An RTO Comparison:1 SPP and MISO’s Contrasting Approaches
Transcript of An RTO Comparison:1 SPP and MISO’s Contrasting Approaches
September 19, 2016 Page 1 of 17
September 19, 2016
An RTO Comparison:1
SPP and MISO’s Contrasting Approaches
Using MISO as a comparison, this paper examines how the Southwest Power Pool (SPP) handles the inherent tension between their role as “independent manager of the grid” with their interest of serving their members’ collective and individual needs as a voluntary organization.
SPP and MISO view their independent RTO roles very differently. SPP pursues a “consensus
independence” approach. While there certainly are exceptions, SPP rarely acts until there is agreement among its members and stakeholders. And, when SPP does act, it is more a ratification and implementation of the members’ agreement. SPP’s long history of very close
relationships with its members, a relatively homogenous membership and limited willingness to take proactive actions that all of its members do not support has created decision-making
processes and stakeholder structures designed to promote consensus and limit dissent. By comparison, MISO’s larger, more diverse footprint with a wider range of stakeholder
interests led MISO to take more of an “objective independence” RTO approach. MISO encourages and accepts stakeholder input but makes its own independent decisions. While MISO
will work with and accommodate its individual members’ needs and wishes, it does so only after it, MISO, has independently concluded that the course of action is in the best interest of (or at least does not hurt) MISO and its entire footprint of members.
These differing approaches are embedded in each RTO’s culture and drive their respective
operations, decisions and stakeholder relationships. Each approach has strengths and weaknesses, and also creates distinctive lenses through which each RTO sees each other, complicating their efforts to work together.
Caveat: SPP and MISO are large, complicated organizations. Thus, to achieve its goal of being
a condensed thought-provoking document highlighting their respective differences and similarities, generalities are necessarily made and exceptions to those generalities along with countless details are ignored or limited.
Organizational Development. The Federal Energy Regulatory Commission (FERC) has
approved ten Regional Transmission Organizations (RTOs) covering much of North America. Each RTO is made up of transmission-owning members that have voluntarily joined together to create the RTO. Beyond those who actually own and operate the transmission lines, each RTO
1 This examination is solely the sole work of Edward Garvey and AESL Consulting. Any errors, mistakes or
omissions are ours alone.
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has an ecosystem of stakeholders. Each RTO has three interconnected duties. The first and
perhaps most important duty is to ensure the reliability of the bulk power grid within its footprint. The second duty is the facilitation of efficient transmission to economically optimize
the generation of its members and reduce the costs to the customers they serve. The third duty is managing the wholesale electric power market within its respective footprint.
While all RTOs perform these three duties, there are considerable differences on how they do it. These differences stem from their: 1) developmental histories (including industry-event
responses); 2) founding members’ goals, needs, desires and make up; 3) organizational cultures; 4) methods for gathering input from their members and stakeholders and 5) decision-making processes. Yet, perhaps the most important distinction stems from how the RTO handles the
inherent tension between its obligatory role as independent grid manager and the various specific needs of its voluntary members.
SPP traces its roots to 1941 when a number of utilities combined their generation and transmission facilities to be what we today think of as a power pool to more efficiently serve an
Arkansas aluminum smelter serving the World War II effort. The forerunner entities continued to operate as a large power pool for decades until it formally became a FERC-approved RTO in
2004. SPP launched a real-time energy market in 2007 and added a day-ahead energy market in March of 2014.
The SPP voting membership is mostly made up of incumbent transmission owners and transmission customers. There is currently little voting representation from independent power
producers, renewable generators, or the environmental community. Competitive transmission providers only recently began participating in SPP stakeholder meetings. Forty of SPP’s members are cooperatives, municipalities, and their generation and transmission providers and
ten are investor-owned utilities. But for a sliver of Texas, SPP does not serve any states that have “restructured” or otherwise enabled retail customer choice.
By comparison, MISO is relatively new, created in the early 2000’s by utilities who recognized the benefits a wholesale market would bring as they sought generation sharing, peak load
balancing, and investment in additional transmission to support growing loads and wind development. Thus, in contrast to SPP’s history, MISO began operating a power pool as well as
real-time and day-ahead electricity markets at its inception. The original (and current) MISO membership is more diverse than SPP’s since MISO has both restructured jurisdictions as well as traditionally regulated jurisdictions. It also has a higher percentage of investor-owned members
and serves both very rural and very urban areas.
A further example of this historical difference can be found in their respective legal organization set-up. While both are non-profit corporations, SPP is set up as a 501(c)(6) – a business league or association of persons having some common business interest. There is no mention or
requirement that the entity serve or operate in the public interest. Rather, 501(c)(6) entities are designed to assist and promote the members of the entity. By contrast, MISO is a 501(c)(4), a
category used by and for entities dedicated to the promotion of social welfare, promoting the
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common good and general welfare of the people of the community. While this difference may be
a distinction-without-a-difference, it is indicative that the differing histories and RTO membership make-up have created significant differences in how SPP and MISO function,
operate and interact with their stakeholders. It also indicates how each organization views its mission.
