OVERVIEW AND PURPOSE

Each public utility transmission provider is required to submit a proposal for a coordinated and regional planning process that complies with the planning principles and other requirements in the Final Rule, or in the alternative, a transmission provider may make a compliance filing describing its existing coordinated and regional planning process, including the appropriate language in its tariff, and show that this existing process is consistent with or superior to the requirements in the Final Rule (P 437).

Each transmission provider must document this process and post on its OASIS or website a “strawman” proposal for compliance with each of the planning principles adopted in the Final Rule, including a specification of the broader region in which it will conduct coordinated regional planning.

This strawman begins with a review of the nine planning principles contained in FERC Order 890. It outlines why Cleco Power, LLC (Cleco) believes that its planning processes already comply with those principles or what steps Cleco intends to take in order to become compliant.

The strawman proposal will form the basis for a compliance filing required by FERC Order 890, due on October 17, 2007 (P 442). Compliance filings must be made by all of the transmission providers.

This Strawman document will be posted on the Cleco OASIS website by May 29, as required by FERC Order 890 (P 443).

FERC ORDER 890 PLANNING PRINCIPLES

Principle 1: Coordination

Requirements: Transmission providers must meet with all of their transmission customers and interconnected neighbors to develop a transmission plan on a nondiscriminatory basis (P 445). FERC does not establish a minimum number of meetings, the scope, notice requirements, format or other features, but leaves this to be developed with the input of customers and other stakeholders (P 451). The “purpose of coordination is to eliminate the potential for undue discrimination in planning by opening appropriate lines of communication between transmission providers, their transmission providing neighbors, affected state authorities, customers, and other stakeholders.” This requirement could be met through formation of a permanent planning committee made up of the transmission provider, neighboring transmission providers, affected state authorities, customers, and other stakeholders (P 452).

Compliance: Cleco already coordinates and will continue to coordinate with all affected parties, including its customers, neighboring transmission owners, and regional reliability councils, regarding request for transmission service and generator interconnection requests as necessary and on a regular basis.

Cleco consults with customer at various stages of the study process, including the scoping meeting, and at each time study results are communicated to its customers (Feasibility, System Impact and Facilities Studies). Cleco communicates with its neighboring transmission providers on a regular basis, and as well as facilitates communication between its customers and its neighboring transmission service providers/owners, specifically, if during the study process, a neighboring system’s facilities are identified as being affected.

In addition, Cleco performs annual assessments of the Cleco system to ensure the transmission system meets NERC standards and SPP criteria based on network load, OATT long term firm transactions, pre-888 grandfathered transactions and designated network resources. Cleco will coordinate transmission expansion through a joint process with Southwest Power Pool, Independent Coordinator of Transmission (ICT) for Entergy as well as neighboring transmission owners.

Cleco will conduct an annual Transmission Expansion Planning summit in which Cleco invites transmission interconnected neighbors, affected state authorities, customers, and other stakeholders to attend. The purpose of this summit is to inform stakeholders of planned transmission expansion, provide coordination, and allow for all stakeholders to comment and provide input into the planning process. If deemed necessary by the stakeholders, a joint planning committee could be formed to represent stakeholders to review proposed options for the transmission expansion to ensure the project is beneficial to all and achieves the greatest degree of reliability and compatible economy.

The date and time for this conference will be posted on the Cleco website, www.cleco.com, under the Transmission Services link. The summit process includes projects for: (i) regulated generation interconnection projects, (ii) transmission upgrade projects of existing facilities for reliability and economic purposes, and (iii) new transmission expansion projects for reliability and economic purposes.

Principle 2: Openness

Requirements: Transmission planning meetings must be open to all affected parties, including but not limited to, all transmission and interconnection customers, state authorities and other stakeholders (460). The transmission provider in consultation with affected parties, are to develop mechanisms to manage confidentiality and CEII concerns (460).

