Wednesday, March 20, 2019

SPP FERC Briefs: FCAs, NPPD Complaint, Refunds

By Tom Kleckner

FERC Approves SPP’s Streamlined FCA Process

FERC last week approved SPP’s plan to streamline the process by which it designates frequently constrained areas (FCAs), effective Dec. 22 (ER19-166).

The commission had directed SPP to seek approval of any new, removed or modified FCAs when the RTO submitted Tariff revisions in 2012 to implement its Integrated Marketplace. SPP and its Market Monitoring Unit worked with stakeholders to develop the designation process for areas with high levels of congestion and a dominant or pivotal supplier.

The commission agreed with SPP’s argument that the designation process may result in a significant lag between the MMU’s annual evaluation of FCAs and when they are updated in the Tariff. It said SPP’s proposal allows the RTO and MMU to address market power concerns in a timely fashion.

“We find that this delay could result in the inappropriate application of mitigation measures during the lag period or, conversely, the lack of application of mitigation measures when appropriate, potentially allowing market participants to exercise market power,” FERC said.

SPP’s Tariff requires the MMU to re-evaluate FCAs at least annually.

The MMU said it strongly supported SPP’s proposed revisions, noting that under the previous process, it could take up to six months to update the FCA list following its report. With the change, the Monitor’s updates and associated analysis will be publicly available at least 14 days before any updates take effect. Affected market participants can raise any concerns with the MMU.

SPP stakeholders approved the Tariff revision during July’s Board of Directors and Markets and Operations Policy Committee meetings.

The MMU’s 2017 analysis reduced the FCA list to one, effective April 2018. (See SPP’s FCA List Pared to One Area.)

NPPD Complaint Against Tri-State Denied

Tri-State G&T transmission upgrade project in Colorado | Tri-State G&T

The commission denied Nebraska Public Power District’s complaint against fellow SPP member Tri-State Generation and Transmission Association that certain costs in the latter’s annual transmission revenue requirement (ATRR) and its failure to credit certain revenues are unjust and unreasonable (EL18-194).

NPPD alleged that Tri-State unfairly included in its ATRR the costs of two grandfathered agreements (GFAs) and its facilities not physically connected to SPP’s system. It also said Tri-State excluded point-to-point revenue from the credits applicable to revenue requirements for network service. The utility asked the commission to remove all costs related to the two GFAs and the facilities from Tri-State’s ATRR and SPP’s rates for NPPD’s transmission zone, and to include point-to-point revenue as a credit to the cooperative’s revenue requirement.

The complaint stems from Tri-State’s placement in NPPD’s transmission zone when the cooperative wholesale power supplier joined SPP in 2015 as part of the Integrated System. NPPD protested at the time but reached a settlement with Tri-State and SPP in 2017.

FERC ruled the disputed cost components were covered in the settlement agreement, saying that NPPD had failed to demonstrate that without its proposed modifications, the settlement “seriously harms the public interest.”

SPS Gets Partial Approval to Issue Refunds

El Paso Natural Gas’ iconic “Blue Flame” headquarters in El Paso | Texas Historical Commission

FERC granted one of Southwestern Public Service’s three waiver requests related to the issuance of customer refunds, but it rejected a second and dismissed a third as unnecessary (ER18-2377).

The Xcel Energy subsidiary requested the waivers in September, saying it had received a $12 million refund from El Paso Natural Gas (EPNG), which provides fuel to SPS and third-party-owned gas-fired plants on its system. The utility said each wholesale requirements customer has a power supply agreement that contains a fuel cost adjustment clause, through which SPS recovers fuel transportation costs.

The commission accepted SPS’ request for a waiver of section 35.14 of FERC’s regulations, which limits the fuel cost adjustment clause to the recovery of current fuel costs. That clears the way for the utility to issue about $3 million in refunds to eight of its current and former wholesale customers.

FERC rejected the utility’s request for a waiver of section 35.19a of its regulations and its methodology for computing interest on refunds. SPS requested the waiver to avoid paying interest for the period between its receipt of the refunds from EPNG and the distribution of refunds to SPS’ wholesale customers.

The commission said the utility’s arguments were insufficient to explain why it should be exempt from paying interest.

Finally, FERC dismissed SPS’ request for a waiver from the utility’s fuel cost adjustment protocols as unnecessary, saying they don’t conflict with providing EPNG refunds to wholesale requirements customers.