
FERC Order 1000 Challenges
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23. DNV GL © 2015
Challenges
 Limited number of competitive projects being selected
– One project identified in most recent SPP planning cycle; none in last MISO
planning cycle; none in last CAISO planning cycle; several potential
opportunities in PJM
 Limited time and information to put together solutions and proposals
– Depending on the ISO and planning process involved, may only have 30 days to
submit proposals including modeling data/study results and cost estimates
 Varying processes, requirements, timelines throughout the RTOs/ISOs
– Widely varying processes and models can make it difficult to keep up and to
ensure that submitted projects are meeting the requirements of the region
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24. DNV GL © 2015
Rising up to the Challenges
 Limited solutions
– Develop unique and cost-effective solutions to submit to the RTOs.
– Get involved in RTO processes, work to change some procedures and criteria
 Limited time/information
– Front-load effort as much as possible, be familiar with the processes involved.
– Review draft models, use preliminary information to get some ideas of what
might be coming when the windows open
 Varying processes/requirements/timelines
– Requires in-depth knowledge and close monitoring of all regions
24

25. DNV GL © 2015
DNV GL’s Order 1000 Approach
25

26. DNV GL © 2015
The DNV GL Advantage
26
• Our team has extensive experience in all types of
transmission studies.
• Dedicated team working on FERC Order 1000
studies
Team of Planning
Experts
• Direct experience working with and in the various
RTO environments.
• Continued engagement in RTO stakeholder
processes
Experience in RTO
Planning Processes
• Proprietary tools and processes to help screen
multiple transmission solutions
• Databases and methods to help replicate RTO
calculations
Unique Tools
• Success in securing transmission projects for non-
incumbents in several regions
• Successful identification of key projects during RTO
planning processes
Proven Track Record
in Transmission
Development
Support

27. DNV GL © 201527
DNV GL Approach for Transmission Development Support
Transmission
Opportunity
Identification &
Development
Comprehensive
benchmarking
of system
needs
In-depth
understanding
of regional
planning
processes
Unique tools to
screen
transmission
solutions
Optimal & cost-
effective
solutions –
Project
Submittal
Technical and
strategic
support through
stakeholder
process
Project
approval

28. DNV GL © 2015
Summary
 Order 1000 brings major changes to the transmission landscape!
– Interregional Planning
– Cost Allocation
– Introduction of Competition in Transmission Planning/Development
– Innovative Solutions at Lower Cost
 Processes are still new, and challenges are present on the RTO as well as
the developer side of transmission project development
 Opportunities are out there, but it requires high-quality projects along
with competitive pricing to win solutions
 DNV GL has the capabilities to help you and your organization navigate
this space and develop and submit winning projects
28

29. DNV GL © 2015
SAFER, SMARTER, GREENER
www.dnvgl.com
How can DNV GL help you with FERC Order 1000?
- Attend our FERC Order 1000 Panel
DNV GL’s Utility of the Future Leadership Forum
June 2–3 Washington, DC
www.dnvgl.com/UofF2015
- Contact us at energyadvisory.energy@dnvgl.com
to schedule time with our experts
29
Ben Roubique, PE
benjamin.roubique@dnvgl.com
501-291-2360

30. FERC Order 1000
and the
Transmission
Owner Selection
Process
May 13, 2015
Antoine Lucas

31. SPP Process - Highlights
• All entities desiring to participate in the SPP TOSP
must apply to become Qualified RFP Participants
(QRPs)
• Detailed Project Proposals (DPP) received for solutions
in the planning process
• Competitive Upgrade projects approved for
construction now require RFPs prior to NTCs
• A panel of Industry Experts will review, rank and score
all RFP responses and make recommendation to SPP
Board
• SPP Board will select Designated Transmission Owner
(DTO) and issue NTC 31

32. QUALIFIED RFP PARTICIPANT (QRP)
32

33. Qualified RFP Participant
• Qualified RFP Participant (QRP): An entity that has been determined by
SPP to satisfy the qualification criteria set forth in the Order
• Any Entity can qualify to be a QRP and participate in the TOSP
• Only approved QRPs can participate in the TOSP
• All interested entities must apply
• Application fee applies to all applicants
Timetable
• Annual Open Enrollment period for QRPs: April 1st - June 30th
• SPP will post all applicants by July 15th
• SPP will notify Applicants by September 30th of any QRP deficiencies
• 30 day cure period for any deficient applications
• SPP will post all QRPs for following year by December 31st
33

34. Qualifying for QRP Status
• Each Applicant must demonstrate that they meet qualification criteria
in order to be approved as a QRP
• The qualification is based on categories detailed in Attachment Y of the
SPP Tariff:
 Membership Criteria
 Financial Criteria
 Managerial Criteria
• Applications for QRP will be evaluated by SPP to assess if the Applicant
meets the qualification criteria and make the final determination
• Qualified QRP Status good for 5 years
– Must re-certify annually no later than June 30th
• If QRP qualifications change
– Must notify SPP for determination of status
34

35. DETAILED PROJECT PROPOSAL (DPP)
35

36. What is a DPP?
• Information about a proposed transmission project in
the ITP process
– Sufficient info to allow SPP to evaluate the proposed
project
– Encourage innovative ideas
• Required to qualify for 100 incentive points in the
competitive bidding process
• Current avenues remain available to propose a
transmission project
36

37. DPP Submission
• Any entity may submit a DPP
• Specific data requirements
– SPP Tariff Att. O Section III.8.b(i)
– Business Practice 7650
• 2015 ITP10 – 1179 DPPs submitted
– 27 different submitters
• 2015 ITPNT - 436 DPPs submitted
– 24 different submitters
37