Compliance: As stated in the response to Principle 1, meetings of the Cleco Planning Summit are open and accessible to all interested parties. Meetings notices will posted on the Cleco website and relevant information is also posted and maintained on www.cleco.com, under the Transmission Services link.

Participants in the Transmission Expansion process require and are required to sign the confidentiality agreements designed to manage confidentiality and CEII (Critical Energy Infrastructure Information) concerns. This agreement provides rules for party access, disclosure to FERC and other authorized parties, rules for the use and applicability of non-disclosure agreements and procedures regarding breach and liability. This is a standard agreement and is designed to allow an appropriate level of information sharing between Cleco Transmission, transmission providing neighbors, affected state authorities, customers, and other stakeholders.

The Cleco Open Access Transmission Tariff (“OATT”) also provides the procedure to be followed for the execution of a data confidentiality agreement, as well as the procedure for the evaluation of a request for confidential data. CEII is information concerning proposed or existing critical infrastructure (physical or virtual) that:

1) Relates to the production, generation, transmission or distribution of energy;

2) Could be useful to a person planning an attack on critical infrastructure;

3) Is exempt from mandatory disclosure under the Freedom of Information Act; and

4) Gives strategic information beyond the location of the critical infrastructure.

Cleco is fully compliant with the Commission rules for the management of CEII information. Cleco does not post or disseminate material that is CEII classified. Interconnection Service Agreements containing maps and diagrams are posted on the Cleco website and also publicly filed with FERC, therefore this material is not CEII. On an annual basis Cleco files the Form No. 715 with FERC which provides the Annual Transmission Planning and Evaluation Report and Overview. This report includes base case data which is CEII protected information. Cleco does not allow access to this type of information, unless the access is restricted pursuant to CEII procedure. The public may file a Critical Energy Infrastructure Information (CEII) request under 18 C.F.R. § 388.113 or a Freedom of Information (FOIA) request under 18 C.F.R. § 388.108.

In addition, Cleco follows specific provisions regarding base case data and confidentiality as follows:

Transmission Provider shall provide supporting documentation, work-papers and relevant power flow, short circuit and stability databases, subject to confidentiality arrangements. The Transmission Provider may require the transmission customer to sign a confidentiality agreement before the release of commercially sensitive information or Critical Energy Infrastructure Information in the Base Case data. Such databases and lists, hereinafter referred to as Base Cases, shall include all (1) generation projects and (ii) transmission projects, including merchant transmission projects, that are included in the then-current, approved Regional Transmission Expansion Plan.

Principle 3: Transparency

Requirement:

Transmission providers must disclose to all customers and other stakeholders the basic criteria, assumptions and data that underlie their transmission system plans (P 471). Transmission providers must reduce to writing and make available the basic methodology, criteria and processes they use to develop their transmission plans, including how they treat retail native loads (P 471). Transmission Providers are required to make available information regarding the status of upgrades identified in their transmission plans in addition to the underlying plans and related studies (P 472). Transmission providers should make as much transmission planning information publicly available as possible, consistent with confidentiality protections (P 476). Form 715 is an insufficient basis for broad transmission planning proposes and must be supplemented by additional assumptions and data (P 477). Disclosure of criteria, assumptions, data and other information that underlie transmission plans is required (P 478). Where demand resources are capable of providing the functions assessed in a transmission planning process, and can be relied upon on a long-term basis, they should be permitted to participate in that process on a comparable basis (P 479).

Compliance: Cleco will continue to conduct its annual transmission expansion planning, interconnection processes, and evaluation of transmission service request in a transparent and non-discriminatory manner. Cleco cooperates with all stakeholders and interconnected neighbors to disclose the planning criteria, modeling assumptions and data underlying in its studies.

The base case power flow models are developed through the Southwest Power Pool (SPP). All planning and interconnection data is provided to the SPP as well as other working groups and committees. Second, with appropriate confidentiality safeguards in place, Cleco provides data and information to stakeholders as requested in order to enable other parties to recreate analyses as well as simulate sensitivities. Specific process plans and related documentation are available upon request as well as the baseline study reports. Generator interconnection queues and transmission service request queues are posted on OASIS as well as a list of completed study results. These queues are listed chronologically and offer access to project status, contact information to obtain analytical reports and other important information.

