Exhibit No. SPP-14 Docket Nos. RT04- ER04- UNITED STATES ...2 Research Advisory Committee. 3 Q....

Exhibit No. SPP-14 Docket Nos. RT04-____ ER04-____

UNITED STATES OF AMERICA BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

Southwest Power Pool, Inc. ) Docket Nos. RT04-____ ) ER04-____

DIRECT TESTIMONY OF RICHARD A. SPRING

ON BEHALF OF SOUTHWEST POWER POOL, INC.

Exhibit No. SPP-14 Docket Nos. RT04-____ ER04-____ Page 1 of 15

DIRECT TESTIMONY OF

RICHARD A. SPRING ON BEHALF OF SOUTHWEST POWER POOL, INC.

Q. Please state your name. 1

A. Richard A. Spring 2

Q. By whom are you employed and in what capacity? 3

A. Richard A. Spring, Vice President Transmission Services, Kansas City Power & 4

Light (KCPL), 1201 Walnut, Kansas City, MO 64106-9679. 5

Q. What are your duties and responsibilities in your current position? 6

A. Since 1999, I’ve served as Vice President of Transmission for Kansas City Power 7

& Light, and am intimately involved in the issues of transmission open access and 8

new wholesale market design. In addition, I am a member of the Wolf Creek 9

Nuclear Operating Corporation Owners Committee. 10

Q. Please describe your educational and professional qualifications and employment 11

history. 12

A. I have 26 years of experience in electric production for two investor-owned utilities 13

and have held several positions in operations, maintenance and engineering for coal 14

fired power plants. I have a bachelor’s degree in mechanical engineering from 15

Wichita State University and a master of business administration from Rockhurst 16

College. 17

I am a Board member of the Southwest Power Pool and chair the Strategic Planning 18

Committee. I am a member of the Edison Electric Institute’s Transmission Subject 19


Area Committee and Transmission Policy Task Force and a member of the EPRI 1

Research Advisory Committee. 2

Q. Please describe your involvement with the Southwest Power Pool (SPP). 3

A. KCPL is a Transmission Owning Member of SPP. Its transmission facilities are 4

under the SPP regional tariff. I have been directly involved with the SPP since 5

1999. I have been an SPP Board member since November 7, 2000 and serve as 6

Chair of the Strategic Planning Committee. 7

Q. What is the purpose of your testimony? 8

A. The purpose of my testimony is to provide an overview of the collaborative process 9

that has been underway within SPP since the point in time when a new SPP strategy 10

became a directive and a necessity. Following the mutual termination of the 11

planned merger of the SPP and the Midwest Independent Transmission Operator 12

(MISO) on March 20, 2003, the Chairman of SPP’s Board of Directors immediately 13

recognized a need for the organization to refocus its strategy, set a course to create 14

and find opportunities, and to develop a visible and positive strategic plan. As such, 15

on the day the merger terminated, the SPP Board created a Strategic Planning Task 16

Force (SPTF), setting forth the responsibilities of the task force and establishing its 17

membership. Exhibit No. SPP-15. I was named as co-chair of the SPTF. Since that 18

time, I have been involved on a continuous basis (often daily, or multi-daily 19

interactions); at no time since March 20, 2003 has there been a single regular work 20

week without my active participation in the evolving SPP strategy. 21

22


In this role I have interacted not only with the SPTF and SPP staff, but with the SPP 1

Board as a spokesman for the SPTF, the respective State Commission members and 2

staff in the formation stages of the Regional State Committee (with particular 3

emphasis on representatives of the Kansas Corporation Commission and the 4

Missouri Public Service Commission which regulates KCPL); the FERC, the 5

committees, working groups and task forces of the SPP (i.e. Finance Committee, 6

Regional Transmission Working Group, Transmission Definition Task Force), 7

members and non-members of the SPP and KCPL management. 8

9

I will review the collaborative activities involving the SPP Board of Directors, 10

SPTF, and the state regulatory agencies. This review is not intended to be an all-11

inclusive summary of the collaborative actions leading to SPP’s RTO filing. In that 12

regard, I note that Messrs. Brown and Marschewski address these and other areas of 13

collaboration that ultimately shaped SPP’s filing. 14

SPP Board of Directors 15

Q. Please provide the constituency of the current SPP Board of Directors. 16

A. The SPP Board of Directors is comprised of 21 members: seven Transmission 17

Owning members, seven Transmission Dependent members and seven Independent 18

Directors with the SPP President serving as one of the Independent Directors. 19

Exhibit No. SPP-16 provides the current SPP Board of Directors Roster. 20

Q. Describe the SPP Board actions since March 20, 2003. 21

1. On March 20, 2003, the SPP Board met in a brief teleconference. There was an 22

update on the SPP/MISO merger, including a summary of the actions taken on 23


this date by the MISO Board of Directors paralleling the actions of the SPP 1

Board effectively terminating the merger. The SPP Board was informed that the 2

SPP Chair had formed the Strategic Planning Task Force, provided a scope of 3

work for the group, identified those who would serve on the SPTF and the date 4

for its initial meeting. 5

2. On April 14, 2003, the SPP Board met to consider a report from the SPTF. The 6

SPTF commented and presented material concerning the principles upon which 7

their work was to be based which had been termed the SPP Value Proposition. 8

There was a review of SPP’s financial status, market functions, and industry 9

environment. The SPP Board heard the options considered by the SPTF in 10

setting a strategic direction, which included a renegotiation with the MISO, 11

other possible mergers, other organizational structures, geographical separation 12

of the organization, and a stand-alone SPP regional organization. Specific 13

comments were made by SPTF members on these topics: state involvement, 14

Order 2000 compliance, regional tariff, administrative processes (governance on 15

committee structures), and the regional reliability organization function. After 16

discussion and some modification to the SPTF recommendation, there was a 17

unanimous resolution to proceed with development of a Regional Transmission 18

Organization. 19

As evidence of the emphasis on state involvement, seven state regulatory 20

agencies were present including Commissioners from Arkansas, Oklahoma, 21

Kansas, Louisiana, Missouri, New Mexico, and Texas. Forty-nine persons were 22

in attendance, representing twenty-five members. 23


3. Again on June 24, 2003, the SPP Board met. While other items were heard and 1

acted upon as necessary, it was again the progress of the SPTF, which occupied 2

the most significant portion of the meeting. I reported on certain aspects of the 3

SPTF progress relying in part upon materials submitted to the SPP Board in 4

advance of the meeting. During this meeting the SPP Board: 1) considered 5

detailed revisions to the SPP committee structure including the scoping 6

documents for the newly formed committees, 2) considered a recommendation 7

to rename the SPTF the Strategic Planning Committee (SPC) and to make the 8

SPC a permanent committee, 3) was asked to accept to the Market 9

Implementation Plan as proposed by the Congestion Management Systems and 10

Market Settlement Working Groups. The SPP Board reviewed proposed changes 11

to the SPP membership assessment philosophy and looked forward to a 12

timetable for recognition as an independent regional transmission organization. 13

Importantly, the SPC recommended a change in the governance from that which 14

they had proposed on April 14, 2003 in recognition of a greater emphasis upon 15

the independence of the SPP Board and a re-emphasis on the need for state 16

involvement on this issue. After discussion and modification to the SPC 17

recommendations, the substance of the SPC recommendations was approved 18

with two votes in opposition and one abstention. Sixty-three persons were in 19

attendance, representing twenty-one members. Representatives from the State 20

Commission staff of Missouri, Arkansas, Oklahoma, and Kansas attended in 21

person or by phone. 22


4. On August 26, 2003, the SPP Board met, and I introduced the SPC comments, 1

report and recommendations. There were four recommendations: 1) Approve 2

the modified SPP Bylaws and Membership Agreement, 2) Authorize the SPP 3

staff to file an application seeking recognition as a regional transmission 4

organization as soon as practicable, 3) Approve transition to the new governance 5

structure by which SPP’s non-stakeholder directors become the SPP Board of 6

Directors and the stakeholder directors become the SPP Members Committee, 4) 7

Accept the form of a seams agreement for inclusion in the filing and authorize 8

SPP staff to immediately begin negotiations with neighboring entities on specific 9

agreements. Following discussion, including several minor changes to the SPC 10

recommendation and a significant change to withhold approval of the 11

governance language as proposed, the SPC recommendations were approved 12

with one vote in opposition. The governance language issues were raised by the 13

States, over what has been termed jurisdictional shift, which could be initiated 14

by this proposed filing, and the role of the RSC within SPP. All parties (SPP, the 15

States, and the FERC staff) were agreeable to working expeditiously toward a 16

resolution of this issue. Fifty-four persons were in attendance, representing 17

twenty-two members and five State Commissions. 18

19

5. On September 22, 2003, the SPP Board met on a teleconference, and I presented 20

the recommendation of the SPC concerning the continuation of efforts with the 21

states on Bylaw language as well as two other matters (modification of the 22

implementation plan for the energy imbalance market and specific language 23


dealing with the special circumstances surrounding the continued participation 1

of the Southwestern Power Administration, supra). The SPP Board also heard a 2

joint report from the Market Working Group and Business Practices Working 3

Group, and a report from the Finance Committee. The recommendation on the 4

assessment and tariff schedule to be implemented on October 1, 2003 was 5

passed unopposed with some administrative changes to the SPC’s 6

recommendation. At this meeting, eighteen members of the SPP Board were in 7

attendance and seven member guests, a Commissioner and two members of the 8

Arkansas Public Service Commission staff, two representatives of the Kansas 9

Corporation Commission staff, and two representatives of the Oklahoma 10

Corporation Commission staff also attended the conference call. 11

6. The SPP Board met via teleconference on the afternoon of October 1, 2003. 12

This meeting involved the discussion of options for the specific language to be 13

included in the SPP Bylaws, related to the role of the Regional State Committee. 14

Alternatives included a definitive and descriptive role for the State Commissions 15

as compared to more general language. The SPC recommended the adoption of 16

the general language for presentation to the SPP Board on October 28, 2003, 17

while agreeing to continue to work with the States on more specific language. In 18

attendance at this meeting were fifteen members of the SPP Board, three 19

additional member guests, Chairman of the Oklahoma Corporation Commission, 20

and three SPP staff members. 21

Q. Were minutes of these SPP Board meetings recorded and made publicly available? 22

A. Yes, they are included as Exhibit No. SPP-17. 23


Strategic Planning Task Force or Strategic Planning Committee 1

Q. Please provide the constituency of the Strategic Planning Committee. 2

A. There are nine members of the Strategic Planning Committee (formerly known as 3

the Strategic Planning Task Force): four representatives of the Transmission 4

Owning members, four Transmission Using members and the SPP President. Two 5

SPP staff members, Carl Monroe and Nick Brown (also witnesses in this 6

proceeding), were named as facilitators to the SPC at the time the committee was 7

formed and continue in that role. Exhibit No. SPP-18 is the roster for the SPC. 8

Q. Describe the areas of primary emphasis for the SPC. 9

A. 1. SPP Value Proposition – An early focus of the SPC was on what we have called 10

the Value Proposition, or the SPP difference, which are the values and/or 11

principles that sets SPP apart from other regional entities. Those values are: 12

• Relationship Based – in 1941 the Southwest Power Pool was formed by 13

eleven utilities located in seven states to meet a critical electric need during 14

