How Small Public Power Utilities Gain A Bigger Voice

From the February 28, 2017 issue of Public Power Daily

The Kansas Power Pool, a public power agency that provides energy and transmission services to 24 public power utilities in Kansas, says that by partnering with GridLiance it is gaining the expertise and staffing support it needs to deal with increasingly complex North American Electric Reliability Corporation compliance requirements and to pursue transmission projects that would benefit its members and their region.

The emergence and growth of regional transmission organizations, the implementation of more than 100 NERC reliability standards, and the issuance of Federal Energy Regulatory Commission Orders 890 and 1000 over the past several years have changed everything for public power entities, says Mark Chesney, Kansas Power Pool CEO and General Manager.

That is especially true for the small public power utilities that are members of KPP. Each utility serves between a few hundred and a few thousand customers and has a small staff. Chesney says that KPP — formed in 2005 — itself is “a small shop.”

About three years ago, KPP accepted an invitation to discuss how GridLiance, a public power-focused independent transmission company, might help the agency and its members on NERC compliance, representation at the Southwest Power Pool —  the RTO that includes Kansas and neighboring states — and development of FERC Order 1000 and other transmission projects.

Participating in regionally funded transmission projects helps KPP’s members earn revenue to help offset transmission rate increases, and lower energy costs and increase reliability for customers. The projects also can provide greater access to renewable energy sources.

In June 2016, KPP and GridLiance signed an agreement demonstrating their commitment to work together in advancing transmission projects that would benefit KPP’s members and the SPP region. Chesney says GridLiance represents KPP and its members at a number of key SPP committees and task forces, and explores the development of several transmission projects.

“Our goal is to be a flexible partner,” says Kevin Hopper, GridLiance’s president for the SPP region. Other independent transmission companies take a one-size-fits-all approach, he says, but GridLiance’s emphasis is on working as a team with public power utilities, joint action agencies and electric cooperatives to determine what support they might need.

“Something else that separates us from the others is that we give our public power partners the opportunity to invest in new transmission projects with us,” Hopper says. Some may want to participate as a way to add a steady stream of transmission revenue to help offset rising transmission costs, he says, while others may prefer not to.

KPP member utilities face several major challenges including modest, radial transmission connections to the larger grid that can leave them more vulnerable to service interruptions. They also face staffing constraints that make it difficult, if not impossible, for them to participate in RTO committees or to pursue transmission projects.

“Due to a lack of resources, they get left out,” says Hopper. Noting that he and many other GridLiance principals spent much of their careers in the public power sector, he sees the “invisibility” of smaller public power utilities as a fairness issue that needs to be addressed.

Hopper adds that the financial support GridLiance receives from Blackstone, a leading energy infrastructure investor, gives it the wherewithal to enable KPP and other GridLiance partners to compete with larger transmission companies proposing projects of their own. Transmission engineering and analysis is expensive, he says.

KPP’s Chesney says that thanks to the transmission company’s very competent and experienced staff, his agency now has a much bigger voice at SPP and a much deeper understanding of the transmission projects it should focus on.

“We have three or four transmission projects on the drawing board already,” says Chesney, noting that each is well past the conceptual stage. “We’re very happy with how far we’ve come, and very optimistic about where we’re going.” 

Hopper says GridLiance is active in four large grid operator regions — SPP, the Midcontinent Independent System Operator, the Electric Reliability Council of Texas, and the California Independent System Operator — and is branching out into others, maintaining focus on public power. In addition to representing partners at RTOs and helping them develop and finance transmission projects, GridLiance can help to implement cost-effective NERC compliance strategies.

GridLiance also supports the sale of transmission systems. Last year, the company acquired the transmission assets of Tri-County Electric Cooperative — more than 400 miles of 69-kV and 115-kV lines and related substations in Oklahoma’s panhandle. The sale allowed Tri-County to focus on distribution system improvements.

This spring, GridLiance will close on the acquisition of the 230 kV transmission system of Valley Electric Cooperative, Inc. in southwestern Nevada. Valley is the only Participating Transmission Owner in CAISO located outside the state of California. Valley will use sale proceeds to reduce rates and continue expansion of its broadband service to members.