Cleco is an independent entity that protects all Confidential Information provided to it pursuant to the Cleco Code of Conduct, including information in planning studies. Cleco also has policies and procedures in place to guard against the release of CEII.

In the interconnection process, the Cleco provides updates on the status of upgrades to the systems as part of the annual process of developing the Transmission Baseline Planning Models.

Demand response plays an important role in Cleco’s economic Transmission Planning process. A certain level of demand response is included in the Cleco load forecast which is updated annually and initiates the annual expansion planning process. When undertaking economic planning (i.e. planning to reduce congestion and improve the economics of the grid rather than solely meeting reliability criteria), Cleco includes assumptions regarding anticipated demand response and generation in its market efficiency analysis. Included in the assumptions are demand resources that are committed. All of this information will be open, transparent and developed by working with stakeholders in a public process.

Principle 4: Information Exchange

Requirement: Transmission providers, in consultation with their customers and other stakeholders, must develop guidelines and a schedule for the submittal of information. . The information collected by transmission providers for their native load customers must be transparent and, to that end, equivalent information must be provided by transmission customers to ensure effective planning and comparability. Information must be made available continuously, and at regular intervals identified in advance. The frequency and planning horizon must be consistent with ERO requirements (P 486).

Point-to-point customers must submit any projections they have of a need for service over the planning horizon and at what receipt and delivery points. To the extent applicable, transmission customers also should provide information on existing and planned demand resources and their impacts on demand and peak demand. In addition, stakeholders should provide proposed demand response resources if they wish to have them considered in the development of the transmission plan (P 487).

The transmission planning required by Order 890 is intended to provide transmission customers and other stakeholders a meaningful opportunity to engage in planning along with their transmission providers. This information exchange relates to planning, not other studies performed in response to interconnection or transmission service requests (P 488).

Compliance: Cleco requires network customers under OATT as well as pre-888 customers to provide a description of the network load at each delivery point including a load forecast for 10 years as well as resource information updated at least annually, plus "timely" updates of other material changes.

Also please see Compliance for Planning Principles 1, 2 and 3 above.

Principle 5: Comparability

Requirement: Each transmission provider must develop a transmission system plan that meets the specific requests of its transmission customers and otherwise treats similarly situated customers (e.g., network and retail native load) comparably in transmission system planning.

Compliance: The Cleco Transmission Expansion process is designed to accommodate the view and inputs from all stakeholders, as discussed in Planning Principles 1 and 2. Further, the Cleco Transmission Expansion process is designed to reflect the transmission enhancements and expansions based on customer supplied information including load and capacity forecasts, generation resources, and new delivery points for at least the following ten years. The Transmission Expansion process accommodates inputs from all parties and attempts to expand the transmission system to reliably serve on a comparable basis both firm wholesale and firm retail network load customers while taking into account long term firm point to point and network transactions.

Principle 6: Dispute Resolution

Requirement: Transmission providers must develop a dispute resolution process to manage disputes that arise from the Order 890 planning process. The process should be specific as to how it will be used to address planning disputes, both procedural and substantive issues (501).

The intent of the process is not to address issues over which the Commission does not have jurisdiction (502).

Compliance: Section 12 of the Cleco OATT provides for dispute resolution procedures which are designed to provide a common and uniform procedure for resolving disputes associated with transmission service provided under the OATT. This process in Section 12 will have to be modified to also accommodate any disputes arising from the Cleco planning process.

Principle 7: Regional Participation

Requirement: Each transmission provider must coordinate with interconnected systems to: (1) share system plans to ensure that they are simultaneously feasible and otherwise use consistent assumptions and data; and (2) identify system enhancements that could relieve significant and recurring transmission congestion. (523) Regional planning should encompass as broad a region as possible and may be organized on both a sub-regional and regional level (527).