38. DPP Analysis Process
Transmission
Planning
Response
Window
• 30 Day Window
DPP Submission
Staff
Verification for
Timeliness &
Completeness
Notification of
Completeness
and
Opportunity for
Resubmission
ITP Study
Process
DPP submitter
notified if
project is
selected /
not selected
38

39. Att. Y, Section I.1 – Determining Competitive Projects
39
1) As determined in accordance with Section I.2 of this Attachment Y, the Transmission
Provider shall designate a Transmission Owner in accordance with the process set
forth in Section III of this Attachment Y for transmission facilities approved for
construction by the Transmission Provider after January 1, 2015 that meet all of the
following criteria:
a) Transmission facilities that are ITP Upgrades or high priority upgrades;
b) Transmission facilities with a nominal operating voltage of greater than 100 kV;
c) Transmission facilities that are not a Rebuild of an existing facility and do not
use rights of way where facilities exist;
d) Transmission facilities located where the selection of a Transmission Owner
pursuant to Section III of this Attachment Y does not violate relevant law where
the transmission facility is to be built;
e) Transmission projects that do not require both a Rebuild of existing facilities
and new transmission facilities; and
f) Transmission facilities that are not a Local Transmission Facility.

40. Transmission Facility approved for construction after 1/1/2015
Upgrade Determination
Rebuild of
an existing
facility?
No
Yes Operating
voltage >
100 kV?
Yes No
ITP or High
Priority Upgrade
or Interregional
Project?
Yes
s
ROW where
facilities
exist?
Yes
NC
NoNo
Location
violates
relevant
law?
Yes
No
Includes
new and
Rebuild?
Yes
No
Figure 2
Local
Transmissi
on Facility?
Yes
No
TOSP
4
NC - Non-
Competitive
NC NC
NCNC
In-service
date within
3 yrs or
less?
Yes
No
NC
STR Project Process

41. No
Transmission Facilities approved for construction
after 1/1/2015 that require both a Rebuild of
existing facilities and new transmission facilities
Competitive Upgrade Determination
5
Rebuild Cost >=
80% of Total
Project Cost?
Yes
NC
Divide project
into parts
REBUILD
NC
TOSP
NEW
Pursuant to the criteria in Att. Y,
Section I.1 found on Figure 1.
NC - Non-

42. REQUEST FOR PROPOSAL (RFP)
42

43. RFP Process
• RFP will be issued for each competitive upgrade after
study reports have been published and the list of
recommended upgrades has been approved by the SPP
Board of Directors
• Each competitive upgrade will have 180 days* from the
issue date for the QRPs to complete their RFP response
• Each completed RFP response will be analyzed and
scored by the IEP
– If the QRP had a selected DPP for this upgrade, the 100
point bonus would apply at this time
*In accordance with the SPP Tariff, as approved by SPP stakeholders and Board, the Transmission Provider may determine that
a time period shorter than 180 days but no less than 90 days may be necessary for specific upgrades.
43

44. INDUSTRY EXPERT PANEL (IEP)
44

45. Industry Expert Terms Defined
• Industry Expert Pool: Group of industry experts recommended to the
SPP BOD by the Oversight Committee
• Industry Expert Panel: 3 -5 person group of industry experts selected
from the pool by the Oversight Committee who are engaged to review
and evaluate proposals submitted in response to the Transmission
Owner Selection RFP. The SPP BOD may approve the use of multiple
industry expert panels.
45
Industry Experts
IE Panel
3 – 5 Experts per IE Panel
IE Pool Approved Experts in IE Pool

46. Industry Expert Pool Process
• Industry Expert applicants must complete an application and submit it to
SPP
• The Industry Expert candidate shall have documented expertise on file with
SPP in one or more of the following areas:
1. Electric transmission engineering design
2. Electric transmission project management and construction
3. Electric transmission operations
4. Electric transmission rate design and analysis
5. Electric transmission finance
Timetable
• The proposed application period for Industry Expert candidates for 2015:
June 1 – September 1, 2014
• The Oversight Committee will recommend pool to the SPP BOD in October
2014 46

47. Designated Transmission Owner Selection
• IEP reviews RFP responses, rank and score solutions
– Each submitted RFP response is scored according to
established criteria
– Panel provides a recommendation to the SPP Board of
Directors
 Respondent information is redacted
• SPP Board of Directors chooses selected RFP response
and an alternate
– NTC issued to Board-chosen RFP response
47

48. Helpful SPP Web Links
• SPP Order 1000 Process
– Contains links to the applications and forms for the QRP,
DPP, and IEP processes, and has documents from the
Order 1000 Summits and ITP10 and ITPNT Model and
Needs Assessment dates
• SPP Order 1000 Exploder
– Receive emails on Order 1000 dates and information
related to the Order 1000 processes
• Competitive Transmission Process Task Force
– Contains meeting materials and documents for the
committee
48

49. DNV GL © 2015
SAFER, SMARTER, GREENER
www.dnvgl.com
How can DNV GL help you with FERC Order 1000?
- Attend our FERC Order 1000 Panel
DNV GL’s Utility of the Future Leadership Forum
June 2–3 Washington, DC
www.dnvgl.com/UofF2015
- Contact us at energyadvisory.energy@dnvgl.com
to schedule time with our experts
49
Ben Roubique, PE
benjamin.roubique@dnvgl.com
501-291-2360