Title
Approval of the Fifth Revised Network Integration Transmission Service Agreement (NITSA) and Fifth Revised Network Operating Agreement (NOA) between Los Alamos County and Public Service Company of New Mexico
Recommended Action
I move that the Board of Public Utilities approve the Fifth Revised Network Integration Transmission Service Agreement and Fifth Revised Network Operating Agreement between Los Alamos County and Public Service Company of New Mexico and forward to County Council for final approval.
Utilities Manager Recommendation
The Utilities Manager recommends approval of the motion as presented.
Body
Public Service Company of New Mexico (PNM) provides transmission facilities to deliver power from the various generation resources owned by Los Alamos County, including all market purchases.
Los Alamos County entered into a Network Integrated Transmission Service Agreement (NITSA) and a Network Operating Agreement (NOA) with the Public Service Company of New Mexico in 2002 which was last revised in 2018 and approved by Board and Council.
The County-owned generation resources are; San Juan Generating Station, Abiquiu and El Vado Hydro Electric Generating Facilities. The County also has a life of the plant power purchase agreement (PPA) with Lincoln Electric for the Laramie River Station in Wheatland Wyoming and an allocation of Federal Hydro Power.
Power generated from these resources is delivered to Los Alamos over PNM’s transmission system. In the case of Laramie River Station, power is delivered over a Western Area Power Administration (WAPA) transmission line from Wyoming to NM before interconnecting with PNM’s transmission system. Abiquiu and El Vado power is delivered over Northern Rio Arriba electric cooperative (NORA) and Jemez Electric Cooperative transmission lines before interconnecting with PNM.
Electricity generated at power plants moves through a complex network of electricity substations, power lines, and distribution transformers before it reaches customers. The network structure of the interconnections helps maintain the reliability of the power system by providing multiple routes for power to flow and by allowing generators to supply electricity to many load centers. This redundancy helps prevent transmission line or power plant failures from causing interruptions in service.
These interconnections describe the physical system of the grid. The actual operation of the electric system is managed by entities called balancing authorities. PNM is the Balancing Authority for New Mexico. Most, but not all, balancing Authorities are electric utilities, (such as PNM) that have taken on the balancing responsibilities for a specific portion of the power system.
A Balancing Authority ensures, in real time, that power system demand and supply are finely balanced. This balance is needed to maintain the safe and reliable operation of the power system. If demand and supply fall out of balance, local or even wide-area blackouts can result.
Balancing Authorities maintain appropriate operating conditions for the electric system by ensuring that a sufficient supply of electricity is available to serve expected demand, which includes managing transfers of electricity with other Balancing Authorities in the region. Balancing Authorities are responsible for maintaining operating conditions under mandatory reliability standards issued by the North American Electric Reliability Corporation (NERC) <http://www.nerc.com> and approved by the U.S. Federal Energy Regulatory Commission (FERC) <http://www.ferc.gov/>. These operators monitor the grid to identify potential problems before a situation becomes critical.
Balancing Authorities provide numerous services but primarily provide scheduling, system control & dispatch, reactive supply & voltage control from generation sources, regulation and frequency response, energy imbalance and reliability re-dispatch services to maintain reliability of the bulk electric system.
Changes to the NITSA and NOA
There are three major reasons for the changes of our NITSA and NOA for this iteration.
1. Retirement of San Juan
LAC’s 7.2% share of output from Unit 4 of the San Juan Generating Station is being removed as an approved resource due to LAC’s exit from the participation agreement and possible shutdown/decommissioning.
2. Implementation of the EIM and reflecting OATT changes in the Network Operating
a. Schedule 2: Reactive Supply and Voltage Control from Generation Sources- PNM is no longer charging for reactive power.
- Secondary impact of PNM no longer charging for reactive power is the elimination all of the credits received for the Static Var Compensator. It was previously reduced due to transmission upgrades made by PNM and now is eliminated.
b. Schedule 3: Regulation and & Frequency Response- reference to the Open Access Transmission Tariff filed with the Federal Energy Regulatory Commission. Variable Cost related as the EIM is optimizing on an hourly basis.
c. Schedule 4: Energy Imbalance Service- reference to the Open Access Transmission Tariff filed with the Federal Energy Regulatory Commission. Variable Cost related as the EIM is optimizing on an hourly basis.
d. Clean up of legacy language on Schedule 5 & Schedule 6 removing language that referenced LAC’s self-supply of Operating Reserves (Spinning and Supplemental Reserves).
3. Formalize our relationship with LANL with regard to the 115 KV Transmission system.
- We have added delegation of DOE/NNSA staff on matters that pertain to interconnects and services as they are the owner and operator of the Transmission System.
Alternatives
If the County chooses not to accept PNM’s proposed changes LAC would find itself before the Federal Energy Regulatory Commission defending our position, with doubtful prospects of success. All of the changes proposed are referring to the PNM OATT already filed and approved with FERC.
Fiscal and Staff Impact
The reduction of 2 MW SVC Credit to 0 MW will result in a cost increase of approximately $72,000.00 on an annual basis. However, elimination of Schedule 2 will result in an approximate savings to LAC of $24,000.00. Staff does not feel that the EIM Changes for Schedule 3 and Schedule 4 are material as they are variable, and this process has been in place since April 1st of last year. The change recognizing DOE/NNSA’s ownership of the Transmission system is formalizing our existing arrangement with PNM and DOE/NNSA. There is no material staff implication or monetary implication with this addition.
Attachments
A - Fifth Revised NITSA between PNM and LAC
B - Fifth Revised NOA between PNM and LAC