FERC rang out the regulatory year for SPP by accepting the grid operator’s tariff revisions establishing subregions for the cost allocation of future byway projects under its highway/byway methodology.
The Dec. 30 order decouples SPP’s Schedule 9 (zonal rates) and Schedule 11 (highway/byway) transmission pricing zones and creates five larger Schedule 11 subregions of existing zones (ER26-407).
Two-thirds of the cost of byway upgrades (between 100 and 300 kV) will be allocated to the subregion in which they are connected, with the remaining 33% allocated to the SPP footprint. New base plan upgrades larger than 300 kV will be allocated RTO-wide as highway projects.
SPP plans to group its 18 existing transmission pricing zones into five new Schedule 11 subregions: North, Nebraska, Central, Southwest and Southwest. The subregions will replace legacy pricing zones only to allocate costs for future byway facilities under Schedule 11 and will not affect Schedule 9 zonal boundaries or previously approved cost allocations.
The commission found that the RTO’s proposed modifications to the cost allocation for byway facilities “reasonably reflects that the transmission customers within a subregion use and benefit from these facilities.” It said SPP’s technical analyses demonstrate that the zones within each proposed subregion are significantly integrated based on their “complementary import/export patterns, significant inter-zonal connectivity, similar power-flow patterns and other operational interdependencies.”
FERC disagreed with protests filed by the Louisiana, Oklahoma and Texas regulatory commissions that SPP’s proposal was facially deficient and that it had not satisfied its burden under the Federal Power Act because the RTO failed to identify or quantify the proposal’s future cost impacts. The commission said SPP had met its burden to show the tariff changes comply with FERC’s cost-causation principle.
It also was unpersuaded by an assertion by the city of Springfield, Mo., that SPP did not demonstrate how the Regional Cost Allocation Review (RCAR) process would fairly evaluate cost-benefit imbalances under the proposed modifications. The RCAR reviews the highway/byway cost-allocation methodology every six years to analyze the effects on each pricing zone.
SPP’s proposal was approved by its board, state regulators and members in 2025. Several members pushed back over concerns about unreasonable cost shifts. (See “Members Pass Last of HITT’s 2019 Recommendations,” SPP MOPC Briefs: April 15-16, 2025.)
FERC disagreed, finding that the grid operator had “adequately demonstrated” that allocating two-thirds of byway facility costs to its subregion and the remainder on a regional load ratio share basis “allocates the costs in a manner that is at least roughly commensurate with the benefits of these facilities.”
SPP’s proposal was the last recommendation from the Holistic Integrated Tariff Team (HITT), which was created in 2018 to conduct a comprehensive review of the RTO’s cost-allocation model, transmission planning processes, Integrated Marketplace and real-time operations. After a year of discussion, the 15-person HITT published a report with 21 recommendations. (See HITT Shares Draft Report with SPP Stakeholders.)
The tariff change was hung up for several years by work on another HITT recommendation to adopt a policy creating an appropriate balance between cost assessed and value attained from energy and network resource interconnection service products and generating resources with long-term firm transmission service.
