# Presentation: 714446

- March 18, 2004
- Western Technical Conference
**Robert Wolaver, P.E.**

- Tri-State Comments on Regulation and Frequency Response Service

##      Topics

- Tri-State Background
- Western Ratemaking
- Tri-State Concerns

## Tri-State Background

**Organized in 1952 by Member Distribution Cooperatives**
**Provides Generation and Transmission Service to Rural Areas in Four States**
**Non-profit, wholesale power supply cooperative **
**Provides electricity to 44 Member Distribution Cooperatives**
**Members provide electric service to about one million consumers**

## Slide 4

## Slide 5

## Tri-State Background 

**2,210 MW Peak Load **
**Member Service Territory: 250,000 Square Miles**
_**Peak**_** Load Density 9 kW/Square Mile**
**Unusual Load Patterns: 80% Monthly Load Factor**

## July 2003 Tri-State Member Load

##   Tri-State Background

- Customer Relationship with Western
- Loveland Area Project Customer: 368 MW
- Colorado River Storage Project Customer: 445 MW
- Largest RMR Network Transmission Customer
_**Pays Western $2 Million per Year for Regulation**_
- Also a Network Transmission Customer of:
- Xcel Energy
- Nebraska Public Power District
- PacifiCorp
- Public Service Company of New Mexico

##  Tri-State Renewable Programs

-  Green Power Program
-  End-Use Customers Choose Level of Participation
-  Tri-State meets program demands through wind and
-    bio-gas projects, and through the purchase of green tags
-  Member of Basin Electric Power Cooperative
-  87 MW Installed Wind
-  Distributed Generation Pilot
-  Energy Efficiency Credits
-  $700,000 in 2003

## Tri-State and Ancillary Services

- Tri-State is generally a customer, not a provider of ancillary services
- Tri-State is Not a Control Area
- No generation on AGC

## Tri-State Position on Ancillary Services

- Prefer Approach that is Indifferent as to Source
- Treat Intermittent Resource the Same as Intermittent Load
- Treat All Customers of Imbalance the same based on _**Net Impact**_ on the Control Area
- Nondiscriminatory, Good Economic Signals, Defensible

## Tri-State Position on Ancillary Services

- Implications of Nondiscriminatory Approach
- What does not matter?
- 	Source: Wind, Coal, Gas, Hydro
- 	Size: Large, Small
- 	Purpose: Load, Generation
- What Matters?
- Measured Performance
- Rate of Change (Regulation)
- Predictability (Energy Imbalance)

## Importance to Tri-State 

- Western and Tri-State have transmission facilities near favorable wind sites
- Tri-State is a large customer of Western for power and transmission services
- Existing Customers Pay for System
- If there are inappropriate cost shifts, Existing Customers can pay the cost, and get no benefit

## Mission of Western

- Western Area Power Administration markets and delivers reliable, cost-based hydroelectric power and related services within a 15-state region of the central and western U.S.
- Western is one of four power marketing administrations within the U.S. Department of Energy whose role is to market and transmit electricity from multi-use water projects.

- http://www.wapa.gov/geninfo/whatwho.htm

## Western Ratemaking

- The Reclamation Project Act of 1939 specified the role of power users in repayment. Section 9(c) in part: "Any sale of electric power...made by the Secretary in connection with the operation of any project or division of a project, shall be...at such rates as in his judgment will produce power revenues...to cover an appropriate share of the annual operation and maintenance cost, interest on an appropriate share of the construction investments...and such other fixed charges as the Secretary deems proper: Provided further that in said sales...preference shall be given to municipalities and other public corporations or agencies, and also to cooperatives and other nonprofit organizations financed...by loans made pursuant to the REA Act of 1936..."

- http://www.wapa.gov/powerm/pmrates.htm

## This is Not Public Policy Issue

- Western has legislated mission
- Purpose of Western
- Control Area Operation

## Tri-State Concerns

- Operating Reserves
- Rocky Mountain Reserve Group
- WECC/NERC – Non-Firm Sale?
- Existing Carve-Out for Wind in Energy Imbalance Rate
- Cost Shift / Subsidy
- Taxpayer vs. Ratepayer
- Transmission Usage

## Tri-State Concerns

- Incremental vs. Embedded Cost in Rate Analysis
- Appropriate for Xcel Energy Adding Wind on Top of Xcel Resources
- Impact of Gas-Fired Generation
- Example of Western Resource Inflexibility:
- 	Two Day-Ahead Prescheduling
- 	Departure from Industry Standard
- 	Very Expensive for Customers
- 	Real-Life Indication of Drought, Environmental Restrictions

## Need to Address The Issue

- Need Predictable, Accurate Cost Signals
- A System With Significant Wind Resource Presents a Greater Regulating Burden
- Nondiscriminatory Rate Structure
- Wholesale Competitors
- Changing Requirements for Renewables
- Sound Technical, Economic Analysis

## Who Pays?
Large Wind Farms
Competitive Bid for Regulation 
Pass Through Cost
Dynamic Meter To Host Control Area
Western has lots of Wind, little Water
Appropriate, Cost-based Regulation Charge For all Loads/Resources
Fix Existing Energy Imbalance Rate

- Large Wind Farms
- Competitive Bid for Regulation
- Pass Through Cost
- Dynamic Meter To Host Control Area
- Western has lots of Wind, little Water
- Appropriate, Cost-based Regulation Charge For all Loads/Resources
- Fix Existing Energy Imbalance Rate

- Conclusions

## Questions/Comments?