World War II. This was done with a minimum of formality, as suited the 15

circumstances, and continued much more on the needs of the interstate 16

transmission system and its members and their relationships than the more 17

formal contracts that exist today. SPP still builds heavily upon these 18

interdependencies, albeit with a substantially greater formality due to 19

increased legal and regulatory requirements. 20

• Member Driven – the broad-based SPP committee structure, working 21

groups and ad-hoc task forces are the source of SPP’s success. Over two 22


hundred persons are involved in these groups, which are staffed with 1

particular emphasis on membership diversity and regulatory involvement. 2

It is this critical membership support that allows SPP the ability to minimize 3

its staff size and to operate at the highest level of efficiency. 4

• Independence Through Diversity – The diversity of SPP’s membership and 5

the independent, objective decision-making processes proposed by SPP 6

ensure that SPP’s transition to a recognized Regional Transmission 7

Organization will be as seamless as possible. Certainly, this filing in terms 8

of governance, the role of the States, and the revisions to the committee 9

structure will build on SPP’s many years of experience as the region’s 10

independent security coordinator, reliability council, and provider of 11

regional open access transmission service to facilitate the transition to 12

formal RTO status. 13

• Reliability & Economic/Equity Issues Inseparable – SPP prides itself on 14

being the only regional transmission organization that contains the 15

reliability function. That too has historic significance dating back to 1968. 16

Today, SPP monitors the real-time flow of information across its footprint. 17

It also institutes line loading relief and curtailment or the redispatch of 18

generation when required to protect regional reliability. Within SPP, 19

reliability and economic issues are inseparable. 20

• Evolution, not Revolution – SPP has evolved over more than sixty years 21

and this filing is further evidence. The approach that we submit in this 22


filing is a measured, steady one; guided by need, experience, and 1

economics. 2

2. Organizational Options – As mentioned, the SPC considered several 3

organizational options in the initial phases of its work, including possible 4

mergers or strategic alliances; formation of an independent transmission 5

company (“ITC”); and a stand-alone regional transmission organization. The 6

pros and cons of each option were evaluated in the context of regulatory 7

expectations, the SPP Value Proposition, geography, and practicality. 8

Discussion led to a recommendation to the SPP Board to proceed with the 9

development of an RTO proposal and ultimately this filing. 10

3. Governance – Without question, this subject has occupied the majority of the 11

SPC’s time and effort. The initial SPC plan, which had been adopted by the 12

SPP Board, would have preserved the current SPP Board structure. This 13

governance structure was later determined not to meet the expected 14

independence requirements of FERC. So by late June other options were under 15

consideration. 16

17

The five governance options under consideration and their evaluation criteria 18

are shown on Exhibit No. SPP-19. The SPC reviewed these options with the 19

knowledge that States participating in the proposed Regional State Committee 20

formation had advised SPP on July 2, 2003 that their preferred role with respect 21

to the SPP Board was to have active participation without having an actual 22


Board vote. As a result, Option D, Non-Stakeholder SPP Board with 1

Management Committee Participation, became the recommended option. 2

3

Progress toward full development and adoption of this recommendation moved 4

smoothly until mid-August, 2003 when representatives from the proposed 5

Regional State Committee expressed concern in two areas: implications of 6

FERC’s White Paper with respect to the role and authority of the Regional State 7

Committee on specific issues, i.e. participant funding, congestion management; 8

and the jurisdictional shift question that I mentioned earlier. These issues 9

continued to generate significant concern and discussion, and the SPP Board 10

agreed to withhold approval of those sections of the Bylaws that deal with these 11

topics until a resolution could be reached between SPP and the emerging the 12

Regional State Committee. 13

. 14

4. SPP Committee Structure – SPP’s existing organization group structure was 15

reviewed. A proposal evolved from this review that included the addition of 16

four groups: Strategic Planning Committee, Operation Model Development, 17

Business Practices and Critical Infrastructure Protection Working Groups. Four 18

groups are to be deleted from the current structure: Scheduling Task Force, 19

Ancillary Services Task Force, Black Start Task Force, and the Control Area 20

Implementation Task Force. The Commercial Practices Committee and the 21

Engineering & Operating Committee are to be combined into the Operations 22

Policy Committee. The Market Settlement Working Group and Congestion 23


Management Systems Working Group are to be combined into the Markets 1

Working Group. These changes as recommended and adopted by the SPP 2

Board are shown as Exhibit No. SPP-20. Subsequent to SPP Board approval, 3

these changes were implemented. 4

5. Revisions to SPP’s Bylaws and Membership Agreement; development of a pro 5

forma seams agreement – The SPC, SPP members, and the Regional State 6

Committee representatives have spent considerable time drafting the proposed 7

Bylaws, Membership Agreement (including the form of an agreement for 8

independent transmission company participation), and the form of a seams 9

agreement. These documents have been offered as exhibits by Mr. Brown and 10

Mr. Monroe. 11

Q. What process has been followed to support the openness of the SPC deliberations? 12

A. As with the SPP Board meetings, all meetings of the SPC have been noticed to the 13

SPP members and noticed on the SPP website. Any interested party could 14

participate in these meetings in person or via teleconference. There have been 15

fifteen meetings of the SPC during the period from April 3, 2003 to present. Five of 16

the meetings were two days in length each, there have been eight telephone or 17

netconference meetings and two one-day meetings. Guests participating in the 18

meetings included Independent SPP Directors, SPP members, State Commission 19

representatives and vendors. On July 22, 2003, SPP staff hosted a netconference to 20

review the proposed revisions to SPP’s Bylaws, Membership Agreement, the form 21

of an agreement for ITC participation, and the form of a seams agreement. In 22

addition to this netconference, written comments on the proposed documents were 23


received, classified, and redistributed to the SPP Members prior to final 1

development of the SPC recommendation to the SPP Board. 2

Q. Were minutes of the SPC meetings recorded and made publicly available? 3

A. Yes, they are attached as Exhibit No. SPP-21. 4

Regional State Committee (RSC) 5

Q. Please provide some insight into the involvement of the State Commissions in the 6

development of this RTO filing. 7

A. While there has been a long standing relationship between the State Commissions, 8

SPP, and its Members, those interactions increased during the SPP/MISO merger 9

proceedings and moved to an even greater level of coordination and communication 10

as SPP began preparation of its strategic plan following the merger termination. 11

12

SPP has been an invited participant in some twelve meetings of the States. Most of 13

these meetings have been teleconferences, which have generally followed a weekly 14

schedule. Of the eight State Commissions in the SPP footprint there has been 15

participation by all Commissions with the exception of one. While many of the 16

weekly discussions involved the States and SPP staff only, there have been 17

teleconferences involving the SPC. The SPC met with the States on August 25, 18

2003 in Kansas City, the day before the SPP Board meeting which adopted all of the 19

recommendations of the SPC necessary for an RTO filing with the exception of 20

language on the proposed Regional State Committee’s participation. 21

Members of the SPP staff and SPC have had numerous individual contacts with 22

State Commissioners and their staffs on the essential elements of SPP’s current 23


filing. State Commission staff personnel have actively participated in SPP 1

committee and task force deliberations that have been undertaken and are ongoing. 2

Q. Describe the pre-filing efforts of SPP and the States with the FERC. 3

A. I joined other members of the SPC in meetings with FERC Commissioners on April 4

22, 2003 to discuss SPP’s strategic plan. Then on June 6, 2003, representatives of 5

the States and SPP met with FERC Commissioners and staff in Atlanta in 6

conjunction with the SeTrans Region White Paper Technical Conference. This was 7

an important meeting in terms of initiating a change to the SPC recommendation 8

concerning SPP Board governance. On August 5, 2003 I again joined other SPC 9

representatives meeting with FERC Commissioners and Senior FERC staff 10

reporting on the progress made by SPP since the Atlanta meeting with an emphasis 11

on the changes to SPP governance and independence of the SPP Board. There was 12

discussion of topics to be covered in the filing, plans to not file Section 203 13

applications with the filing, and the applicability of earlier SPP market development 14

efforts. On August 22, 2003 another pre-filing conference was held in Washington 15

with many of the principals of SPP, the States, and the FERC involved. Again as 16

with other aspects of this effort, the informal dialogue between SPP and the state 17

and federal regulators contributed to many aspects of SPP’s current filing. 18

Conclusion 19

Q. Please summarize your view of the openness and participation of the parties 20

leading to this filing? 21

A. This filing is the culmination of an extended, deliberative process. I have not done 22

an exhaustive search of the records, but have done a reasonable review to ascertain 23


that SPP has directly conducted some 90 meetings or teleconferences since the 1

effort to develop and implement a new SPP strategy was undertaken on March 20, 2

2003. This is indicative of the formal opportunities for participation and not 3

indicative of the informal discussions, hundreds of telephone calls, and email 4

exchanges which must number in the thousands. Certainly, in my opinion this has 5

been an appropriate, fair, and reasonable approach to obtain the review and input of 6

every interested person or entity. 7

Q. Does this conclude your testimony? 8

A. Yes. 9

10

11

Exhibit No. SPP-15 Docket No. RT04-___

ER04-___ Southwest Power Pool

STRATEGIC PLANNING TASK FORCE

Scope March 18, 2003

Background At its March 12, 2003 meeting the SPP Board of Directors took action to pursue mutual termination of a merger with the Midwest Independent Transmission System Operator (MISO). It is expected that the MISO Board of Directors will take similar action at it’s March 20, 2003 meeting. Given this change of events and the current industry environment, SPP Board of Directors chair, Al Strecker (OKGE), formed the Strategic Planning Task Force reporting to the Board of Directors. Resonsibilities The Strategic Planning Task Force (SPTF) is charged with a complete review of the SPP organization considering the current industry environment and making appropriate recommendations to the Board of Directors. An initial report is expected at the April 14, 2003 meeting of the Board of Directors. The SPTF expects to formulate a strategic plan for SPP over the next several months. Roster The SPTF is co-chaired by Dick Dixon (Westar) and Richard Spring (KCPL) and also includes the following members: John Marschewski (SPP), Trudy Harper (Tenaska), Mel Perkins (OKGE), Ricky Bittle (AREC), Michael Desselle (AEP), Dave Christiano (SPRM), Michael Gildea (DENA). Nick Brown and Carl Monroe of the SPP staff will jointly facilitate the group’s activities.



Board of Directors

Mr. Gene Argo Midwest Energy, Inc.

Mr. David Chrisiano City Utilities of Springfield, MO

Mr. Harry Dawson Oklahoma Municipal Power Authority

Mr. Michael A. Deihl Southwestern Power Administration

Mr. Richard A. Dixon Westar Energy

Mr. Jim Eckelberger Independent Director

Mr. Michael Gildea Duke Energy Trading & Marketing

Ms. Trudy Harper Tenaska Power Services Co.

Mr. Quentin Jackson Nuclear Electric Insurance Ltd.

Mr. John Marschewski Southwest Power Pool

Mr. Tom J. McDaniel Independent Director

Mr. Stephen Parr Kansas Electric Power Coop.