Stakeholder Relations. Based on its long-term power pool origins, SPP maintained its
“homegrown,” informal, almost symbiotic relationship with its members of mostly vertically-
integrated, non-restructured, rural utilities. This close relationship between SPP and its members has created a mutually supportive culture. SPP’s members and stakeholders seem to support SPP and its decisions or, at least, rarely publicly disagree with SPP. In fact, Basin Electric, in
explaining its decision to join SPP to its members, stated that SPP acts more like a cooperative while MISO acts more like an investor owned utility.
In SPP, a stakeholder has to fit into one of SPP’s two voting sectors:
1. Transmission Owners (which must own and operate over 500 miles of transmission) or
2. Transmission Users (including utilities, municipalities, distribution coops, certain generators and TOs with less than 500 miles of transmission line.)
Thus, SPP is member-dominated, seeking informal consensus among all stakeholders, and all stakeholders – regardless of sector – are permitted to participate in all stakeholder meetings.
By comparison, MISO has 10 stakeholder sectors:
1. Transmission Owners 2. Coordination Members 3. IPPs & Exempt Wholesale Gen
4. Municipals, Coops & Transmission Dependent Utilities 5. Eligible End-User Customers
6. Competitive Transmission Developers 7. Power Marketers & Brokers 8. Environmental & Others
9. State Regulatory Authorities 10. Public Consumer Groups
Each stakeholder votes within its Sector and on the Advisory Committee, only the Sector Representatives participate and cast their sector-designated number of votes. The MISO-member
relationship is an arms-length, business-based arrangement. MISO prides itself on its operating efficiency, independence and cost “policing.” MISO works hard to involve stakeholders and
members in its decision-making, but because of its business focus and objective independence, MISO takes actions that it, MISO, deems best for its entire footprint membership. Therefore, it is not unusual for some MISO members and stakeholders to disagree with a MISO decision and do
so publicly. On the other hand, MISO’s “objective independence” allows MISO greater freedom to make decisions and pursue issues that benefit the members in the long run, which might not
otherwise be possible if left up to member consensus.
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The less formal relationship between SPP and its stakeholders stems from many different reasons but one may be that there is less diversity of interests and perspectives among SPP stakeholders.
For example, MISO leaders hear from all the sectors; they hear from advocates representing transmission owners, retail-choice states, traditionally regulated states, environmental groups, renewable energy groups, consumer and ratepayer advocacy groups, competitive transmission
owners, load serving entities, and generators. SPP’s stakeholders are much less diverse. While competitive transmission owners are starting to broaden stakeholder views, the rest of the
membership is fairly homogenous. There is no strong environmental or ratepayer advocacy; wind generation has only one consultant as a participant. There are no retail-choice states in SPP, only state-regulated states. In addition, coops and municipal power entities make up a larger part
of the voting members than MISO. As discussed further below, decisions on SPP’s cost allocation issues have been delegated to the Regional State Committee, which is made up of state
regulatory commissioners from each of the states in SPP’s footprint. This delegation allows SPP to avoid stakeholder conflict regarding cost allocation and resource adequacy decisions and assists state-regulated members with transmission cost recovery issues before these same
Commissions.
Relationship with States. SPP’s symbiotic stakeholder relationship extends to the states in
the SPP footprint. The Regional State Committee (RSC) is an arm of SPP and has no independent staff. The Secretary of the RSC is the General Counsel of SPP. While the RSC does have some responsibility specified in SPP’s Tariff (for cost-allocation and resource adequacy),
information is tightly controlled by SPP. By comparison, the Organization of MISO States (OMS) is an independent body with an independent Executive Director, office space and staff. It has the ability to gather information and make filings independent of the RTO but does not have
the delegated cost allocation authority of the SPP RSC.
Because of the consensus-driven approach, as well as SPP’s relationship with the RSC, it is
relatively easy for SPP Transmission Owners to achieve their policy goals. There is very little resistance to decisions made by SPP management from the Members, Board or RSC because by the time that decision is made it has been thoroughly vetted and consensus reached through
multiple working groups and subcommittees, usually over a protracted period of time using significant staff resources. Issues that do not reach consensus or at least supermajority support
rarely make it through the SPP process.
