by Norm Richardson
Planning for the future expansion of the electric transmission system has been evolving, moving from a focus on reliability to a more comprehensive analysis of economic benefits. In February, FERC adopted Order No. 890, reforming several aspects of its landmark Order No. 888, which established the framework for open access to transmission. Among the reforms is a requirement for transmission providers to establish a coordinated, open transmission planning process that meets nine specific planning principles: coordination, openness, transparency, information exchange, comparability, dispute resolution, regional coordination, economic planning studies, and cost allocation.
The inclusion of the last two principles requires an investment in new technology and analysis by regional transmission organizations (RTOs) and their members. The return on this incremental investment should be immediate and visible: transmission owners will be able to quantify the benefits and costs of upgrades, and merchant transmission companies will be able to share this information with the financial community.
In traditional transmission planning, computer models are used to simulate transmission flows during “snapshot” conditions (peak load, low load, etc.) with assumed generation output levels. In order to assess economic benefits, models must also be able to perform economic unit commitment and dispatch over a broad time period such as a year or several years, so that generation production costs can be determined. The input data assumptions for these models would then consist of not only the transmission data used for reliability analysis, but all aspects of generation and load data including heat rates, fuel price forecasts, and operating constraints.
Order 890 requires all of these data assumptions-transmission and “economic”-to be open and transparent to stakeholders. When put together, all of the requirements necessary to fulfill the needs for economic analysis rely heavily on the ability to gather, refine, disseminate, and control this large volume of data. These challenges can only be met through advanced data management technology and processes, some of which are already being used and adopted by the larger transmission coordinators.
Midwest Independent System Operator
The Midwest ISO includes 28 transmission owners with operations in 15 states and a Canadian province. MISO recently submitted its third Midwest Transmission Expansion Plan (MTEP), which details projects within the region that provide future reliability and/or economic benefits to its stakeholders.
For its economic analysis, MISO licenses a database that covers the Eastern Interconnect and then supplements this data with its own information based on the current status of the interconnection queue and transmission projects. The supplemental data is separate so it can be applied to updates in the underlying economic database, but can still be viewed and managed as a fully merged set of data assumptions. This database is made available to MISO members, which may also submit supplemental data to be considered in the MTEP process.
MISO is currently taking the next major step in the economic evaluation of transmission projects. Plans that look out five years into the future can generally rely solely on interconnection queue projects to fill in new capacity assumptions. For modeling the transmission system beyond five years, standard practice has been to add generators based on individual utility resource plans if available, and fill in capacity shortfalls with generic assumptions on new construction. MISO will be using resource planning models to better evaluate the type, amount and timing of new capacity additions on a sub-regional basis, and will utilize the same economic data used for transmission evaluation, with additional information on construction costs and planning criteria such as minimum reserve margin, reliability and renewable portfolio standards. Resource plans will be produced for several scenarios, or futures, and used to evaluate and integrate transmission expansion looking 15 years into the future.
The PJM Interconnection is an RTO covering 13 states and the District of Columbia, with 14 voting transmission owners. For several years, PJM has produced a Regional Transmission Expansion Plan (RTEP), which was created based on reliability analysis and historical congestion. The next transmission plan will include a Market Efficiency analysis that will determine economic benefits to those reliability upgrades, as well as identify new projects that may be developed solely based on economic analysis.
The Market Efficiency analysis will include market simulations for four future years through 2016, and will also include a high-level simulation of 2021 to validate future-year results. It will also determine sensitivity around uncertainties such as fuel prices, load growth, emission costs, discount rates and generation expansion/retirement. Because these sensitivities will be performed around each potential transmission upgrade, data for hundreds of simulation scenarios must be managed clearly and consistently.
Developing scenarios around load growth and fuel prices requires consideration of macro-economic forces and their impact on localized power supply. In detailed market simulation models, load is represented on an hourly basis across nearly 3,900 buses in the PJM system. Load growth scenarios deal with uncertainty of annual peak and energy on a PJM-wide basis, so each scenario must allocate these assumptions to each hour to each bus in a consistent basis.
Fuel prices are also represented on a delivered basis to each generating facility. In developing natural gas price scenarios, the underlying commodity price will change and therefore needs to be reflected consistently in the delivered gas prices in Chicago, Newark, etc. For coal prices, multiple underlying commodities should be represented based on the source and type of coal. Rail and barge costs would then be applied consistently to these mine costs.
Western Electric Coordinating Council
The WECC is a NERC region representing the systems within the Western Interconnection. In 2006, the WECC formed the Transmission Expansion Planning Policy Committee (TEPPC) to carry out three main functions: overseeing database management; providing policy and management of the planning process; and guiding the analyses and modeling for Western Interconnection economic transmission expansion planning
Overseeing database management is a critical component of TEPPC because the WECC developed its own economic database for use by all of its members, instead of licensing proprietary databases similar to MISO and PJM. WECC members must work together within a collaborative data model to develop reasonable, consistent input assumptions across the region.
To facilitate this consistency, WECC will use categories to represent the generators in the region. Each generating unit is assigned to a specific category based on its type, capacity, and age. All economic data is then represented by category, including variable O&M, heat rate curves, startup costs, outage rates, etc. This allows for a reasonable representation of the region’s capacity without requiring members to submit data that may be deemed confidential.
The WECC is not an RTO, but currently represents one, the California ISO, and will possibly represent more in the future. For the transmission planning process, consideration must be given to impacts on the entire region while focusing on a specific subregion in the WECC. The data model used by the WECC will allow it to develop market simulations that only represent a subregion such as the California ISO without having to create separate “one-off” data models.
Norm Richardson is vice president of energy forecasting and planning for NewEnergy Associates, a Siemens Company. Mr. Richardson has more than 13 years of experience in the development and use of software for electric market price forecasting, power supply planning, risk analysis, asset valuation, and transmission expansion and analysis. You can contact him at email@example.com.