Mr. Harry I. Skilton Independent Director

Mr. Richard Spring

Kansas City Power & Light Company

Mr. Al Strecker OG+E Electric Services

Mr. Larry Sur Independent Director

Mr. Richard Verret American Electric Power

Mr. Gary Voigt Arkansas Electric Cooperative Corporation

Mr. Walter Yeager Cinergy Corporation



BOARD OF DIRECTORS MEETING Hilton Hotel – Kansas City Airport – Kansas City, MO

June 24, 2003

- Summary of Action Items -

1. Approved minutes of the April 14, 2003 meeting with one correction.

2. Approved Independent Auditor’s Report prepared by Deloitte & Touche.

3. Approved Strategic Planning Task Force recommendations as amended.

4. Approved 2003 Proposed Administrative Budget

5. Approved the EBWG recommendation: 1) changing the trustees for the SPP Savings Plan in Section T (1)”Investment” of the plan document to President and Senior Vice President and Corporate Secretary; 2) modifying the loan administrator to Manager, Accounting and Human Resources Generalist II in Section T (1) (b) (iii).

6. Approved the EBWG recommendation: the 2003 funding of $836,662 for the SPP Retirement

Plan and $386,306 for the retiree medical benefit for all SPP employees.


ER04-___ MINUTES NO. 85 Southwest Power Pool BOARD OF DIRECTORS MEETING Hilton Hotel – Kansas City Airport – Kansas City, MO

June 24, 2003

TUESDAY Agenda Item 1 - Administrative Items SPP Chair Mr. Al Strecker called the regular meeting to order at 10:01 a.m., thanked everyone present for attending and referred to the agenda (Agenda – Attachment 1). Mr. Strecker then called for a round of introductions. The following Board members were in attendance or represented by proxy: Mr. Gene Argo, Midwest Energy, Mr. Gary Voigt, Arkansas Electric Cooperative Corp.,

Mr. David Christiano, City Utilities of Springfield, MO, Mr. Harry Dawson, Oklahoma Municipal Power Authority Mr. Mr. Richard Verret, American Electric Power, Mr. Michael Deihl, Southwestern Power Admin., Mr. Dick Dixon, Westar Energy, Mr. Jim Eckelberger, independent director, also proxy for Mr. Quentin Jackson, independent director Ms. Trudy Harper, Tenaska Power Services Company, Mr. Mike Gildea, Duke Energy

Mr. Stephen Parr, Kansas Electric Power Coop., Mr. John Marschewski, Southwest Power Pool, Mr. Tom McDaniel, independent director

Mr. Gary Roulet, proxy for J. M. Shafer, Western Farmers Electric Cooperative, Mr. Harry Skilton, independent director, Mr. Richard Spring, Kansas City Power & Light, Mr. Al Strecker, OG+E,

Mr. Larry Sur, independent director Mr. Walt Yeager, Cinergy Services There were 63 persons in attendance representing 21 members (Attendance List - Attachment 2). Two proxy statements were received by the Secretary (Proxies - Attachment 3). Mr. Strecker referred to draft minutes of the April 14, 2003 Meeting (4/14/03 Meeting Minutes - Attachment 4) and asked for necessary corrections or a motion for approval. Mr. Yeager pointed out that he and Mr. Gildea were both present at the April 14, 2003 Board of Directors meeting, but were omitted from the minutes. Mr. Skilton motioned that the minutes be approved as modified. Mr. Sur seconded this motion, which passed unopposed. Agenda Item 2 – Audit Report Mr. Strecker asked Mr. Skilton to give the Audit Report. Mr. Skilton referred to the Independent Audit Report prepared by Deloitte & Touche LLP (Audit Report – Attachment 5). Mr. Skilton stated that the Finance Working Group had met with the auditors earlier in the day, for the first time. Mr. Skilton then asked Mr. Tom Dunn (SPP) and Mr. Keith Conine (Deloitte & Touche) to respond to several questions posed with regard to the independence of the auditors. After some discussion, Mr. Skilton moved that the Audit Report be accepted as presented. Mr. McDaniel seconded this motion, which passed unopposed. Agenda Item 3 – Strategic Planning Task Force Report Mr. Strecker than asked Mr. Spring to present the Strategic Planning Task Force Report. Mr. Spring referred to the Strategic Plan (Strategic Plan- Secondary Report– Attachment 6) and gave a brief background of the SPTF and an update on their activities then asked Mr. Brown to continue (SPTF Slides – Attachment 7). Mr. Brown reviewed the SPTF roster recognizing the diversity of the group. He emphasized SPP’s Value Proposition as being relationship based, member driven, independence through diversity of Board and Committee membership, reliability and economic/equity issues inseparable and evolution, not revolution. Mr. Brown talked in some detail about the Strategic Plan and then asked Mr. Dixon to present the SPTF recommendations to the Board of Directors as follows:


ER04-___ SPP Board of Directors Minutes July 24, 2003

3

• Accept the proposed revisions to the committee structure of the organization and the related scope documents for newly formed committees/groups effective immediately; direct that the inaugural members of the new Strategic Planning Committee include those current members of the Strategic Planning Task Force; accept the revisions to Section 5 of the SPP Bylaws necessary to effect the re-organization of the committees/working groups effective immediately; and, direct that SPP’s remaining organizational groups review their scope statements and present any necessary modifications for Board of Directors consideration at the November 2003 meeting

• Accept the Market Implementation Plan as proposed by the Congestion Management Systems and Market Settlement Working Groups and the SPTF as the approach for SPP to become compliant with FERC Order 2000.

• Accept the proposed changes in the methodology SPP utilizes to assess its membership for operating and capital expenses effective July 1, 2003 and January 1, 2004 as proposed, and the requisite revisions to Section 7 of the SPP Bylaws to effect these changes.

• Accept that SPP governance affirmed at the last Board meeting does not meet the expected requirements of independence expressed by FERC and directs the SPTF to submit further governance recommendations, including bylaw changes, to the Board in August recognizing the need to maintain the current level of stakeholder input at all Board meetings. The SPTF will include active state involvement in the development of these recommendations; and

• Accept that FERC recognition as an independent regional organization is needed as soon as possible and direct the SPTF to prepare necessary filing documents for Board of Directors consideration at the August 26, 2003 meeting.

Before taking action on the SPTF recommendations, Mr. Strecker asked Mr. Skilton to give a FWG report (FWG Slides – Attachment 8) on the Repayment of Tariff Fee Shortfall. Mr. Skilton spoke briefly on the methods to refund to the membership accrued overpayments then asked Mr. Dunn to discuss the repayment of member overpayments. Mr. Dunn presented an overview along with pros and cons to the FWG recommendation that the Board of Directors approve for SPP to arrange sufficient financing to fully repay the accrued member overpayments. After much discussion, Mr. Skilton moved and Ms. Harper seconded, that the FWG recommendation be tabled. The recommendation was later withdrawn as not necessary following considerable discussion as to the method to make the repayment. Alternative methods of repayment will be recommended for consideration at a later date. Discussion resumed on the SPTF recommendations. Mr. Christiano moved that the SPTF recommendations be approved. Mr. Dawson seconded this motion for purposes of discussion. Mr. Dawson suggested the following amendment to bullet item #3:

Amendment: delete “proposed” in first sentence. Insert “the earlier of” after “effective”. Insert after “2004”, “or conditional approval by FERC of RTO/ISO status of the SPP”.

Mr. Dawson motioned that the amendment be accepted. Mr. Roulet seconded this motion. Mr. Argo called for the question. The motion failed. Mr. Dixon suggested the following amendment to bullet item #3 as a compromise and aid in the decision of potentially departing members:

Amendment: Insert “October 1, 2003 and” before “January”. Mr. Dixon motioned that this amendment be approved. Mr. Voigt seconded this motion.It was approved with five opposed (Mr. Parr, Mr. Spring, Mr. Roulet, Mr. Desselle and Mr. Dawson).



4

Mr. Dawson then suggested the following amendment be made to bullet item #4 concerning governance: Amendment : Replace “does” with “may”. Insert “including the pros and cons of the various governance methods” after “meetings”. Passed, 1 against.

Mr. Dawson moved that this amendment be approved. Mr. Desselle seconded this motion, which passed with Mr. Sur opposing. After discussion, the question was called on the main motion to approve the SPTF recommendations as amended. The recommendations were approved with two opposed (Mr. Desselle and Mr. Parr) and one abstention (Mr. Dawson). Agenda Item 4 – Finance Working Group - 2003 Proposed Administrative Budget Mr. Strecker then asked Mr. Skilton and Mr. Dunn to present the Finance Working Group report on the 2003 Administrative Budget. Mr. Dunn reviewed the 2003 Proposed Administrative Budget - Revised Executive Summary (Executive Summary – Attachment 9). Mr. Skilton moved that the 2003 Proposed Administrative Budget be approved as presented. Mr. Eckelberger seconded this motion, which passed unopposed. Agenda Item 5 – Nominating Task Force Report Mr. Strecker then asked Mr. Christiano to present the Nominating Task Force Report. There was discussion as to whether or not a search firm should be hired to find candidates to fill the independent director position. To date, several Board members have offered suggestions as to potential candidates. Discussion continued as to what skills might be needed as SPP moves forward. Given pending discussions and possible changes to the governance structure of the Board, the Nominating Task Force is suspending efforts to fill current vacancies. Agenda Item 5 – Employee Benefits Working Group Report Mr. Strecker then asked Mr. Eckelberger to give the Employee Benefits Working Group report. Mr. Eckelberger referred to the (EBWG Report - Attachment 10) recommending changes to the SPP Savings 401(k) Plan. After brief discussion, Mr. Eckelberger moved that the Board of Directors approve the following EBWG recommendation: 1) changing the trustees for the SPP Savings Plan in Section T (1)”Investment” of the plan document to President and Senior Vice President and Corporate Secretary; 2) modifying the loan administrator to Manager, Accounting and Human Resources Generalist II in Section T (1) (b) (iii). Mr. Dawson seconded this motion, which passed unopposed. Mr. Eckelberger also presented a report on 2003 Annual Expenses for SPP Retirement Plan and Retiree Medical Benefit. Mr. Eckelberger moved that the Board of Directors approve the EBWG recommendation to approve the 2003 funding of $836,662 for the SPP Retirement Plan and $386,306 for the retiree medical benefit for all SPP employees. Mr. Dawson seconded this motion, which passed unopposed. Adjournment The Board of Directors agreed to a next meeting on Tuesday, August 26 in Kansas City, MO at a place to be determined from 10 a.m. until 3 p.m. Mr. Strecker then asked Mr. Marschewski to make a presentation. Mr. Marschewski asked Mr. Royster to step forward and be recognized for his over 23 years of service to Southwest Power Pool. Mr. Marschewski presented Mr. Royster with a Resolution (Resolution – Attachment 11) from the SPP Board of Directors expressing their gratitude to him and wishing him well in his retirement.



5

Mr. Strecker thanked everyone for their participation and at 2:40 p.m. excused all non-board members from the room in order for the Board of Directors to continue in Executive Session. Nicholas A. Brown, Corporate Secretary


ER04-___

Southwest Power Pool BOARD OF DIRECTORS MEETING Embassy Suites – Kansas City Airport – Kansas City, MO

August 26, 2003


1. Approved minutes of the June 24, 2003 meeting as distributed.

2. Approved the four SPC Recommendations (including the proposed changes below) except section 5.2 of the SPP Bylaws (and any additional related sections for Bylaws and Membership Agreement needed for State jurisdictional issues) and not file until these issues are resolved or 9/30/03 whichever is earlier. • Section 3.13.2 Bylaws from “6” to “7” persons. • Section 4.2.2 b Membership Agreement change “paid” to “incurred” • SPP Board directs the SPC to work with the states and FERC to resolve section 5.2 of the

Bylaws and related proposed additional sections.