Decision-Making Approaches. In SPP most issues are brought to the RTO from their
members through an established “Revision Request” (RR) process where any stakeholder or SPP staff fills out an RR form to initiate a Tariff, Business Practice or other change. The RR is
reviewed, assigned a priority and enters the SPP study and stakeholder processes. SPP proposes the scope and cost of conducting a project, but if stakeholders want to change the scope or timeline, then SPP leaves it to stakeholders to decide whether the additional cost is justified. By
contrast, when an issue or Tariff revision is raised by a stakeholder in the MISO footprint, MISO (rather than the stakeholder) generally takes the organizational lead by working with interested
stakeholders to formulate a suggested course of action and timeline and presents it to
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stakeholders for input within a timeline. MISO attempts to control project costs by efficient and
timely project completion. This includes deadlines on stakeholder inputs.
Although both RTOs utilize stakeholder-run meetings and votes to make recommendations to
their respective Boards, decisions in SPP are made with a casual consensus approach. SPP Staff plays a lesser role in driving the outcomes, and SPP stakeholder votes are rarely close or
contested. By contrast, MISO’s decision-making process is very organized and structured; while all stakeholders can comment at stakeholder meetings, participation is limited at MISO’s Advisory Committee and Board meetings. In SPP all stakeholders can comment during topic
discussions at all meetings, including the Market and Operations Policy Committee (MOPC) and Board.
SPP explicitly cultivates the perception that stakeholders drive SPP’s tasks, and in fact they do since they have a consensus-based culture and SPP frequently relies on stakeholder personnel to
do the issue analysis. SPP presents projects along with proposed optional courses of action and timelines and then allows stakeholders to choose options and adjust timelines. By comparison,
issue and options analysis in MISO is primarily done by MISO staff with stakeholder input and then review. While this allows for deep and independent substantive analysis it can leave stakeholders feeling they have little control.
The relationship between MISO decision-makers and its stakeholders are polite and business-like
while the relationship between SPP executives and staff and the SPP members and stakeholders are much less formal - typically collegial.
Each dues-paying SPP Member has one vote to cast on decisions. Individual votes are cast for all decisions. Though not a requirement, SPP typically asks those submitting a “no” vote to provide
a written explanation for the minutes. As such, many SPP Members abstain from voting when they do not support a decision. In some cases, decisions are approved with a minority of support due to abstentions.
In MISO, each stakeholder Sector, including OMS, holds a certain number of votes that can be
cast as a Sector on decisions. An important distinction between the RTOs is that in MISO each sector and stakeholder-member gets a vote, regardless of whether or not they are formal “dues-paying” MISO members. However, actual votes have become less frequent in the MISO
processes so it appears that MISO and Stakeholders appear to be working more and more collaboratively to find common or consensus approaches.
Board of Directors: Selection & Role. Both RTOs have a Board of Directors (Board)
that is selected after an external and internal vetting process. However, the SPP vetting process
appears less formal when compared to the MISO process. Both SPP and MISO have "nominating
committees" that generally rely on independent executive search firms to find candidates.
MISO’s bylaws specifically require the Nominating Committee to use an independent executive
search firm, whereas SPP’s does not. In SPP, the Corporate Governance Committee – made up
of one Director, seven Members, and chaired by the CEO – puts forth candidates for ratification
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by Members. Members can choose not to approve, but they are not given a choice. SPP’s Board
is not involved at all, other than including the Board Chair as one of nine Corporate Governance
Committee Members.
In MISO, a Nominating Committee is formed consisting of three Directors and two Advisory
Committee members. The MISO Nominating Committee is required to put forth at least two
candidates for each Director position. The Directors then get a chance to approve and send on to
the membership at least one candidate for each position. Both RTOs require the members to elect
new Directors. Although SPP Members are only given the choice to agree or disagree with the
Corporate Governance Committee’s recommendation, a supermajority must agree in order for
the candidate to be elected. In MISO, candidates receiving a simple majority of the Members’
vote are elected.
While the Boards of both RTOs have a close relationship with the RTOs’ management and
stakeholders, SPP’s Board appears – consistent with SPP’s consensus independence culture – to
be more integrated into and dependent upon SPP’s management. By contrast, the MISO’s Board
is always seen as and operates as a separate, distinct entity. This distinction can best be seen in
how each Board gets its information. In SPP the Board receives its information primarily from
the SPP executive team. By contrast, while the MISO management certainly provides extensive
information to the Board members, the MISO Board also receives reports directly from the
Transmission Owners Committee, OMS and the Advisory Committee. Also, during each MISO
Board week the MISO Advisory Committee has a “hot topics” session where each sector offers
its views on a selected issue of concern. MISO Board Members are present and ask questions of
the sector representations. Similarly, the lead sector representatives on MISO’s Advisory
Committee make formal presentations of their views to the MISO Board. Thus, the sectors and
stakeholders get to address the MISO Board directly, separately and without MISO filtering their
views. It is not unheard of for a sector representative to use these forums to “make their case”
that the MISO Board should overturn or amend a MISO decision. Such end-runs do not happen
in the SPP settings.
