By Chris O’Malley

SPP is seeking Federal Energy Regulatory Commission approval for a revised Tariff that the RTO says will more accurately screen generators for market power abuses in the form of uneconomic production.

The revised Tariff (ER15-788) is in response to FERC’s September 2013 finding that SPP lacked an automatic screen “to identify a broader range of resources that could be engaged in uneconomic production to cause or exacerbate a constraint.”

SPP has spent the last year updating its Tariff. Last March, the RTO transitioned from a real-time energy imbalance service market to the integrated marketplace design, which brought day-ahead and real-time energy and operating reserve markets.

Generators can manipulate the market by producing enough power to overload nearby transmission constraints, SPP said.

Under that scenario, the LMP on one side of the constraint could fall while prices on the relieving side of the constraint rise. Thus, a market participant could receive an uplift payment because of a low LMP on one side of the constraint — and receive higher energy payments for resources it owns on the other side of the constraint, SPP explained.

More Scrutiny

“SPP’s current Tariff language does not include provisions for identifying when the LMP is low enough for the relevant [generating] resource to be deemed uneconomic,” SPP told the commission.

In addition, its Tariff lacks a provision distinguishing offer parameters that properly represent the resource’s physical capability from those that are unreasonably inflexible, SPP said.

Among the proposed remedies, the new Tariff includes language that would permit SPP’s Market Monitor to deem a resource uneconomic if the LMP at the generator’s settlement location falls below 50% of the applicable “energy offer curve reference level.” SPP said the same threshold is utilized for identification of uneconomic production in the MISO energy market.

SPP’s revised Tariff also would compare a generator’s submitted parameters to reference levels developed by the Market Monitor. It would distinguish small fluctuations in parameters from those “that are intentionally unrealistic.”

No Sign of Widespread Abuse

The RTO’s most recent State of the Market Report states that there were a “small number” of periods when uneconomic production was identified.

SPP’s Market Monitor also had an eye out for abuses such as physical withholding and economic withholding. While a number of concerns were raised, “there is little evidence of any market power abuse,” the Monitor said.

The State of the Market Report was for the year 2013, prior to SPP’s transition to the integrated marketplace.