• Recommendation 1: Approve the attached modifications to the SPP Bylaws and Membership Agreement (including the attachment providing a form of an agreement for independent transmission company participation) for filing with FERC in an application for recognition as a regional transmission organization. The documents are to become effective on the first day of the calendar month occurring between the 30th day and 60th day following a final FERC order recognizing SPP as a regional transmission organization.

• Recommendation 2: Authorize the Staff to file an application with FERC as soon as

practicable seeking SPP recognition as a regional transmission organization pursuant to FERC Order 2000, and to make necessary corrections and formatting changes to the governing documents subject to review of the SPC.

• Recommendation 3: Approve a transition to the new governance structure by which

SPP’s non-stakeholder Directors become the Board of Directors and the stakeholder Directors become the Members Committee, all carrying forward their current terms.

• Recommendation 4: Accept the attached form of a seams agreement for inclusion in the FERC filing, and authorize the SPP Staff to immediately begin negotiations with neighboring entities on specific agreements pursuant to this form.


ER04-___ MINUTES NO. 86 Southwest Power Pool BOARD OF DIRECTORS MEETING Embassy Suites – Kansas City Airport – Kansas City, MO

August 26, 2003

TUESDAY Agenda Item 1 - Administrative Items SPP Chair Mr. Al Strecker called the regular meeting to order at 10:02 a.m., thanked everyone present for attending and referred to the agenda (Agenda – Attachment 1). Mr. Strecker stated that Agenda Items 3 and 5 would be combined and reports given later in the meeting. Mr. Strecker then called for a round of introductions. The following Board members were in attendance or represented by proxy: Mr. Gene Argo, Midwest Energy, Mr. Gary Voigt, Arkansas Electric Cooperative Corp.,

Mr. David Christiano, City Utilities of Springfield, MO, Mr. Harry Dawson, Oklahoma Municipal Power Authority Mr. Mr. Michael Desselle, proxy for Richard Verret, American Electric Power, Mr. Michael Deihl, Southwestern Power Admin., Mr. Dick Dixon, Westar Energy, Mr. Jim Eckelberger, independent director,

Mr. Quentin Jackson, independent director, Ms. Trudy Harper, Tenaska Power Services Company,

Mr. Stephen Parr, Kansas Electric Power Coop., Mr. John Marschewski, Southwest Power Pool, Mr. Tom McDaniel, independent director, via teleconference

Mr. Gary Roulet, Western Farmers Electric Cooperative, Mr. Harry Skilton, independent director, Mr. Richard Spring, Kansas City Power & Light, Mr. Al Strecker, OG+E,

Mr. Larry Sur, independent director, via teleconference There were 54 persons in attendance representing 22 members (Attendance List - Attachment 2). One proxy statement was received by the Secretary (Proxy - Attachment 3). Mr. Strecker referred to draft minutes of the June 24, 2003 Meeting (6/24/03 Meeting Minutes - Attachment 4) and asked for necessary corrections or a motion for approval. Mr. Dawson motioned that the minutes be approved as distributed. Mr. Skilton seconded this motion, which passed unopposed. Agenda Item 2 – Nominating Task Force Report Mr. Strecker asked Mr. Christiano to give the Nominating Task Force Report. Mr. Christiano referred to the Nominating Task Force Report (Nominating Task Force Report – Attachment 5). Mr. Christiano stated that the departure of J. M. Shafer, Western Farmers, left a vacant transmission owner seat on the Board of Directors as well as a vacant vice chair position. Mr. Christiano stated that the Nominating Task Force and Chair of the Board of Directors are responsible for submitting a nomination and as such nominates to the Board of Directors Gary Roulet to fill the vacant transmission owner seat on an interim basis until the next meeting of members, and Jim Eckelberger for vice chair. Hearing no other nominations, the Board of Directors elected Gary Roulet to serve on the Board of Directors on an interim basis and elected Jim Eckelberger as vice chair of the Board of Directors. Agenda Item 3 – Strategic Planning Committee Report Mr. Strecker then asked Mr. Spring to present the Strategic Planning Committee (SPC) Report. Mr. Spring referred to the SPC Report and Recommendations to the Board of Directors (SPC Report & Recommendations– Attachment 6), gave a brief background and updated the Board of Directors on the work of the SPC resulting in this report and recommendations along with the supporting draft documents (SPC Slides – Attachment 7). Mr. Spring then presented the SPC recommendations to the Board of Directors as follows:


ER04-___ SPP Board of Directors Minutes August 26, 2003

3

• Recommendation 1: Approve the attached modifications to the SPP Bylaws and

Membership Agreement (including the attachment providing a form of an agreement for independent transmission company participation) for filing with FERC in an application for recognition as a regional transmission organization. The documents are to become effective on the first day of the calendar month occurring between the 30th day and 60th day following a final FERC order recognizing SPP as a regional transmission organization.

• Recommendation 2: Authorize the Staff to file an application with FERC as soon as

practicable seeking SPP recognition as a regional transmission organization pursuant to FERC Order 2000, and to make necessary corrections and formatting changes to the governing documents subject to review of the SPC.

• Recommendation 3: Approve a transition to the new governance structure by which

SPP’s non-stakeholder Directors become the Board of Directors and the stakeholder Directors become the Members Committee, all carrying forward their current terms.

• Recommendation 4: Accept the attached form of a seams agreement for inclusion in the FERC filing, and authorize the SPP Staff to immediately begin negotiations with neighboring entities on specific agreements pursuant to this form.

After the recommendations were presented, Mr. Eckelberger referred to the Bylaws Section 3.13.2 and suggested a change from “6” to “7” persons. He then referred to the Membership Agreement Section 4.2.2 (b) and suggested changing the word “paid” to “incurred”. Chairman Hochstetter of the Arkansas Public Service Commission proposed that the Regional State Committee (RSC) Section 5.0 of the Bylaws be held pending further language being submitted by the states. Following addition discussion, Mr. Dixon motioned that the Board of Directors approve the four Recommendations (including the proposed changes below) of the SPC except section 5.2 of the SPP Bylaws (and any additional related sections for Bylaws and Membership Agreement needed for State jurisdictional issues) and not file until these issues are resolved or 9/30/03 whichever is earlier.

• Section 3.13.2 Bylaws from “6” to “7” persons. • Section 4.2.2 b Membership Agreement change “paid” to “incurred” • SPP Board directs the SPC to work with the states and FERC to resolve section 5.2 of the

Bylaws and related proposed additional sections. Mr. Christiano seconded this motion which passed with one vote in opposition (Mr. Dawson). Agenda Item 4 – Operations Report Mr. Strecker then asked Mr. Monroe to give the Operations Report. Mr. Monroe presented slides reviewing the 2003 Operational Highlights as well as slides documenting the events of August 14, 2003 (Operations Report – Attachment 8). Agenda Item 3 & 5 – Finance Working Group Report and Tariff Fee Recommendation Mr. Strecker then asked Mr. Skilton and Mr. Dunn to give the Finance Working Group Report (Tables – Attachment 9). Mr. Dunn referred to the Staff report and recommendation on Assessment and Tariff Schedule 1 Rates (Staff Report – Attachment 10). After some discussion, it was determined that no vote would be taken on the recommendation at this time.


ER04-___ SPP Board of Directors Minutes August 26, 2003

4

Adjournment The Board of Directors will meet via teleconference on September 22, 2003 at 2:00 p.m. CDT to discuss the Tariff Fee Recommendation from the Finance Working Group and the RSC proposed language for the Bylaws. The Board of Directors agreed to a meeting on Tuesday, October 28 (1:00 p.m. – 5:00 p.m.) and the Annual Meeting of Members on October 29, 2003 (8:00 a.m. – noon) in Little Rock, AR. Mr. Strecker thanked everyone for their participation and at 1:10 p.m. excused all non-board members from the room in order for the Board of Directors to continue in Executive Session. Nicholas A. Brown, Corporate Secretary



BOARD OF DIRECTORS TELECONFERENCE MEETING September 22, 2003

2:00 p.m. CDT


1. Approved minutes of the August 26, 2003 meeting with one correction.

2. Approved the recommended rosters for the Market Working Group and the Business Practices Working Group.

3. Approved an assessment and tariff Schedule 1 rate of $0.15/MWh effective October 1, 2003.

4. Approved modifications to the implementation plan for the energy imbalance market.

5. Approved the continuation of “special conditions” for Southwestern Power Administration (SWPA)

through October 31, 2004 to the extent that SWPA maintains its membership in SPP.


ER04-___

MINUTES NO. 87 Southwest Power Pool BOARD OF DIRECTORS TELECONFERENCE MEETING

September 22, 2003 2:00 p.m. CDT

Agenda Item 1 - Administrative Items SPP Chair Mr. Al Strecker called the teleconference meeting to order at 2:04 p.m., thanked everyone present for attending and referred to the agenda (Agenda – Attachment 1). A quorum was declared with the following Board members in attendance or represented by proxy (Proxy – Attachment 2):

Mr. David Christiano, City Utilities of Springfield, MO, Mr. Harry Dawson, Oklahoma Municipal Power Authority Mr. Michael Desselle proxy for Mr. Mr. Richard Verret, American Electric Power, Mr. Michael Deihl, Southwestern Power Admin., Mr. Dick Dixon, Westar Energy, Mr. Jim Eckelberger, independent director Ms. Trudy Harper, Tenaska Power Services Company, Mr. Mike Gildea, Duke Energy

Mr. Stephen Parr, Kansas Electric Power Coop., Mr. John Marschewski, Southwest Power Pool,

Mr. Gary Roulet, Western Farmers Electric Cooperative, Mr. Harry Skilton, independent director, Mr. Richard Spring, Kansas City Power & Light, Mr. Al Strecker, OG+E,

Mr. Larry Sur, independent director Mr. Gary Voigt, Arkansas Electric Cooperative Corp.,

Mr. Walt Yeager, Cinergy Services SPP Staff included Nick Brown, Carl Monroe, Tom Dunn and Stacy Duckett. Guests participating included Ricky Bittle (AECC), Mel Perkins (OG+E), Carl Huslig (Aquila), Bary Warren, Mike Palmer and Rick McCord (EDE), Tom Stuchlick (Westar), Randy Bynum, Richard House and Sam Loudenslager (APSC), Larry Holloway and Cynthia Claus (KCC), and Linda Gutherie and Kelli Leaf (OCC). Mr. Strecker referred to draft minutes of the August 26, 2003 Meeting (6/26/03 Meeting Minutes - Attachment 3) and asked for necessary corrections or a motion for approval. Mr. Quentin Jackson attended the August 26, 2003 Board of Directors meeting, but was omitted from the minutes. Mr. Dawson moved that the minutes be approved as modified. Mr. Skilton seconded this motion, which passed unopposed. Agenda Item 2 – Market Working Group and Business Practices Working Group Report Mr. Monroe was asked to give the Market Working Group and Business Practices working Groupreport requesting the approval of the rosters for each Group as presented (Market Working Group and Business Practices Working Group Recommendation – Attachment 4). These groups are considered critical to initiatives of SPP. After discussion and minor changes, Mr. Spring moved that the report be accepted as presented. Mr. Eckelberger seconded this motion, which passed unopposed. Agenda Item 3 – Finance Committee Report Mr. Skilton presented the Finance Committee report concerning assessment and Tariff Schedule 1 rates (Finance Committee Recommendation – Attachment 5). It was recommended that the SPP Board of Directors establish an assessment and tariff Schedule 1 rate of $0.15/MWh effective October 1, 2003. SPP will hold any revenue collected in excess of budgeted costs to fund, at the direction of the Finance Working Group, repayment of prior member overpayments resulting from shortfalls in administrative fee revenue under the regional tariff and/or repayment of the $5 million required principal payment due March 2004. During discussion it was decided to replace “at the direction of the Finance Working Group” with