Finally, while the personal relationships between MISO and the individual members of its Board
is both cordial and professional there has been times when MISO Board members have disagreed
publicly, sharply and critically with MISO management. Such times reflect not only a difference
of opinion but also how they view their roles, i.e. the MISO Board sees its role as independent
overseer of the RTO and its management, therefore it is their obligation to make any difference
they have publicly known. This has rarely occurred in SPP, probably for two reasons. One reason
is because of SPP’s consensus approach, i.e. there are less differences of opinion reaching the
SPP Board because they have all been worked out beforehand. Another reason might be that the
SPP Board and its RTO management have the same “inside the club” attitude since the SPP
Board selection process emphasizes the RTO’s culture and not independence, i.e. the Members
of the SPP Board do not necessarily see themselves as an independent voice but an integral part
of the management decision-making team.
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The closeness or separation of an RTO’s Board is a double-edged sword. While the closeness of
SPP’s Board with its management can clearly make for a less complicated relationship, the fact
that MISO’s Board is separate or more independent from its management provides a separate
venue to discuss issues affecting the RTO. This often leads to better, deeper, more innovative
decisions. It also lends an air of credibility to those decisions, as any aggrieved party knows that
they had an opportunity to be heard and an independent review.
Relationship with the Market Monitor. The cultural differences and views of
“independence” manifest themselves very distinctly in the relationship between SPP and its Market Monitoring Unit (MMU) vs. MISO and its Independent Market Monitor (IMM).
Market monitoring by an entity independent of the RTO is a FERC requirement designed to make sure the RTO markets operate competitively and efficiently. Not only is the market
monitor supposed to look for manipulation or flaws in the RTO rules or market transactions that would allow “gaming” of the system, it also looks to improve market efficiency. The goal is to promote transparency in the markets and to maintain stakeholder confidence in the RTO’s
independent operations and the market overall. Due to their differing respective cultures, the relationships SPP and MISO have with their respective market monitors is very, very different.
SPP utilizes an internal team it calls the Market Monitoring Unit (MMU) to act as the market monitor. The MMU shares resources with SPP, including legal counsel and some staff. Some
MMU staff have performed non-market monitoring duties for SPP, including during the launch of SPP’s Integrated Marketplace. While this practice is allowed under FERC Order 719, the
practice has been criticized by other RTOs’ market monitors as well as recently mentioned in a FERC audit questioning the independence of SPP’s MMU. While the FERC audit did not specifically find that there had been actual wrong-doing, it raised concerns about the “blurred”
lines of separation between SPP and its MMU. Specifically, the audit criticized the presence of SPP executives in meetings with the MMU and the SPP Board, the use of incentive
compensation for the MMU staff, the shared use of legal counsel and other staff, the MMU involvement in SPP Tariff formation as well as the accessibility of the MMU staff to RTO offices because of shared workspace. While SPP does not appear to want to change this
relationship approach with its market monitor, FERC does have the ability to force changes it sees as necessary to ensure the market monitor’s independence. In essence, the SPP MMU has
been an internal extension of its RTO operations; it is linked with SPP management. To be fair, since FERC raised its concerns, SPP’s Board has taken some small steps (albeit reluctantly) towards a more independent MMU by allowing the MMU to use non-SPP legal and other staff,
delegating MMU staff compensation decisions away from SPP management, physically separating the MMU from the remainder of SPP staff, etc. over the past year due to FERC
concerns, but it has been reluctant to make the MMU truly independent. MISO has a completely different relationship with its market monitor, starting with name. MISO
uses the term most RTOs use: Independent Market Monitor (IMM). Consistent with MISO’s cultural dedication to both functional and operational independence it created an IMM that is
fully independent and separate from MISO’s management and stakeholders with clear and
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unambiguous lines of separation. MISO’s IMM is a separate entity and has 24 staff members
made up of economists, engineers, software developers and other professionals, to ensure the market is operating as designed. The IMM staff are employees of an independent external
company and do not share MISO’s resources (other than separate secured space in the MISO building in Carmel.) If (or when) MISO’s IMM has issues with the market operation or proposed rules, the IMM will testify directly to MISO’s stakeholder subcommittees, MISO’s Board and
even FERC.
Thus, like its relationship with its members and stakeholders, MISO values and maintains organizational independence in its market monitor. At the same time, SPP’s approach to its market monitor mirrors its approach with its members: conjoining the monitoring function with
its operations, promoting internal collaboration and coordination that limit independence and possibly efficacy and dissension. However, after FERC raised its concerns, SPP’s Board has
taken steps to allow some MMU independence.
