FERC has accepted SPP tariff revisions that allow make-whole payments for incremental energy costs affected by incremental energy offer caps under Order 831, regardless of the resource’s reason for commitment.
The commission said in a Sept. 19 order that the revisions provide an opportunity for cost recovery, ensuring the resources have an opportunity to recover their incremental energy costs, and an incentive to provide accurate operating parameters and to follow dispatch instructions during Order 831 conditions (ER24-2570).
The revisions are effective Oct. 16.
FERC’s Order 831 revised regulations to address incremental energy offer caps by requiring each commission-jurisdictional grid operator to: cap incremental energy offers at the higher of $1,000/MWh or that resource’s verified cost-based incremental energy offer; and cap verified cost-based incremental energy offers at $2,000/MWh when calculating LMPs.
SPP uses energy offers between $1,000 and $2,000/MWh to set the LMP, but its Market Monitoring Unit must verify the offers in advance. The MMU verifies whether energy offers above $1,000/MWh reasonably reflect the resource’s actual or expected costs prior to calculating LMPs.
The Monitor told FERC it supported SPP’s proposal, contending there are gaps in the make-whole payment construct that could impede generator owners from receiving full reimbursements under Order 831. It said the gaps could incentivize generators to reduce their financial risks, which could harm the market during extreme conditions.