ER04-___ SPP Board of Directors Teleconference Minutes September 22, 2003

3

“subject to approval of the Board of Directors”. Mr. Skilton moved to approve this recommendation as modified. Mr. Spring seconded the motion, which passed unopposed. Agenda Item 4 – Strategic Planning Committee Reports Mr. Spring presented recommendations from the Strategic Planning Committee (SPC) (MWG Recommendation– Attachment 6 and SWPA Recommendation– Attachment 7). Mr. Spring submitted the SPC recommendation from the Market Working Group (MWG) requesting approval of a slight modification to the implementation plan for the energy imbalance market. Mr. Spring moved to approve this recommendation. Mr. Marschewski seconded the motion, which passed unopposed. Mr. Spring then submitted the SPC recommendation regarding SWPA’s continued participation in SPP. It was determined that the transition of SPP into a FERC recognized regional entity is causing the Southwestern Power Administration (SWPA) to meet certain federal requirements prior to continuing their participation in SPP; therefore, the following recommendation was approved by the SPC and submitted for Board approval:

"To the extent that Southwestern Power Administration (SWPA) maintains its membership in SPP (including its present "special conditions") through October 31, 2004, SPP staff supports and recommends to the SPP Board Of Directors an additional "special condition" to Exhibit 1 of SWPA's new Membership Agreement to continue the provisions of current SPP services including reliability coordination, OASIS administration, tariff administration, security coordination, scheduling and automated reserve sharing, while allowing SWPA to delay participation in SPP's markets. SPP will waive any additional exit cost responsibilities related to these markets through October 31, 2004. If SWPA chooses between October 31, 2003 and October 31, 2004 to participate in the market, the waiver of the additional exit cost responsibilities associated with the market will terminate.”

Mr. Spring moved to approve the SWPA recommendation. Mr. Dixon seconded the motion, which passed unopposed. It was recommended to address the subject of continuation of efforts with states at the next Board of Directors meeting. Adjournment The Board of Directors agreed to a teleconference meeting on Wednesday, October 1, 2003, at 1:00 p.m. CDT. Mr. Strecker thanked everyone for their participation and adjourned the teleconference at 3:00 p.m. Nicholas A. Brown, Corporate Secretary


ER04-___

Southwest Power Pool BOARD OF DIRECTORS MEETING

Teleconference at 12:00 noon March 20, 2003


None.


ER04-___ MINUTES NO. 84

Southwest Power Pool BOARD OF DIRECTORS MEETING

Teleconference at 12:00 noon March 20, 2003

Agenda Item 1 - Administrative Items SPP Chair Mr. Al Strecker called the meeting to order at 12:02 p.m. The following Board members were in attendance or represented by proxy: Mr. Gene Argo, Midwest Energy, Mr. Gary Voigt, Arkansas Electric Cooperative Corp.,

Mr. David Christiano, City Utilities of Springfield, MO, Mr. Harry Dawson, Oklahoma Municipal Power Authority Mr. Michael Desselle, proxy for Mr. Richard Verret, American Electric Power, Mr. Michael Deihl, Southwestern Power Admin., Mr. Dick Dixon, Westar Energy, Mr. Jim Eckelberger, independent director,

Mr. Michael Gildea, Duke Energy North America, Mr. Stephen Parr, Kansas Electric Power Coop., Mr. John Marschewski, Southwest Power Pool,

Mr. J. M. Shafer, Western Farmers Electric Cooperative, Mr. Harry Skilton, independent director, Mr. Richard Spring, Kansas City Power & Light, Mr. Al Strecker, OG+E,

Mr. Larry Sur, independent director, and Mr. Walt Yeager, Cinergy. A quorum was declared with 24 persons in attendance representing 13 members. Also present were Mr. Scott Moore (AEP), Mr. Ricky Bittle (AREC), and Messrs. Nick Brown, Tom Dunn, Walter May and Ms. Stacy Duckett (SPP). (Agenda – Attachment 1). The Secretary received one proxy statement (Proxies - Attachment 2). Mr. Strecker thanked everyone for participating and asked Mr. Nick Brown for a secretary’s report. Mr. Brown asked if there were any objections to including the resolution of Board of Directors from their March 12, 2003 meeting executive session in the minutes of that meeting. Hearing none, Mr. Brown stated that the minutes of that meeting would be distributed soon. Agenda Item 2 – SPP/MISO Merger Update Mr. Marschewski reported that the Midwest ISO Board of Directors also took action at their meeting this morning to mutually terminate the purchase and assumption agreement related to the merger between SPP and MISO. Agenda Item 3 – Strategic Planning Task Force Mr. Brown reported that SPP Chair, Mr. Al Strecker, had formed a Strategic Planning Task Force to review the SPP organization considering the current industry environment and make appropriate recommendations to the Board of Directors. Mr. Brown referred to a scope statement for this new group distributed with the meeting agenda (SPTF Scope – Attachment 3) and stated that a first meeting had been scheduled for April 2-4, 2003. Adjournment With no further business, Mr. Strecker adjourned the meeting at 12:23 p.m. Nicholas A. Brown, Corporate Secretary


ER04-___

Strategic Planning Task Force Roster Richard Dixon, Co-Chair Richard Spring, Co-Chair Sr. VP Operations Strategy VP Transmission Services Westar Energy, Inc. Kansas City Power & Light Michael Gildea Trudy Harper Manager Regulatory Policy VP & General Manager Duke Energy North America Tenaska Mel Perkins Ricky Bittle Director Transmission Policy Vice-President Oklahoma Gas & Electric, Co. Arkansas Electric Cooperatives Michael Desselle David Christiano Director Public Policy Director Electric Systems Control American Electric Power City Utilities of Springfield, MO John Marschewski Nick Brown & Carl Monroe, Facilitators President Sr. VP & VP Operations Southwest Power Pool, Inc. Southwest Power Pool, Inc.

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ER04-___

Southwest Power Pool Strategic Planning Committee

Report and Recommendations to the Board of Directors

August 19, 2003 Background On March 20, 2003, the Strategic Planning Task Force was formed to completely review the SPP organization considering the current industry environment and to make appropriate recommendations to the Board of Directors. The Initial Report of this task force was presented and accepted by the Board of Directors at its April 14, 2003 meeting. A Secondary Report was presented and accepted by the Board of Directors at its June 24, 2003 meeting, containing a recommendation that the task force become a permanent group reporting to the Board of Directors and called the Strategic Planning Committee (SPC). This report provides responses and recommendations to the actions contained in the Secondary Strategic Plan Report, specifically regarding modification to SPP’s governance and related documents for a filing seeking recognition of SPP as an independent regional transmission organization. Strategic Planning Committee The SPC is comprised of a diverse group of representatives from SPP members: Richard Spring, Co-Chair Richard Dixon, Co-Chair VP Transmission Services Sr. VP Operations Strategy

Kansas City Power & Light Westar Energy, Inc. Michael Gildea Trudy Harper Manager Regulatory Policy VP & General Manager Duke Energy North America Tenaska Mel Perkins Ricky Bittle Director Transmission Policy Vice-President Oklahoma Gas & Electric, Co. Arkansas Electric Cooperatives Michael Desselle David Christiano Director Public Policy Director Electric Systems Control American Electric Power City Utilities of Springfield, MO

John Marschewski Nick Brown & Carl Monroe, Facilitators President Sr. VP & VP Operations Southwest Power Pool, Inc. Southwest Power Pool, Inc.


ER04-___ SPP Strategic Planning Committee Report to the Board of Directors

August 19, 2003 2

Collaborative Process The SPC used an open collaborative process in the development of documents contained in this report, seeking input from all interested parties. This process included, but was not limited to seeking input on various governance models for evaluation (requested June 26, 2003), and seeking input on proposed governance documents (requested July 25, 2003) with a related workshop on July 31 to provide background information, SPC reasoning and to answer questions. Since the last Board of Directors meeting, the SPC held open meetings on July 10-11 and August 14-15, 2003 and teleconference meetings on July 23, 24, and 30, 2003. All meetings were publicly noticed with agendas and background materials distributed via the SPC email exploder list and posted on SPP’s website. Several non-stakeholder directors and representatives from SPP’s state regulatory agencies were actively involved in the SPC meetings. Minutes of these meetings can be obtained on the website. In addition to SPC meetings, representatives of the SPC and Staff continue to meet with FERC and state regulatory agencies to provide information and solicit direct input. Governance Evaluation The Board of Directors at its June 24, 2003 meeting accepted that SPP’s current governance structure affirmed on April 14th may not meet the expected requirements of independence expressed by the FERC. As such, the Board directed the SPC to submit further governance recommendations, including bylaws changes, to the Board in August, recognizing the need to maintain the current level of stakeholder input at all Board meetings. While there is practically an infinitum of possible governance structures that could be evaluated, five alternative models were developed to bring focus to discussion. These models represented the reasonable range of alternatives and are described here:

Model A: As Is This model maintains SPP’s current hybrid board structure consisting of 21 directors with 7 in each of three categories - transmission owner, transmission user, and non-stakeholder. This model is intended to balance the interests of transmission owners and transmission users. Model B: As Is w/ Weighted Voting This model maintains SPP’s current hybrid board structure, but voting results weighted 49% to stakeholder directors and 51% to non-stakeholder directors, with approval requiring a simple majority. This model is intended to balance the interests of stakeholders and non-stakeholders while giving a slight advantage to non-stakeholders (their vote will always carry, to the extent, but only to the extent, that they are unanimous in their decisions.)



August 19, 2003 3

Model C: Non-Stakeholder Voting w/ Stakeholder Directors This model maintains SPP’s current hybrid board structure, but voting rights are afforded only to non-stakeholder directors. This model is intended to provide all the independence of a complete non-stakeholder board while insuring stakeholder input in the decision-making process because it guarantees a seat at the table during all dialogue. Model D: Non-Stakeholder Board w/ Members Committee Participation This model contains a complete non-stakeholder board, but maintains the “look and feel” of SPP’s current hybrid board structure with an elected Members Committee structured like the current stakeholder sectors, with a sole responsibility of meeting with the board at all of its meetings except for executive session (limited to personnel and legal issues.) This model is intended to provide maximum independence while providing stakeholder input in most matters, and limiting liability to stakeholder representatives who have no vote.

Model E: Non-Stakeholder Board w/ Advisory Committee This model contains the typical non-stakeholder board structure, with stakeholder input limited to an advisory capacity. This model is intended to provide maximum independence while providing an opportunity for stakeholder input in some matters, but no guarantee to participate in the dialogue that leads to many decisions.

The models were evaluated based on various characteristics rather than “pros and cons” due to SPP’s varied constituency (one member’s con tends to be another’s pro). The following characteristics were used to evaluate the models and are based on SPP’s historic value propositions and regulatory constraints.