Conclusion. While SPP and MISO each fulfill RTO roles and duties, their organizational
histories, cultures and organizational designs lead to very different operational approaches. The SPP approach is “consensus independence,” which seeks consensus among their stakeholders for
their decisions, thereby limiting dissension. Arguably, this gives SPP greater internal cohesiveness, creates fewer distracting headaches for management and eases the implementation of decisions. It also allows SPP to pursue special or unique arrangements for its members or to
attract new members because they can each get beneficial arrangements, as they did when SPP convinced the Integrated System (Basin, WAPA and others) to join. However, this consensus
approach comes at the expense of decision-making speed, efficiency, creativity and, perhaps, a truly efficient market. SPP rarely takes action that exceeds the comfort-level of a reluctant member. It also creates less transparency and, paradoxically, less stakeholder involvement.
Although SPP encourages all stakeholders to participate there is no automatic participatory role like there is for MISO’s sectors. The result is that SPP leadership may actually be hearing fewer
perspectives. Since MISO started out as a newer, larger, more diverse organization, it created a very different
operational approach – a more formal “objective independence” approach. By comparison to SPP, this approach allows MISO to make more organized, timely, and efficient decisions; it
allows MISO to pursue broader, forward-looking, creative public interest analysis; and there is greater consistency across the footprint. It also gives MISO the integrity of an “independent honest broker” when presenting their decision since it is based on what is best for the overall
footprint. Decisions try to be at the highest (rather than lowest) common point among stakeholders. MISO’s more independent market monitor may give market participants greater
confidence in the efficiency of the market. A downside is that MISO’s independent decisions sometimes leave disgruntled stakeholders. There is a less flexible decision-making structure as issues go through MISO’s committees. Also, some seem to find MISO’s multiple sector
representation design a little constraining. Finally, there are times when MISO, as an independent entity, has assumed a more regulatory relationship with its members, rather than the
collaborative or facilitative role that SPP has.
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SPP’s approach may be changing as they have expanded from being a small, mostly homogenous organization to a larger, more diverse one with the addition of its Integrated
Marketplace and the Integrated System (Basin, WAPA and others). SPP’s implementation of a Day 2 market, Order 1000 reforms and the addition of the Integrated System are bringing in more stakeholders, requiring SPP to consider opinions outside its original group of incumbent
utilities – arguably requiring SPP to act more like MISO. One example of this evolution was illustrated during an August 2016 Board meeting when stakeholders realized that SPP costs were
increasing to fund Basin’s transmission build-out in western ND and SPP’s Administrative fees were forecasted to be higher than initially projected and increasing. If accurate, SPP may be undergoing a long, slow, spasmodic and often painful cultural evolution, but an inevitable one.
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Appendix A – SPP Organizational Chart
Membership
Chair - Jim Eckelberger
Vice Chair - Harry Skilton
Secty – Paul Suskie
Regional Entity Trustees
Chair - John Meyer
Secty – Emily Pennel
Regional State Committee
President – Patrick Lyons
Secty – Paul Suskie
SPP Board of Directors/
Members Committee
Chair - Jim Eckelberger
Vice Chair - Harry Skilton
Secty – Paul Suskie
Corporate Governance Committee
Chair - Nick Brown
Secty – Paul Suskie
Finance Committee
Chair - Harry Skilton
Secty - Tom Dunn
Human Resources Committee
Chair – Julian Brix
Secty – Malinda See
Market and Operations Policy Committee
Chair - Noman Williams
Vice Chair - Paul Malone
Secty - Carl Monroe
Business Practices WG
Chair - Grant Wilkerson
Vice Chair – Rick McCord
Secty – Ken Quimby
Change WG
Chair – Jim Jacoby
Vice Chair – Michelle Trenary
Secty – Annette Holbert
Balancing Authority Operating
Committee
Chair - Paul Johnson
Vice Chair – Greg McAuley
Secty – Kim Gorter
Operations Training WG
Chair – Denney Fales
Vice Chair – Robert Hirchak
Secty – Michael Daly
Critical Infrastructure
Protection WG
Chair – Eric Ervin
Vice Chair – Mike Lotz
Secty – Lesley Bingham
Model Development WG
Chair – Nate Morris
Vice Chair – Derek Brown
Secty - Anthony Cook
Regional Compliance WG
Chair – Jennifer Flandermeyer
Vice Chair – John Allen
Secty – Kim VanBrimer
Project Cost WG
Chair – Tom Hestermann
Vice Chair –
Secty – Cary Frizzell
Market WG
Chair - Richard Ross
Vice Chair – Jim Flucke
Secty – Debbie James
Operating Reliability WG
Chair – Allen Klassen
Vice Chair – Ron Gunderson
Secty – Casey Cathey
Transmission WG
Chair – Travis Hyde
Vice Chair -
Secty – Kirk Hall
Oversight Committee
Chair - Joshua Martin
Secty – Michael Desselle
SPP Staff
President - Nick Brown
Executive VP - Carl Monroe
Executive VP - Paul Suskie
Senior VP - Tom Dunn
Senior VP - Mike Ross
VP - Michael Desselle, Lanny Nickell,
Bruce Rew, Malinda See, Barbara Sugg
Strategic Planning Committee
Chair – Michael Wise
Secty – Michael Desselle
Updated 01/12/16
Cost Allocation Working Group
Chair – Dallas Rippy
Secty – Tamika Barker
Economic Studies WG
Chair - Alan Myers
Vice Chair – Kip Fox
Secty – Kelsey Allen
Event Analysis WG
Chair – Bud Averill
Secty – Ron Losh
Generation WG
Chair - Mitch Williams
Secty - Derek Hawkins
SPP Staff
Gen. Manager
Ron Ciesiel
Regional Tariff WG
Chair – David Kays
Vice Chair –
Secty – Brenda Fricano
Credit Practices WG
Chair - Mark Holler
Vice Chair - Terri Wendlandt
Secty - Phil McCraw
Seams Steering Committee
Chair - Paul Malone
Vice Chair - Bary Warren
Secty – Brett Hooton
System Protection &
Control WG
Chair – Bud Averill
Secty – Doug Bowman
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SPP’s Organizational Structure.