Compliance: As stated in Cleco’s OATT section 35.2 and Attachment G, Cleco and other transmission providers will coordinate their planning activities with those of the Southwest Power Pool, NERC, and other regional reliability organizations and develop consistency of the models, databases, and assumptions utilized in making reliability determinations. Cleco will continue to coordinate with all affected parties during the study and planning processes including but not limited to request for generator interconnection (larger & small), transmission service requests, expansion of existing transmission system to reliably serve Cleco customers. In addition, Cleco will continue to coordinate transmission expansion through a joint study process with Southwest Power Pool, Independent Coordinator of Transmission (ICT) for Entergy as well as transmission owners that are deemed as materially affected. Cleco participates in the Southwest Regional Planning process through joint studies and transmission working group.

Principle 8: Economic Planning Studies

Requirement: The planning process retains a congestion study principle for the transmission planning process and must consider both reliability and economic considerations (542).

Transmission Providers, in consultation with their stakeholders during the development of the Attachment K compliance filings, are directed to develop a means to allow the Transmission Provider and stakeholders to cluster or batch requests for economic planning studies so that the Transmission Provider may perform the studies in the most efficient manner (546).

Requests for economic planning studies and the responses to the requests shall be posted on the Transmission Provider’s OASIS or website (546). Stakeholders shall have the right to request a defined number of high priority studies to address congestion and/or integration of new resources or loads. The costs of this defined number of high priority studies would be recovered as part of the overall pro forma OATT cost of service. Once requested, the transmission provider would conduct the studies, including appropriate sensitivity analyses, in a manner that is open and coordinated with the affected stakeholders (547). The study process should encompass the study of upgrades to integrate new generation resources or loads on an aggregated or regional basis (548).

The Transmission Provider should be obligated to study the cost of congestion only to the extent it has the information to do so. If stakeholders request that a particular congested area be studied, they must supply relevant data within their possession to enable the transmission provider to calculate the level of congestion costs that is occurring or is likely to occur in the near future, providing for confidential treatment and application of the Standards of Conduct.

Transmission Provider must clearly define the information sharing obligations placed on customers in the planning attachments in the pro forma OATT (550).

Compliance: The Cleco Transmission Expansion process is developed to enable the transmission needs in the Cleco region to be met on a reliable, economic and environmentally acceptable basis. Cleco allows stakeholders to request additional economic studies as part of the Transmission Expansion process via OASIS as well as an opportunity for input into the economic planning process that may be appropriate to address congestion. Cleco will undertake appropriate analysis as it evaluates congestion on the system, and when appropriate, perform cost-benefit evaluations of alternative transmission solutions to congestion problems. Generally, Cleco can also accommodate stakeholder requests for additional sensitivity analyses, where the sensitivities would add value to the analysis

Cleco can accommodate clustering studies when appropriate. Cleco’s current process provides for economic planning studies to be built on one another on a sequential basis, and projects are studied by their in service date. Projects with the same in-service date will be studied in the same base case or “clustered.” Clustering of small projects may be more efficient; however Cleco can apply this methodology on a case by case basis.

Principle 9: Cost Allocation for New Projects

Requirement: Planning process must address the allocation of costs of new facilities (stakeholders and Transmission Providers are permitted to determine their own specific criteria) (557 & 558).

Guidance for cost allocation method: (1) whether it fairly assigns costs among participants, (2) whether it provides adequate incentives to construct new transmission, (3) whether it is generally supported by state authorities and participants across the region (559).

Each region should address these issues up front, at least in principle, rather than having them re-litigated each time a project is proposed (561).

Compliance: Cleco will assure that the allocation of the cost of existing facilities remains just and reasonable because it reflects the prior investment decision of the individual transmission owners, who built their facilities primarily to support load within the individual transmission owners’ area and continue to serve those loads. The initial approach for allocating costs of new Cleco-planned facilities provides that those benefiting from the new facilities should pay for their costs proportionally.