1. Regulatory Acceptability – degree to which federal and state regulators will support and accept the governance structure.

2. Transparency to Stakeholders – degree to which stakeholders can understand and influence the board’s decision-making process.

3. Stakeholder Preference – degree to which stakeholder are comfortable with the governance structure.

4. Non-Stakeholder Accountability – degree to which SPP and stakeholder interests are in the hands of non-stakeholders.

5. Degree of Change – degree of change from the present situation. 6. Staff Influence – degree to which the Staff can influence the decision-

making process. A matrix developed by the SPC comparing and contrasting the various governance models is included as Attachment 1. Following lengthy discussion, the SPC agreed that the non-stakeholder board with a members committee (Model D) best met FERC’s expectation of independence while maintaining transparency and meaningful stakeholder input into decision-making processes.



August 19, 2003 4

Proposed Governance Changes SPP’s governance is dictated by two enabling documents; the SPP Bylaws and the SPP Membership Agreement. These two documents were reviewed and edited by the SPC to accommodate the governance model selected above and to meet the requirements of FERC Order 2000 for independent regional entities, FERC’s current rules. The documents were also reviewed with respect to FERC’s White Paper on Standard Market Design as the best guide to FERC’s forward thinking. Proposed changes to SPP’s Bylaws focus on the Board of Directors structure and the structure of committees reporting to and/or advising the Board of Directors. The Bylaws provide for a complete non-stakeholder board of seven directors, which is required (except for executive sessions) to meet with an elected Members Committee structured like the current stakeholder sectors. Of particular note also is the addition of a Regional State Committee to formalize the input of SPP’s state regulatory agencies in SPP’s decision-making processes. This new process maintains SPP’s current structure allowing any entity having regulator jurisdiction over a SPP member to participate directly, and adds a new formal process to allow for collective input by these bodies. A table summarizing the proposed governance structure is included as Attachment 2. Proposed modifications to SPP’s Bylaws are included as Attachment 3. Proposed changes to SPP’s Membership Agreement are included as Attachment 4, and can be summarized as only those changes needed to reflect current regulatory requirements on the functional control of independent regional transmission organizations over the facilities of participating transmission owners.

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6 August 19, 2003

Related Documents In the Initial Strategic Plan Report, the SPC included a recommendation accepted by the Board of directors that SPP should file an attachment to its tariff facilitating independent transmission company (ITC) participation by interested transmission owners. The SPC developed in consultation with Translink an attachment to SPP’s Membership Agreement that allows for ITC participation. The agreement was patterned after the ITC agreement developed by and between Translink and the Midwest ISO, which was accepted by the FERC. The document was distributed to the membership for review and is included as Attachment 5. This document would also be included in a SPP filing seeking recognition as an independent regional transmission organization. The Initial Strategic Plan Report also included a recommendation that SPP should continue to work with neighboring entities on regional membership expansion opportunities and should develop seams agreements and/or joint markets with neighboring companies who choose not to participate in SPP and with neighboring regional entities. To this end, the SPC has developed a form of a seams agreement for inclusion in a SPP filing seeking recognition as an independent regional transmission organization, indicating SPP commitment in this regard. This form of an agreement is included at Attachment 6 and Staff should immediately begin negotiations with neighboring entities on the development of specific agreements consistent with this form document. Filing Development If the Board of Directors approved the attached governing documents and authorizes a filing seeking SPP recognition as an independent regional transmission organization, the SPP Staff will independently develop the filing letter, which acts as the legal argument for how SPP meets the regulatory requirements and expectations for independent regional entities. As in previous filings, this independent action has been necessary due to the fact that SPP’s members can all be parties to the filing docket and intervene individually in support of or in protest to some or all elements of the filing. While Staff will develop the total of the filing without organizational group involvement, Staff will solicit and use supporting testimony from individual members of various organizational groups who led related initiatives. This particular action adds collaborative merit to the filing and represents SPP’s diversity of membership and leadership. The filing letter will explain how the current and proposed SPP organization meets the four characteristics and eight functional requirements of regional entities contained in FERC Order 2000. While FERC’s White Paper on Standard Market Design has yet to be codified in an order, the filing letter will also explain how the current and proposed



August 19, 2003 7

SPP organization meets the regional requirements discussed therein. SPP’s current regional transmission service tariff will be submitted as part of this filing. While modifications to this tariff are currently under consideration by the Regional Tariff Working Group, these types of enhancement filings will always be under consideration, and SPP’s current tariff meets FERC Order 2000 requirements and is far superior to other regional tariffs submitted as part of a filing seeking independent recognition. Transition Plan The SPC is recommending that the governing documents included in this report become effective on the first of the month between the 30th and 60th day following a final related FERC order accepting the documents. While some aspects of the proposed changes may be appropriate to implement on a sooner time frame, the SPC will consider this after Board of Directors consideration of the documents in their entirety for the RTO filing, and will make appropriate recommendations at a future meeting. While the SPC was not initially going to make recommendations at this time about the transition to the non-stakeholder board structure, many questions were raised and opinions expressed during the comment period on the governing documents. As such, the SPC believes it an important issue to resolve at this time to aid member and regulatory evaluation of the related recommendations and for a more complete RTO filing for an organization that is already in existence. The SPC is recommending grandfathering the existing Board of Directors personnel and their related terms into the proposed structure. This would result in the current non-stakeholder directors becoming the new Board of Directors, and the existing stakeholder directors becoming the Members Committee. When the current non-stakeholder directors were selected, the Nominating Task Force (NTF) at that time considered it a strong possibility that the FERC could require SPP to transition to a complete non-stakeholder board at some time in the future. As such, the NTF advised the independent search firm of Russell Reynolds Associates of this potential and evaluated the provided candidates as if they would serve as a non-stakeholder board. This approach was undertaken to utilize the time served on the hybrid board structure to provide the non-stakeholder directors with more detailed experience on industry issues. While some have suggested an open election process in transitioning to the proposed board structure, the SPC believes this conflicts with the previous strategy to develop directors, and unnecessary due to the rotating terms for the existing directors that provides for review of two directors each year. The transition of SPP into a FERC recognized regional entity is causing the Southwestern Power Administration to meet certain federal requirements prior to continuing their participation in SPP. The SPC supports the accommodation of



August 19, 2003 8

Southwestern Power Administration’s statutory constraints in order to retain their membership in SPP and will make all reasonable efforts to do so. Subsequent related recommendation from the SPC will be presented to the Board of Directors in the near future. Recommendations The Strategic Planning Committee recommends that the Board of Directors:

1) Approve the attached modifications to the SPP Bylaws and Membership Agreement (including the attachment providing a form of an agreement for independent transmission company participation) for filing with FERC in an application for recognition as a regional transmission organization. The documents are to become effective on the first day of the calendar month occurring between the 30th day and 60th day following a final FERC order recognizing SPP as a regional transmission organization.

2) Authorize the Staff to file an application with FERC as soon as practicable

seeking SPP recognition as a regional transmission organization pursuant to FERC Order 2000, and to make necessary corrections and formatting changes to the governing documents subject to review of the SPC.

3) Approve a transition to the new governance structure by which SPP’s non-

stakeholder directors become the Board of Directors and the stakeholder directors become the Members Committee, all carrying forward their current terms.

4) Accept the attached form of a seams agreement for inclusion in the FERC

filing, and authorize the SPP Staff to immediately begin negotiations with neighboring entities on specific agreements pursuant to this form.

Approved: Strategic Planning Committee August 15, 2003 Action Requested: Approve Recommendations

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ER04-___


ER04-___

MINUTES NO. 8

Southwest Power Pool STRATEGIC PLANNING COMMITTEE

July 10-11, 2003 Meeting Minutes Gaston’s Resort – Lakeview, AR

Agenda Item 1– Call to Order & Introductions, Approval of Minutes Richard Spring (KCPL) called the meeting of the SPC to order at 8:00 a.m. (Agenda – Attachment 1). Other SPC members in attendance during all or parts of the two-day meeting were Vice Chair Dick Dixon (Westar), Mel Perkins (OKGE), Michael Desselle (AEP), David Christiano (SPRM), Ricky Bittle (AECC), and John Marschewski (SPP). SPP Staff in attendance included Nick Brown, Carl Monroe, Tom Dunn and Stacy Duckett. Guests participating in the meeting included Jim Sherwood (SWPA), David Lemmons (Xcel), Clair Moeller (Translink/SPS), Gene Anderson (OMPA), Richard House (APSC), Jim Eckelberger (independent Director), and Harry Skilton (independent Director). Dick Dixon moved that the minutes of the June 10-11, 2003 meeting be approved as written. Mel Perkins seconded this motion, which passed unanimously. Agenda Item 2 – Governance The Committee discussed the various governance models presented in a straw man proposal developed by Staff (Governance Models - Attachment 2). After considerable discussion, “Option D” was chosen as the preferred model. There was then lengthy discussion concerning the details and structure of that option and the Bylaws revisions necessary to reflect the new structure. Those revisions will be included in a new draft of the Bylaws to be distributed to the Committee by July 14. Agenda Item 3 – Filing Strategy Nick Brown addressed the issue of FERC counsel. Upon consideration of issues previously raised, as well as alternative candidates to serve as counsel, Brown recommended that Mike Small be retained. The Committee agreed. Brown reviewed SPP’s previous filings as to content, style and tone. The Committee agreed that the structure for the new filing should be generally the same. In addition, the filing should include references to Order 888, Order 2000 and the FERC White Paper, and the role of the Regional State Committee. A determination must be made regarding the OATT to be filed – either the current one, or one revised for the RTO. Agenda Item 4 – ITC Structure Carl Monroe provided a presentation outlining the possible roles of ITC and SPP in an RTO setting (ITC Structure – Attachment 3). Richard Spring then asked Clair Moeller to discuss proposals for independent transmission company participation in SPP. Clair proposed that SPP consider MISO’s membership agreement Appendix I and tariff schedules for ITC involvement. After discussion it was determined that the MISO documents would be used as a starting point. These documents will be revised, and then distributed to the Membership for consideration.