Per its Bylaws, SPP is governed by the following four independent bodies:
The Board of Directors (Board) – manages the general business of SPP
The Regional State Committee (RSC) – provides state regulatory input to SPP
The Regional Entity Trustees (RE Trustees) – oversees SPP’s function as the NERC-
designated Regional Entity
The Membership – provides stakeholder input to the Board
The majority of the action in SPP happens within the Board, the Regional State Committee
(RSC), and their subcommittees. Although the Board is comprised of eight independent Directors, it is also required to meet with and take advice from a group of 24 Member
representatives, known as the Members Committee. For this reason, the Board is often known as the “Board/Members Committee”. The RSC, consisting of state regulatory commissioners from each of the states in SPP’s footprint, is ultimately responsible for cost allocation and resource
adequacy. The RSC and the Board meet quarterly. The requirement that many decisions go through both the RSC and the Board (with heavy participation from Members) reinforces the
heavy member-driven, consensus-seeking culture at SPP. This inclusive culture carries through to the Board’s subcommittee structure. There are several
committees under the Board, but the largest is the Market and Operations Policy Committee (MOPC). The MOPC is truly the gathering point for all formal member participation and
currently has 49 subcommittees feeding it with advice and recommendations. These Organizational Groups meet monthly, on average, and the majority of the major decisions in SPP run through them before getting to the MOPC. With SPP’s culture, stakeholders are brought
along, often very slowly, in these subcommittees. Progress is slow, and many of the meetings are designed to gain consensus through iterative analysis and discussion rather than efficiency and
action. The Regional State Committee (RSC) includes only one subcommittee, the Cost Allocation
Working Group (CAWG), which is the RSC’s workhorse. The CAWG meets monthly and is made up of state regulatory staff.
In SPP, members and interested stakeholders provide input on decision-making by participating in what SPP calls their “Organizational Groups”. SPP’s bylaws calls all stakeholder groups
“Organizational Groups”, but the official name of most groups include working groups or task forces, although some have other names (e.g. “Strike Team”). For the most part, Organizational
Groups are composed of SPP members that have been appointed by the SPP Board of Directors. Each member assigned to an Organizational Group is given one vote, and in most cases requiring a vote, a simple majority decides. But again, actions are rarely taken without a consensus
opinion.
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SPP’s meetings are open, with many conducted in person – although nearly all meetings include
a teleconference option. Except for state regulators and Board Members, SPP does not reimburse meeting participants for travel expenses. Meetings are supposed to be conducted under the latest
edition of Robert’s Rules of Order, although this practice varies depending on the Chair of the Organizational Group. Each Organizational Group is also assigned an SPP staff member to act as secretary and keep appropriate minutes. Minutes are required to be posted within seven calendar
days following a meeting, but this is rarely accomplished.
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Appendix B – SPP – MISO
SIDE-BY-SIDE COMPARISON
SPP MISO Footprint
All or portions of 9 states…AR, KS, LA,
MO, ND, NM, OK, SD & TX
60,000 miles of transmission lines.
All or portions of 15 states
(reliability)…AR, IA, IL, IN, KY, LA,
MI, MN, MO, ND, SD, WI & Province
of Manitoba
65,800 miles of transmission
Corporate type SPP is organized as a 501(c)(6)… a “business league”
MISO is organized as a 501(c)(4), a
public welfare type of organization
Fuel mix 41.27% Coal 25.53% Gas 25% Renewables (wind/hydro)
8.20% Nuclear
40.59% Gas/Oil
39.65% Coal
12.28% Renewables
7.48% Nuclear
Employees ~600 professionals in one location ~900 professionals in four locations
RTO’s core task SPP’s core task is to deliver reliable energy
(no mention is made of low cost).
