SANTA FE, N.M. — SPP’s Integrated Marketplace continues to show growth and member benefits in its second year of business, SPP Vice President of Operations Bruce Rew told the Regional State Committee (RSC) last week.

Rew said 172 market participants — 110 classified as financial-only, 62 as asset-owning — are now registered for the Integrated Marketplace, comprising the day-ahead and real-time markets, a price-based operating-reserve market and a central balancing authority. He also said the markets delivered $380 million in net savings in the 12 months after they went live in March 2014 and $422 million in savings in 2015.

“We’re still providing a lot of benefits with optimized dispatch, even with natural gas prices under $2,” Rew said.

Part of the marketplace’s success stems from SPP’s growing wind capacity, currently 12,400 MW, with another 574 MW in the pipeline. The RTO, which previously had 50 MW of solar capacity, had an additional 140 MW register April 1, its first addition of solar in years, Rew said. The facilities will go online later this year.

Rew strayed from his presentation to note SPP had set two more wind energy records over the weekend, extending its wind peak to 10,989 MW on April 23 and its wind penetration level to 49.17% on April 24.

SPP has seen its generation profile change and become more diverse with the October addition of the Integrated System and its hydro and wind resources. The RTO set a new winter peak load of 37,412 MW on Jan. 18, 417 MW more than last winter’s peak.

Rew also noted that the day-ahead market was only delayed from posting once in the first quarter of 2016. The real-time balancing market has successfully solved 99.9% of all intervals, he added.

More market improvements are coming. Rew said the gas-electric harmonization project is still on schedule for a fall implementation, and the enhanced combined cycle project is expected to meet its March 2017 target. (See “Enhanced Combined Cycle Project Moves Forward,” SPP Board of Directors/Members Committee Briefs.)

CAWG Updates

The Cost Allocation Working Group (CAWG) updated the RSC on its work, including several issues which will come up for RSC and/or board votes in July.

Nebraska Power Review Board consultant John Krajewski said he hopes a new member cost-allocation review process will be ready for approval in July. He said the process should add consistency to the process used when new members are being considered or ask for changes to the Tariff.

“When we integrated Nebraska and the IS, there wasn’t a firm process to follow,” Krajewski said. “My impression was we flailed around as an RSC.”

Adam McKinnie, chief regulatory economist with the Missouri Public Service Commission, said the working group’s review of aggregate study waiver criteria will help the committee determine which transmission project costs are paid by companies purchasing transmission service and which are allocated to the SPP footprint. SPP’s aggregate study assesses which projects are necessary to sell transmission-service requests (TSR) to move energy around the SPP system, as well as who pays for those projects.

McKinnie pointed out that costs are initially assigned to the different purchasers once the study is complete, but if those purchasers meet certain criteria, a portion of those costs will be paid for by the region. The amount approved for base plan funding is the “safe harbor,” he said, but TSR purchasers who don’t meet the safe harbor’s three criteria can ask for a waiver.

The CAWG is considering criteria that would limit a utility’s designated resource to no more than 125% of its forecasted load if it’s granted a TSR, ensuring base-plan funding is not used for “resources which are unnecessary or uneconomic.”

“The goal is to make sure only designated resources that are needed or close to forecasted load receive the waivers,” McKinnie said.

Stephen Stoll, a commissioner with the Missouri PSC and chair of the Regional Allocation Review Task Force, told the RSC his group had finalized the language for a new business practice implementing each of the remedies recommended in the 2012 RARTF report. The task force intends to bring the revision request for MOPC and board approval in July.

The business practice is designed to “lay the foundation for documenting the potential [regional-cost allocation review] remedies and clarify the process … implementing [an RCAR] remedy.” The task force is responsible for defining the analytical methods used to review the “reasonableness” of the regional-allocation and zonal-allocation methodologies.

The committee also received a status report from the Transmission Planning Improvement Task Force and an update on the 2016 Integrated Transmission Plan’s 10-Year Assessment and report (See related story, SPP Board of Directors Briefs.)

MISO Settlement Funds Held Up

COO Carl Monroe told the committee that SPP has received funds from the recent $9.6 million settlement with MISO, but that protests have delayed distribution of the money.

MISO agreed to the payment to reimburse SPP and impacted members for its use of their transmission systems since 2014. (See FERC OKs MISO-SPP Transmission Settlement.)

On Jan. 27, SPP proposed a new Tariff Attachment AU to govern the distribution of the settlement revenues. The City of Lincoln, Neb., and four wind farms protested in February.

Lincoln said that SPP’s proposal to create a new revenue allocation methodology is unnecessary, and that the RTO should allocate the revenues under the rules in Tariff Attachment L.

In its answer, SPP said that Attachment L is not applicable to the settlement revenues. Contrary to Lincoln’s protest, SPP said it is not providing point-to-point (PTP) transmission service but available system capacity (ASC) usage.

PTP service is charged based on the amount reserved, regardless of actual scheduled usage, and includes a point of receipt and a point of delivery on the SPP system. ASC usage is charged based on actual usage of the SPP and joint parties’ transmission systems as determined by the flow impact of MISO market dispatches between its North and South regions. (The joint parties are Associated Electric Cooperative Inc., PowerSouth Energy Cooperative, Southern Company Services, Tennessee Valley Authority, Louisiana Gas and Electric and Kentucky Utilities.)

SPP also rejected the wind farms’ complaint that its proposal would circumvent the Z2 revenue crediting process, which gives upgrade sponsors a share of revenues received by SPP when the transmission upgrades they funded are used by others. “Attachment Z2 of the SPP Tariff is simply not applicable to the [joint operating agreement] settlement revenues,” SPP said.

On March 25, the commission accepted SPP’s proposal in part and set the docket for hearing and settlement procedures, saying there were factual issues in dispute that could not be resolved based on the record before it (ER16-791).

The commission rejected SPP’s proposal to reimburse $456,000 spent by some transmission owners on legal expenses in the SPP-MISO dispute. “SPP has not provided any commission precedent permitting a regional transmission organization to reimburse certain stakeholders for legal expenses, nor has SPP shown that the transmission owners that incurred the legal expenses represented the interests of SPP and its transmission customers rather than their own interests,” FERC said.

The first settlement conference was held April 21, with a second scheduled June 16.

In the meantime, Monroe said, SPP has asked FERC for permission to distribute the funds to members who signed on to the settlement agreement. “We will be distributing those funds based on our proposed distribution,” he said, but he noted the distribution would be to entities that can make refunds to SPP “if the settlement is different than … proposed.”

‘Where Policy Issues Go to Die’

Denise Buffington, director of energy policy and corporate counsel with Kansas City Power and Light, asked Monroe whether the MOPC’s recent decision to develop a business practice to address non-Order 1000 seams projects was the right mechanism to resolve FERC’s rejected Tariff revision. (See “SPP Pondering ‘One-Offs’ as Potential Seams Projects,” SPP Markets and Operations Policy Committee Briefs.)

“It feels like a business practice is a place where policy issues go to die,” Buffington said.

“We’ll debate that as we go through the business practice,” Monroe assured her. “No one wanted to go through a FERC refiling. The question we’re still trying to address is whether there’s a gap … the business practice is going to have to deal with where the gap is.”

— Tom Kleckner