FERC Filings
EPSA's Motion to Intervene Out of Time and Comments on the SPP Open Access Tariff Revisions
Comments
EPSA appreciates the effort that SPP, the SPP Regional State Committee (RSC), and its stakeholders have devoted to this filing as it is extremely important to clearly outline the responsibilities of transmission providers, owners, and customers with respect to costs associated with transmission expansion. Accordingly, EPSA vigorously supports any and all measures that will improve or expand transmission system infrastructure, while clearly allocating regional cost responsibilities to the appropriate parties. In this regard, the fair and nondiscriminatory sharing of these costs, and the specific circumstances and procedures for imposing them, is especially important.
SPP relied upon an open, deliberative process that fully utilized the SPP RSC to establish a transmission cost allocation plan that benefits the region. The process demonstrated significant deference to the policy objectives of retail regulators’ regional interests, while also including both FERC jurisdictional and non-jurisdictional regional market participants. As SPP acknowledges, the process yielded a transmission pricing plan that ensures regional grid benefits that can work for all customers and keep parochial interests in the region from preventing the construction of needed transmission infrastructure.
Consistent with the Commission’s findings in its February 11 Order on Rehearing of SPP’s July 2, 2004 compliance filing that, “like any other market participant, the RSC should provide direction and input into the SPP process,” the SPP RSC worked with market participants to establish the pricing proposal before referring it to SPP for its approval. The RSC’s involvement in the process allowed SPP state regulators to use their local and regional expertise to shape a non-discriminatory transmission pricing plan for the SPP region. Moreover, the development of the transmission pricing proposal engaged state regulators in the process so that they could ensure that retail customers would not shoulder an unfair or inordinate amount of transmission infrastructure costs. Therefore, the Commission can rule on this cost allocation plan knowing that state regulators and regional stakeholders have created a plan that is in the best interest of regional electricity consumers.
SPP acknowledges that the RSC proposal may meet with opposition from parties that would prefer to derail this regional plan. By supporting the transmission pricing proposal efforts of SPP and the SPP RSC, the Commission not only promotes its goal of competitive wholesale market development, but also fosters the opportunity to develop similar pricing proposals by RTOs in other regions. The SPP pricing proposal facilitates the provision of adequate transmission infrastructure and the maintenance of reliability. Currently, SPP faces significant transmission upgrade needs for which no investment is being made under today’s policy, thus jeopardizing system reliability and serving as a barrier to the development of a wholesale competitive market. The clear and detailed processes outlined in the SPP proposal will promote infrastructure investment and lessen the congestion barriers blocking customers from optimally utilizing the SPP system.
Under SPP’s proposal, network upgrades will be classified into four types: Base Plan Upgrades, Economic Upgrades, Generation Interconnection Related Upgrades and Upgrades Related to Transmission Requests (Requested Upgrades). Base Plan Upgrades are those included in the SPP transmission expansion plan in order to ensure system reliability. Base Plan Upgrades can also include upgrades needed for a new or changed designated network resource, provided that (i) the designated resource is committed for at least five years, (ii) the network customer’s total designated capacity does not exceed 125% of its projected peak load, and (iii) the cost of the upgrades do not exceed $180,000/Megawatt (MW) times the capacity being designated (slightly higher than the current SPP system average cost of about $170,000/MW). Base Plan Upgrades in excess of $100,000 will be allocated one-third regionally with the remaining two-thirds allocated to the zones that benefit from the upgrades based upon an analysis of the incremental impact using SPP’s MW-mile methodology. The one-third/two-thirds allocation is based upon a study performed by SPP using its MW-mile method which determined that approximately one-third of Base Plan Upgrades provides regional benefits, while the remainder serves customers within the local zone. The regional and zonal Base Plan Charges are assessed to point-to-point customers per KW of reserved capacity, and to network customers based upon their load ratio share, which will include bundled retail and grandfathered loads.
Economic Upgrades, Generation Interconnection Related Upgrades and Requested Upgrades will be allocated to the sponsoring entity who will receive transmission credits in accordance with the existing provisions under SPP’s OATT. If all or a portion of these upgrades defer or displace the need for a Base Plan Upgrade, then all or a portion of those upgrades will be allocated using the Base Plan Upgrade allocation method up to the avoided or deferred cost of the subject Base Plan Upgrade, adjusted for time value.
These protocols of the SPP transmission cost allocation proposal provide a clear process and offer certainty to market participants. First, the pricing proposal contains a specific bright-line test for when upgrades qualify for funding based on the proposed regional and zonal approach. Second, the SPP proposal outlines specific criteria that allow other types of upgrades to qualify as Base Plan Upgrades under certain circumstances. Third, the proposal provides certainty regarding which type of upgrade qualifies for transmission credits, whether it is for existing generation projects or for prospective projects.
The Commission’s approval of the SPP cost allocation plan would be consistent with Commission precedent established in other regional markets with clear cost allocation rules. The proposal is also consistent with the Commission’s existing pricing policies in the NE-ISO and PJM, regions that provide specific cost-allocation rules for various classes of upgrades, and thus should be accepted and utilized as a template in other regions.