MISO’s core task is to deliver reliable
low-cost energy.
RTO 2016 Admin
Costs
36 cents/MWh 34 cents/MWh
Approach to
Independence
SPP is a vehicle for a consensus – it seeks the full agreement of its members on nearly every issue. SPP values member consensus as more important than efficiency
MISO prides itself on its objective
independence – it often takes actions it
deems best for its membership even
over member objection. MISO balances
member consensus with efficient,
timely operations
Stakeholder
Influence
SPP allows stakeholder participation, but
decisions are stacked in favor of the
founding TO members.
MISO allows stakeholders to participate
through their sectors and each sector’s
influence is equal, in theory.
Role of states &
state
organizations
The Regional State Committee (RSC) is an
arm of SPP and has no independent staff or
location. The Secretary of the RSC is the
General Counsel of SPP. While the RSC
does have some baked-in responsibility
(for cost-allocation and resource
adequacy), information is tightly
controlled. In the past, the RSC has
participated in closed, informal lunches
with the SPP Board.
The Organization of MISO States
(OMS) is an independent body with an
independent Executive Director, office
space and Staff. It has the ability to
gather information and make filings
independent of the RTO.
From CPUC Proceeding 16I-0816E Investigatory Proceeding of Mountain West Transmission Group
September 19, 2016 Page 14 of 17
SPP MISO State voting
rights
SPP States have authority over SPP’s cost-
allocation and resource adequacy policies,
but the States have no other voting
authority on other decisions. SPP tries to
keep them informed.
MISO states (OMS) are a sector and
have sector voting rights in all matters
Independence of
Management
SPP management generally assists
Members in coming to a recommendation
to the SPP Board, rarely taking a separate
position. Nearly all SPP decisions are run
through stakeholder groups at some point.
MISO management may or may not
come to the same decision as voted by
its Members. Depending on the nature
of the decision, MISO and the Members
may take the decision to the Board. If
decisions do not need to go to the Board
for approval, MISO mgmt. will decide
the issue
Openness of
Meetings
All Stakeholders may comment during all
SPP meetings, even during its Markets &
Operations Policy Committee (MOPC) and
Board Meetings.
During the Board’s decision-making
process (and generally during all Board
meetings,) only MISO, OMS and TO
Representatives may report to the Board
and answer questions but may not
discuss freely unless called upon to do
so. (The Board allows all attendees an
opportunity to comment at the
conclusions of Board meetings.)
Vision, Mission
& Culture
Statements
SPP states that its Vision is “Helping our
members work together to keep the lights
on, today and in the future.
SPP is about more than power. We’re
about the power of relationships.
SPP’s approach to business is not to do the
same thing our peers do cheaper, faster and
bigger. Instead, we focus on creating and
maintaining a unique culture in which our
staff and stakeholders can collaborate to be
as effective and efficient as possible.
SPP is a steward of our stakeholders’
resources, and endeavors to add value
wherever we can.
The MISO Vision is “To be the most reliable, value-creating RTO” Its Mission is to “work collaboratively and transparently with our stakeholders to enable reliable delivery of low-cost energy through efficient, innovative operations and planning.” MISO is an essential link in the safe, cost-effective delivery of electric power across all or parts of 15 U.S. states and the Canadian province of Manitoba. As a Regional Transmission Organization, MISO assures consumers of unbiased regional grid management and open access to the transmission facilities under MISO’s functional supervision.
From CPUC Proceeding 16I-0816E Investigatory Proceeding of Mountain West Transmission Group
September 19, 2016 Page 15 of 17
SPP MISO Formative
History
SPP was founded in 1941 when eleven
regional power companies pooled their
resources to keep Arkansas’ Jones Mill
powered around the clock in support of
critical, national defense needs.”
Several transmission owners recognized
the benefits of FERC’s vision to form
an independently operated regional
transmission system, voluntarily
coming together in 1998 to establish
MISO. FERC accepted MISO’s
organizational plan and initial
transmission tariff on Sept. 16, 1998,
then approved the MISO as the nation’s
first Regional Transmission
Organization (RTO) in December 2001.
On Dec. 15, 2001, MISO began
reliability coordination and regional
planning services, and initiated
procedures for regional planning,
generation interconnection,
maintenance coordination, market
monitoring and dispute resolution.