ER04-___ SPP Strategic Planning Committee Minutes July 10 -11, 2003 Meeting

2

Agenda Item 5 – Member Obligations A revised Membership Agreement was provided to the SPC for consideration. This will be submitted to the Membership for comment as well. There was discussion as to whether new Agreements should be executed prior to the RTO filing and the impact that not executing an Agreement might have on the filing. Clair Moeller noted that some seams issue might require resolution prior to an ITC committing to join SPP. Following discussion, it was determined that a group facilitated by Carl Monroe would review several existing seams agreements and propose a seams MOU to the Committee. Given the lack of certainty regarding the requirement for Section 203 filings, and the impact that may also have on state regulatory processes/approvals, the Committee determined that pre-filing conferences should be held with FERC and the RSC to review the components of the filing and assure that all regulators have any issues addressed in advance of the RTO filing. Agenda Item 6 – Member Input Nick Brown suggested the materials to be provided to the Membership for comment, and a timeline for accomplishing this in advance of the August Board of Directors meeting. The Committee concurred with the proposed plan. Agenda Item 7 – Review of Action Items and Future Meetings

• Staff will edit and re-distribute Bylaws to the SPC on July 14 • Comments will be due to Stacy Duckett by July 18 • Staff will edit and re-distribute Bylaws to the SPC on July 21 (and possibly ITC

and Seams agreement documents) • Teleconference/web cast meeting July 22 at 10A central • Governing documents will be distributed to the Membership on July 23

(comments due back August 8) • Nick Brown is to discuss SPP’s RTO filing with Mike Small, including which

OATT to include • Richard House is to address the issue of state regulatory involvement in the

filing, specifically whether commissioners, individually or jointly, will file in support of the SPP RTO

Future Meetings Future meetings are scheduled for August 14-15 in Oklahoma City, with teleconferences scheduled on July 22 at 10:00 a.m., and July 30 from 8:30 a.m. until 11:30 a.m. (Meeting details will be provided as they are available.) Agenda Item 8 – Adjournment With no further business, Richard Spring thanked everyone for participating and adjourned the meeting at 9:45 a.m. Respectfully Submitted, Stacy Duckett


ER04-___

MINUTES NO. 9

Southwest Power Pool STRATEGIC PLANNING TASK FORCE

July 22-23, 2003 Meeting Minutes Net Conference/Teleconference

Tuesday, July 22, 2003 Administrative Items Chair Richard Spring (KCPL) called the net conference meeting of the Strategic Planning Committee (SPC) to order at 10:00 a.m. Other SPC members in attendance were Dick Dixon (Westar), Mel Perkins (OKGE), Ricky Bittle (AREC), and Michael Desselle (AEP). SPP Staff in attendance included Nick Brown, Carl Monroe, Tom Dunn and Stacy Duckett. Guests participating included Harry Skilton and Jim Eckelberger (independent directors), Bary Warren (Empire), and Richard House (AR PSC). Mr. Spring announced that approval of July 10, 2003 minutes would be dispensed with until the next meeting in order to move directly on to comments on the draft governing documents. General Comments and Comments on Bylaws Comments concerning general governing documents and the SPP Articles of Incorporation were briefly discussed by Stacy Duckett (General Governing Comments & Articles of Incorporation – Attachment 1). Nick Brown then reviewed comments specific to the draft bylaws and the document was edited on-line as the group reached consensus on issues (SPP Bylaws Comments – Attachment 2). The net conference adjourned at 12:00 p.m. due to time constraints and agreement was reached to reconvene the meeting via teleconference the following day, Wednesday, July 23, 2003, beginning at 3 p.m. Wednesday, July 23, 2003 Chair Richard Spring reconvened the meeting via teleconference at 3:04 p.m. Members in attendance were Richard Spring (KCPL), Dick Dixon (Westar), Ricky Bittle (AREC), Michael Desselle (AEP), and Mel Perkins (OKGE). SPP Staff in attendance included Nick Brown and Carl Monroe. Guests included Richard House and Mark Oligschlaeger (AR PSC). Comments on Membership Agreement Nick Brown began with resolving a few additional issues related to the draft bylaws and then the group began discussing comments concerning the SPP Membership Agreement (SPP Membership Agreement Comments – Attachment 3).


ER04-___ SPP Strategic Planning Committee July 22–23, 2003 Net Conference/Teleconference Meeting

2

Action Items Nick Brown stated that staff would make all revisions to the documents discussed during the meeting and will then distribute the documents to the membership on Thursday, July 24, 2003 for review and comment by noon, Friday, August 8, 2003. Some suggested a need to host a workshop to provide an overview of documents, explain the thought processes behind the proposed revisions, and answer questions. Staff was directed to follow up on this idea. Future Meetings The SPC ‘s future meetings include:

• Teleconference, Wednesday, July 30 from 8:30 a.m. until 11:30 a.m. • Workshop meeting & webex, Thursday, July 31 from 1 until 4 p.m. at the SPP

Offices in Little Rock. • Meeting, Thursday and Friday, August 14-15, 2003 from 10 a.m. until 5 p.m. and

8 a.m. until 3 p.m. respectively in Oklahoma City, OK. Adjournment With no further business, Richard Spring thanked everyone for their participation and adjourned the meeting at 4:43 p.m. Respectfully Submitted, Nicholas A. Brown


ER04-___

MINUTES NO. 10

Southwest Power Pool STRATEGIC PLANNING COMMITTEE

July 30, 2003 Teleconference Meeting Minutes Agenda Item 1 – Call to Order & Roll Call Chair Richard Spring (KCPL) called the teleconference meeting of the Strategic Planning Committee (SPC) to order at 8:36 a.m. Other SPC members in attendance were Dick Dixon (Westar), Mel Perkins (OKGE), Ricky Bittle (AREC), Michael Desselle (AEP), Dave Christiano (SPRM), Trudy Harper (Tenaska), John Marschewski (SPP), and Michael Gildea (DENA). SPP Staff in attendance included Nick Brown, Carl Monroe, Tom Dunn and Stacy Duckett. Guests participating included Bary Warren (Empire), Richard Ross (AEP), Gene Anderson (OMPA), David Lemmons (Xcel), Stan Twigs (APX), and David Bryan (ETEC). Nick Brown reviewed the draft agenda and no modifications were suggested. Agenda Item 2 – Approval of Minutes Richard Spring referenced minutes of the July 10-11, 2003 SPC meeting and asked for suggested modifications and/or a motion for approval. Michael Desselle moved that these minutes be approved as distributed. Dick Dixon seconded the motion, which passed unopposed. Michael Desselle then moved that the minutes of the July 22-23, 2003 net/teleconference meeting be approved as distributed. Dick Dixon seconded this motion, which passed unopposed. Agenda Item 3 – Previous Action Items & Documents Workshop Format Nick Brown reported that all previous actions had been completed and that a workshop on the draft governance documents was scheduled for Thursday, July 31, 2003, to facilitate the comment period on the documents by providing background on the SPC work and answering questions. Nick stated that the workshop would be held at the SPP offices with access also available via teleconference and Webex. Agenda Item 4 – Regulatory Dialogue Nick updated the group on his meeting with state regulators in Denver in conjunction with the summer NARUC committee meetings. The purpose of their meeting was to finalize bylaws and articles for the corporation being formed to serve as a regional state committee for SPP. Nick stated that the documents have yet to be finalized, but plans are being made to hold the formation meeting to vote on the bylaws the day prior to the next SPP Board of Directors meeting in Kansas City on August 26. Nick stated that the dialogue was very positive and he spent his time in the meeting answering questions on SPC initiatives and plans. Agenda Item 5 – Transition Plan Strawman Richard then asked Nick to discuss transition processes for implementation of the proposed governing documents. Nick stated that four documents have been developed


ER04-___ SPP Strategic Planning Committee July 30, 2003 Teleconference Meeting

2

and distributed to the membership for comment: Bylaws, Membership Agreement, a form of a seams agreement with neighboring regional entities, and a form of an attachment to the membership agreement for participation by an independent transmission company. Nick stated that he had discussed a straw transition process with Richard and Dick for consideration of the SPC and he suggested the following:

1. Recommend to the Board of Directors on August 26 their approval of the Bylaws, Membership Agreement, and the form of an attachment to the membership agreement for participation by an independent transmission company for filing with the FERC in SPP’s request for recognition as an independent regional organization, with an effective date no later than sixty days following a final FERC order in the related docket; and

2. Recommend to the Board of Directors on August 26 their approval of the form of a seams agreement with neighboring regional entities for filing with the FERC in SPP’s request for recognition as an independent regional organization and authorizing the Staff to begin negotiations with neighboring regional entities on execution of a similar agreement.

The SPC then discussed the straw transition process, discussing related pros and cons. Following this discussion, the SPC concurred with the proposed direction and Richard indicated that Nick would incorporate the process in the next SPC report to the Board of Directors. Agenda Item 6 – RTWG Activities Ricky Bittle reported that the RTWG would meet next week on Wednesday, August 6, 2003 in Tulsa. He stated that work on all initiatives was proceeding well except that there was still considerable disagreement on the definition of transmission for facilities to be included in the regional tariff. Nick Brown stated that he had just received a copy of a motion by the East Texas Cooperatives in Docket ER99-4392 for an order on remand granting specific relief and providing for further proceedings on this very issue. Agenda Item 7 – Markets Participation/Committee Discussion Michael Desselle then discussed participation in SPP processes by market representatives of the membership and stated that SPP’s current structure, as modified combining the Engineering & Operating Committee and the Commercial Practices Committee did not allow sufficient input into decision-making. The SPC then discussed the issue for some time and concluded that the issue should remain on future SPC agendas, that the group should review comments from the membership on the governing documents, that the current structure should be given an opportunity to be implemented and monitored, and finally that as SPP’s markets develop, the need for a separate committee may become more self evident. Agenda Item 8 – Action Items Nick stated that the only specific action item from the meeting was the group’s direction on the transition provisions that he would incorporate into the next SPC report to the


ER04-___ SPP Strategic Planning Committee July 30, 2003 Teleconference Meeting

3

Board of Directors, which would be distributed to the SPC in draft form prior to the next meeting. Nick stated that he would also be working with the FERC commissioners and senior staff to set up a pre-filing conference on the governing documents prior to the next SPC meeting. Agenda Item 9 – Future Meetings The SPC ‘s future meetings include:

• Workshop meeting & webex, Thursday, July 31 from 1 until 4 p.m. at the SPP Offices in Little Rock; and

• Meeting, Thursday and Friday, August 14-15, 2003 from 8 a.m. until 5 p.m. and 8 a.m. until 3 p.m. respectively in Oklahoma City, OK.

Agenda Item 10 – Adjournment With no further business, Richard Spring thanked everyone for their participation and adjourned the meeting at 10:01 a.m. Respectfully Submitted, Nicholas A. Brown


ER04-___

MINUTES NO. 11

Southwest Power Pool STRATEGIC PLANNING COMMITTEE August 14 – 15, 2003 Meeting Minutes

Thursday, August 14, 2003

Agenda Item 1 – Call to Order & Introductions Chair Richard Spring (KCPL) called the meeting of the Strategic Planning Committee (SPC) to order at 8:07 a.m. Other SPC members in attendance or participating via teleconference were Dick Dixon (Westar), Mel Perkins (OKGE), Ricky Bittle (AREC), Michael Desselle (AEP), Dave Christiano (SPRM), Trudy Harper (Tenaska), John Marschewski (SPP), and Michael Gildea (DENA). SPP Staff in attendance included Nick Brown, Carl Monroe, Tom Dunn, Mike Small, and Stacy Duckett. Guests participating included Bary Warren (Empire), Joyce Davidson, Kelly Leaf, Ed Farrar, and Karen Forbes (OCC), Richard House and Sam Loudenslager (APSC), Jim Sherwood (SWPA), Mike Lavanga (ETEC), and David Lemmons (Xcel). Nick Brown reviewed the draft agenda and no modifications were suggested (Agenda - Attachment 1). Agenda Item 2 – Approval of Minutes Richard Spring referenced minutes of the July 30, 2003 SPC teleconference meeting and asked for suggested modifications and/or a motion for approval. Mel Perkins moved that these minutes be approved as distributed. John Marschewski seconded this motion, which passed unopposed. Agenda Item 3 – Previous Action Items & Documents Workshop Nick Brown reported that all previous action items have been accomplished. Nick also reported that approximately 40 persons participated on the workshop held July 31 on the SPC’s proposed governance documents. Nick distributed a list of questions from the workshop and the responses given by him or SPC representatives (Workshop Q&A – Attachment 2). Agenda Item 4 – Meeting w/ FERC Commissioners & Senior Staff Dick Dixon reported that members of the SPC met with Chairman Wood, Commissioner Brownell and Dan Larcamp to provide a status report of SPP development. Attending on behalf of the SPC were Nick Brown, Dick Dixon, Richard Spring, Ricky Bittle and Michael Desselle. Dick referred to an email summary of the meeting distributed by Nick on August 6 to the SPC exploder (FERC Meeting Summary – Attachment 3). Highlights of the meeting included indication by FERC that Section 203 filings would not be expected and that FERC would expect an SPP RTO filing to include explanation of how SPP meets their White Paper characteristics. Agenda Item 5 – Regulatory Dialogue Nick Brown reported that he had received a letter from the APSC, MPSC and OCC with comments on the SPC’s proposed governing documents (State’s Comments Letter –


