SPP’s Market Monitoring Unit filed its 2015 State of the Market report with FERC on Friday, saying the Integrated Marketplace’s second year of operation showed “significant maturing,” illustrated by high participation, “lower levels of make-whole payments and mitigation compared to other markets, and a modest level of scarcity pricing.”
The MMU’s report noted the market was affected by low natural gas prices, increasing wind generation and an expanding footprint. The RTO’s territory grew about 10% in both generation and load with the October addition of the Integrated System, which covers the Dakotas and parts of several other Upper Midwestern states.
According to the report, average monthly natural gas prices were “generally flat” at about $2.50/MMBtu through September, declining to below $2/MMBtu in December. The energy market’s average all-in price was $23.48/MWh.
The MMU said the amount of wind energy continues to increase and represented almost 20% of total SPP generation in November and December. Although congestion declined systemwide, it increased in areas with wind generation.
Coal generation, on the other hand, has declined from a historical average of 60 to 65% to an average of 55% in 2015. In November, coal represented only 45% of SPP’s total generation, according to the report.
SPP ended the year with 12,398 MW of installed wind capacity, a 44% increase from the 8,606 MW in 2014. The MMU said actual generation resulting from new capacity does not show up in the market for several months after registration, and the full impact of the nearly 4,000 MW in new wind capacity will not be felt until 2016.
“Initial results from 2016 indicate that at times generation is approaching 50% of total load,” the MMU said, a “substantial increase” from the 34% average in 2015. SPP’s current wind penetration record is 48.32%, set April 5.
The MMU said the market saw a 156-MW increase in installed generation capacity to 67,251 MW. Along with a slightly lower system peak load compared to 2014, that resulted in a small increase in the market resource margin, from 48% in 2014 to 49%.
“Given the large resource margin and the frequency with which the LMP represents inexpensive generation,” the report said, “prices generally did not rise to levels high enough to support investment in new generating capacity.”
The MMU presented a draft version of the report during the July Board of Directors meeting. (See “MMU Shares Draft State of the Market Report,” SPP Board of Directors and Members Committee Briefs.)
Fitch Affirms SPP’s Long-Term Debt at A, Gives Stable Rating
Fitch Ratings on Friday affirmed SPP’s long-term issuer default rating (IDR) at “A” and gave the RTO a “stable” rating outlook. Fitch also affirmed SPP’s short-term IDR at “F1” and noted the actions affected approximately $268 million in debt.
The agency cited as positives the $66 million in debt maturities being repaid with available cash through 2018 and the $71 million in capital expenditures through 2018, a 19% decrease compared to the prior three years.
Fitch also noted SPP’s projection that the addition of the Integrated System will produce $334.1 million in savings over 10 years.
It said the RTO’s voluntary membership “is a modest credit concern” but that the departure risk “is mitigated by the requirement that the exiting member pay a fee equal to its share of SPP’s outstanding debt and other committed expenses as an ‘exit charge.’”
SPP RE Sets Week of Meetings in Oklahoma City
The SPP Regional Entity has room for either in-person or webinar attendance for its fall workshop Sept. 20-21 in Oklahoma City. The workshop is sandwiched between a Regional Compliance Working Group meeting Sept. 19 and an RTO compliance forum Sept. 21-22. All meetings will be held at the Skirvin Hilton Hotel.
– Tom Kleckner