Strategic Plan
Foundation
The 2014 Strategic Plan introduces a
fourth foundational strategies:
1. Reliability Assurance:
2. Maintain an Economical, Optimized
Transmission System
3. Enhance and Optimize Interdependent
Systems
4. Enhance Member Value and
Affordability
(SPP’s Strategic Plan is generally updated
every three years, as needed.)
MISO's Strategic Plan is focused on
continually finding ways to provide the
least-cost delivered energy for all
customers through the following
strategic elements:
Facilitate integrated infrastructure
investment
Continue to deliver and communicate
benefits identified in MISO's Value
Proposition
Sustain and grow the membership
Enhance products and performance
Achieve high performance through
people, process and technology
Expand our role as an independent
public policy educator
From CPUC Proceeding 16I-0816E Investigatory Proceeding of Mountain West Transmission Group
September 19, 2016 Page 16 of 17
SPP MISO Value
Proposition
“We believe our value derives from a five-
faceted proposition that is central to our
strategy:
Relationship-based
Member-driven
Independence through diversity
Evolutionary, not revolutionary
Reliability and economics are inseparable”
“Value Delivered. Every Day. With
growing energy demands throughout
MISO's footprint, our services help
ensure reliable, least-cost delivered
energy. MISO’s Value Proposition
documents how we unlock billions in
annual benefits for the region. In 2015,
those efforts provided between $2.1
billion and $3.1 billion in regional
benefits, driven by enhanced reliability,
more efficient use of the region’s
existing transmission and generation
assets, and a reduced need for new
assets.
MISO’s Value Proposition affirms our
core belief that a collective, region-wide
approach to grid planning and
management delivers the greatest
benefits. Our landmark analysis serves
as a model for other grid operators and
transparently communicates the benefits
in everything we do.”
RTO cultivated
culture
SPP cultivates a stated culture of a
“stakeholder driven” process. SPP
generally provides stakeholders with
optional courses of action (including
scopes, timelines and costs) and
recommendations and then allows
stakeholders to choose the course and
timeline in helping develop the decision.
MISO cultivates a culture of seeking
input from stakeholders but making its
own independent decisions.
Reserve margin
calculation
SPP mandates that each member fulfill its
own non-coincident reserve margin
responsibility, which is generally higher
than the allocated system coincident
reserve margin requirement.
However, SPP recently lowered its reserve
margin from 13.6% to 12% which erased
some of the benefit enjoyed by MISO’s
Load. SPP stated that it will also be
considering further reserve margin
changes, including allowing Members to
MISO allocates reserve margin
responsibilities back to Load Serving
Members on a system coincident peak
and allows Members to fulfill their
obligations on a coincident basis, which
is generally lower than a non-coincident
basis. (Per statements by MDU
Resources, Inc. to this writer, this is a
significant benefit to MDU.)
From CPUC Proceeding 16I-0816E Investigatory Proceeding of Mountain West Transmission Group
September 19, 2016 Page 17 of 17
fulfill their reserve obligations on a system
coincident peak level.
SPP MISO State regulatory
structures and
RTO
participation
Homogenous—state jurisdiction over
siting/routing and IOU’s rates
States participate in the Regional State
Committee (RSC). The RSC is supported
by SPP staff. The RSC has jurisdiction
over cost allocation and resource adequacy
policies. The RSC has the Cost Allocation
Working Group (CAWG) to conduct
analysis for RSC. The CAWG is supported
by SPP staff and work is conducted as part
of SPP stakeholder process.
The RSC does not vote on anything but
cost allocation and resource adequacy.
More complex mix of state jurisdiction
over siting/routing and IOU’s rates with
open-access “Customer Choice” in IL
and MI (partially.) which
States participate in the Organization of
MISO States (OMS.) OMS has own
staff and staff subcommittees work
independently from MISO. States are
voting Advisory Committee members
and report directly to Board
Voting
consequences
SPP’s stakeholder culture considers
anything but a yes vote to be anomalous. If
a Stakeholder votes no they are asked to
provide their reasoning in writing to SPP
within a certain timeframe after the vote.
As a result, voting abstentions are
common.
Stakeholders do not hesitate to vote no
or abstain. They may or may not
explain the reasons for their vote during
the meeting. No further action is
required.
Highest
Stakeholder
committee groups
Markets & Operations Policy Committee
(MOPC): Made up of Executives of
Members and Directors: MOPC vets
tasks/projects addressed by Stakeholder
Committees/Working Groups and makes
recommendations to Board. MOPC does
not always concur with Stakeholder
groups.
Advisory Committee (AC): Made up of
representatives from the Sectors.
Members participate in the stakeholder
committees. The AC vets policy matters
and reviews decisions/recommendations
of Stakeholder Committees. AC
members generally participate in
stakeholder processes so are familiar
with topics and supports Committees
recommendations.
From CPUC Proceeding 16I-0816E Investigatory Proceeding of Mountain West Transmission Group