ER04-___ SPP Strategic Planning Committee August 14 – 15, 2003 Meeting Minutes

2

Attachment 4). Nick stated that the letter contained several recommended modifications to SPP’s governance and proposed language describing the role of a regional state committee providing direction to SPP. Nick stated that these comments would be addressed later in the meeting as the documents were discussed. Agenda Item 6 – RTWG Activities Ricky Bittle reported on the RTWG meeting on Wednesday, August 6, 2003, in Tulsa. He stated that the issue of defining transmission was being bogged down in the East Texas – AEP FERC battle and that the group may ultimately need specific direction from the SPC. Ricky also mentioned that the RTWG would still like input from the states on participant funding mechanisms. Richard House and Joyce Davidson stated that they would bring this to the attention of the states in their next meeting. Agenda Item 7 – Member Comments on Governing Documents Stacy Duckett led discussion on the SPC’s proposed governing documents and related comments received from the posting period, including the Bylaws (Draft Bylaws - Attachment 5), (Bylaws Comments – Attachment 6), Membership Agreement (Draft Membership Agreement – Attachment 7), (Membership Agreement Comments – Attachment 8), ITC Agreement (Draft ITC Agreement – Attachment 9), (ITC Agreement Comments – Attachment 10), and Seams Agreement (Draft Seams Agreement – Attachment 11), (Seams Agreement Comments – Attachment 12). The SPC edited these documents and/or directed Staff on further edits based on review and discussion of the comments.

Friday, August 15, 2003 Agenda Item 8 – Review Draft SPC Report to Board of Directors Nick Brown stated that he had yet to draft a SPC report to the Board of Directors, but that he would do so over the weekend for SPC review on Monday and Tuesday. Nick stated that the report format would follow the typical style of committee reports to the Board of Directors and that major sections would include background, SPC roster, collaborative process, governance evaluation, proposed governance changes, the ITC and seams agreements, filing development, transition plan, and recommendations. Agenda Item 9 – Recommendations to Board of Directors Nick Brown and Richard Spring then presented draft recommendations to the Board of Directors based on the SPC’s work and the group reached consensus on the following:

1) Approve the attached modifications to the SPP Bylaws and Membership Agreement (including the attachment providing a form of an agreement for independent transmission company participation) for filing with FERC in an application for recognition as a regional transmission organization. The documents are to become effective on the first day of the calendar month



3

occurring between the 30th day and 60th day following a final FERC order recognizing SPP as a regional transmission organization.

2) Authorize the Staff to file an application with FERC as soon as practicable

seeking SPP recognition as a regional transmission organization pursuant to FERC Order 2000, and to make necessary corrections and formatting changes to the governing documents subject to review of the SPC.

3) Approve a transition to the new governance structure by which SPP’s non-

stakeholder directors become the Board of Directors and the stakeholder directors become the Members Committee, all carrying forward their current terms.

4) Accept the attached form of a seams agreement for inclusion in the FERC

filing, and authorize the SPP Staff to immediately begin negotiations with neighboring entities on specific agreements pursuant to this form.

Michael Desselle moved and Ricky Bittle seconded that the SPC approve the recommendations for presentation to the Board of Directors at their August 26, 2003 meeting. This motion passed unanimously. Nick Brown then reported that the Markets Working Group had approved a slight modification to the implementation plan for the energy imbalance market and he referred to a letter sent to Richard Spring from MWG Chair, Richard Ross (MWG Letter – Attachment 13). Nick stated that the implementation plan was included in the Secondary Strategic Plan Report that was approved by the Board of Directors and that modification would also require SPC and Board of Director approval. Michael Desselle motioned and Mel Perkins seconded that the MWG recommended modifications to the imbalance market implementation plan be approved by the SPC and recommended to the Board of Directors. This motion was approved unanimously. Jim Sherwood then presented a presentation on SWPA and its special needs related to their participation in an RTO (SWPA Presentation – Attachment 14). Trudy Harper motioned and Ricky Bittle seconded that the SPC support the accommodation of SWPA’s statutory constraints in order to retain their membership in SPP and that SPP make all reasonable efforts to do so. This motion was approved unanimously. Jim Sherwood was asked by the SPC to provide specific language on SWPA’s needs to the group as soon as possible. Agenda Item 10 – Action Items

• Prefiling conference with the FERC staff on Friday, August 22, 2003, 9-11 a.m.



4

• Nick Brown will distribute draft SPC report to the Board of Directors by noon Monday, August 18, 2003.

• SPC members will provide Nick Brown any comments on the draft SPC report to the Board of Directors by noon, Tuesday, August 19, 2003.

• Nick Brown will distribute the SPC report to the Board of Directors with their meeting background materials by end of business, Tuesday, August 19, 2003.

• Richard House and Joyce Davidson will raise with the states the need for their input on participant funding mechanisms.

• Jim Sherwood is to provide specific language on SWPA’s special needs to the SPC as soon as possible.

Agenda Item 11 – Future Meetings No future SPC meetings were scheduled at this time. Agenda Item 12 – Adjournment With no further business, Richard Spring thanked everyone for their participation and adjourned the meeting at 2:34 p.m. Respectfully Submitted, Nicholas A. Brown


ER04-___

MINUTES NO. 13

Southwest Power Pool STRATEGIC PLANNING COMMITTEE September 15, 2003 Meeting Minutes

Teleconference

Administrative Items Chair Richard Spring (KCPL) called the teleconference meeting of the Strategic Planning Committee (SPC) to order at 4:06 p.m. Other SPC members participating were Dick Dixon (Westar), Mel Perkins (OKGE), Ricky Bittle (AREC), Michael Desselle (AEP), Dave Christiano (SPRM), Mike Gildea (Duke Energy), John Marschewski (SPP), and Trudy Harper (Tenaska). SPP Staff in attendance included Nick Brown and Carl Monroe. Guests participating included Bary Warren (Empire), Richard House (APSC), Adrienne Brandt (PUCT), Kelli Leaf (OCC) and David Lemmons (Xcel). Nick Brown reviewed the draft agenda. Bylaws Section 5.0 Review Future Meetings The next SPC teleconference meeting is set for Friday, September 19, 2003 at 8:00 a.m. CDT. Adjournment With no further business, Richard Spring thanked everyone for their participation and adjourned the meeting at 4:55 p.m. Respectfully Submitted, Nicholas A. Brown


ER04-___

MINUTES NO. 13


Teleconference

Administrative Items Chair Richard Spring (KCPL) called the teleconference meeting of the Strategic Planning Committee (SPC) to order at 4:06 p.m. Other SPC members participating were Dick Dixon (Westar), Mel Perkins (OKGE), Ricky Bittle (AREC), Michael Desselle (AEP), Dave Christiano (SPRM), Mike Gildea (Duke Energy), John Marschewski (SPP), and Trudy Harper (Tenaska). SPP Staff in attendance included Nick Brown and Carl Monroe. Guests participating included Bary Warren (Empire), Richard House (APSC), Adrienne Brandt (PUCT), Kelli Leaf (OCC) and David Lemmons (Xcel). Nick Brown reviewed the draft agenda. Review of Bylaws Section 5.0 and Draft SPC Report to the Board The SPC reviewed a draft generic version of Section 5.0 to SPP’s proposed RTO filing Bylaws related to the Regional State Committee. Nick Brown reported that he had crafted the generic language based on the inability to reach a comfortable degree of consensus among the states on the more detailed language containing directional authority for the RSC. The SPC agreed to send both versions to the Board of Directors and to indicate that deliberations with the states were continuing. The SPC also directed staff to separate the SPC recommendations into separate report documents; these being related to SWPA special membership conditions, modifications to the imbalance market implementation plan, and the RSC Bylaws language. Future Meetings The next SPC teleconference meeting is set for Friday, September 19, 2003 at 8:00 a.m. CDT. Adjournment With no further business, Richard Spring thanked everyone for their participation and adjourned the meeting at 4:55 p.m. Respectfully Submitted, Nicholas A. Brown


ER04-___

MINUTES NO. 15


Teleconference

Administrative Items Chair Richard Spring (KCPL) called the teleconference meeting of the Strategic Planning Committee (SPC) to order at 10:06 a.m. Other SPC members participating were Dick Dixon (Westar), Mel Perkins (OKGE), Dave Christiano (SPRM), John Marschewski (SPP), and Michael Desselle (AEP). SPP Staff in attendance included Nick Brown, Carl Monroe and Stacy Duckett. Representatives of state regulatory agencies participating included Chair Sandy Hochstetter, Commissioner Randy Bynum, Richard House, and Sam Loudenschlaeger (APSC), Kelli Leaf, Ed Farrar, and Joyce Davidson (OCC), Walter Wolf (LPSC), Jess Totten (PUCT), Kyle Clem (KCC), and Steve Dottheim (MoPSC). Other guests participating included Seth Brown (ETEX), Robin Kittel (Xcel), and Brock Omdayko (AEP). Richard Spring stated that the purpose of the meeting was for the SPC to take action on Bylaws language related to the Regional State Committee (RSC) for recommendation to the Board of Directors at their teleconference meeting on Wednesday, October 1, 2003 at 1 p.m. CDT. Review of RTO Bylaws Section 5.0 The SPC then discussed with state representatives and other guests draft language for SPP’s RTO Bylaws on RSC participation, as presented by the states dated September 19, 2003 and including suggested edits by SPP Staff (States Edited Language – Attachment 1). The document was further edited based on discussion during the meeting (9/25/03 Draft Section 5 – Attachment 2). Mel Perkins motioned and David Christiano seconded that the language be sent to the SPC for email vote either for or against approving the language for recommendation to the Board of Directors, and, to the extent that the SPC does not approve the language for recommendation to the Board of Directors, the generic RSC language developed by the SPC (Generic RSC Language – Attachment 3) will be recommended to the Board of Directors for inclusion in SPP's filing seeking RTO recognition from the FERC. This motion passed without opposition. Nick stated that he will request votes via reply email for his receipt no later than noon, Monday, September 29, 2003. Nick stated that he will also ask that each of the state regulatory agencies indicate their support for the draft language, or lack there of, via reply email for his receipt no later than noon, Monday, September 29, 2003. Adjournment With no further business, Richard Spring thanked everyone for their participation and adjourned the meeting at 11:46 a.m. Respectfully Submitted, Nicholas A. Brown

Exhibit No. SPP-14 Docket Nos. RT04- ER04- UNITED STATES ...2 Research Advisory Committee. 3 Q....

Documents

Transcript of Exhibit No. SPP-14 Docket Nos. RT04- ER04- UNITED STATES ...2 Research Advisory Committee. 3 Q....