By Tom Kleckner

SPP’s “year of focus” on the eight-year-old Z2 crediting project may now stretch into 2017 after the Board of Directors on Monday sided with stakeholders and delayed a vote on waiver requests that would allow the work to stay on schedule.

SPP staff last week asked the Markets and Operations Policy Committee, the Regional State Committee and the Cost Allocation Working Group to reject requests by six transmission customers for waivers that would reduce their bills under the project. All three committees tabled or took no action on the requests, despite staff warnings that the failure to act could push the project into next year.

On Monday, the board followed suit, deferring action during a special one-hour conference call with the Members Committee. The MOPC will try to resolve stakeholder concerns over staff’s reading of the RTO’s Tariff, waiver eligibility and invoice amounts during its July 12-13 quarterly meeting.

‘Full and Proper Vetting’ Needed

“I fully understand SPP’s desire to move forward and get the baseline established to do that,” said Les Evans, COO for Kansas Electric Power Cooperative, whose company is facing a $6 million bill. “We believe we need to have a face-to-face so everyone can have a full and proper vetting of the issues.”

“I listened to the MOPC call … a number of points were raised that I wholeheartedly agree with,” SPP Director Phyllis Bernard said. “I think [the vote] was premature. I think [the discussion] needs to be face-to-face. My concern is if the board [was] to take a vote today, we [would be] affirming something that isn’t particularly clear and that’s hotly disputed.”

Attachment Z2 of the Tariff details how entities that fund network upgrades can receive reimbursements through transmission service requests that could not have been honored “but for” the upgrade. But a series of problems have prevented SPP from doing a proper accounting to determine which companies owe money and which are due to receive it.

In January, the Z2 project team set a Nov. 4 date for the project’s completion. CEO Nick Brown told members that same month the project would be his organization’s focus this year. (See “Brown: Finishing Z2 Crediting Project RTO’s Top Priority,” SPP Board of Directors/Members Committee Briefs.)

$99 Million in Waiver Requests

Staff asked the three committees last week to recommend approving a different set of waivers allowing four point-to-point transmission customers to reduce their Z2 obligations. All three committees endorsed the recommendation — as did the board Monday — meaning that $56.4 million in payments due from American Electric Power, Arkansas Electric Cooperative Corp., the Northeast Texas Electric Cooperative and the Oklahoma Municipal Power Authority (OMPA) will now be allocated to the base plan and included in regional and zonal charges under SPP’s Tariff rather than being directly assigned to the companies, who were designated as “Group A.”

Staff also asked stakeholders to reject an additional $42.8 million in “Group B” waiver requests from AEP, OMPA and four additional transmission customers that SPP said don’t qualify for waivers. But Steve Purdy, SPP’s manager of generation interconnections, told the RSC an error had incorrectly included OMPA’s waiver request in Group B and said that further requests in the group may also be “waivable.”

Because the MOPC had tabled the Group B recommendation earlier in the week, the RSC voted unanimously to delay its decision until it meets July 18. The CAWG also agreed not to vote on the Group B recommendation and will discuss those waivers at its next meeting July 6.

Why Go Ahead with a Vote?

“If we know there are issues out there, why are we going ahead with a vote?” asked Oklahoma Corporation Commission Vice Chairman Dana Murphy on June 10. “This process has been going on for eight years, and the first presentation made to us was a few months ago. If we’ve waited eight years, I don’t think a few months will cost us.”

SPP COO Carl Monroe said approving both staff recommendations would allow the RTO to continue the historical calculation of transmission credits owed and due. He said two months of work has already gone into determining who owes what and how much, work that might have to be redone if further waivers are granted.

Staff said Monday it still plans to publish the final numbers, the source of much stakeholder consternation, in September. The first invoices will be due in November.

“Part of the calculations depend on knowing the … base-plan funding rates going forward,” Monroe said. “With no action taken on this, the best we can assume is Group A is the only one waived. If that changes in the next few months, that backs us up.”

“I don’t know that July 18 affects us that much, given the eight years it’s taken to get here,” Murphy said.

Donna Nelson, chair of the Public Utility Commission of Texas, joined Murphy in resisting the Group B recommendation. She said the situation facing the RSC was “systemic” of the larger problem facing the committee.

“Eleven years is a long time,” said Nelson, counting from 2005, when SPP created the aggregate transmission service study process that resulted in Attachment Z. “We need to have the option of doing what we think is right and not be blamed for delaying something that’s been delayed forever.”

Not Assigning Blame

Monroe said staff is not attempting to assign blame. “The intent is to continue the process,” he said.

During an open meeting of the Texas PUC on Thursday, Nelson updated her fellow commissioners on the Z2 billings. Commissioner Brandy Marty Marquez said she found the amount of money involved “shocking.”

“I can understand the concerns being raised,” Marquez said. “We are going to be concerned about the impact to ratepayers.”

SPP staff divided the waiver applicants into two groups after spending several months calculating credit payments due from long-term reservations for transmission service and determining whether the credits should be base-plan funded or directly assigned to individual transmission customers. Staff sent reports on April 28 to all customers with directly assigned upgrade costs, giving them an opportunity to ask for waivers.

The board in April approved a level payment plan in which each entity with a net payable will be given the option to pay the entire amount at once or in equal installments every three months. Payments were to begin in November, with the final installment due in August 2017. (See “Board Approves Z2 Level Payment Plan,” SPP Board of Directors Briefs.)

SPP has scheduled a two-day review session for the Z2 credit-settlement system June 28-29 at its Little Rock headquarters. The session will run 9 a.m. to 4:30 p.m. each day.