FERC approves SPP Resource Adequacy Requirement tariff revision effective July 1
Houston — Southwest Power Pool can implement a Resource Adequacy Requirement program for its footprint, effectively requiring loads with insufficient resources to participate in bilateral capacity markets, as a result of a US Federal Energy Regulatory Commission order issued Tuesday.
hen SPP implemented its integrated marketplace — a centralized market for day-ahead and real-time energy, operating reserves and financial transmission rights — in March 2014, SPP also assumed the balancing authority function for the whole SPP region.
“SPP asserts that its current mechanisms provided in its Planning Criteria are inadequate to provide an appropriate level of assurance that capacity will be available as needed to serve load in the SPP Balancing Authority Area,” FERC said in its order (ER18-1268). “SPP explains that existing assurance options under the SPP Planning Criteria are only applicable to SPP’s load-serving members and therefore do not cover all load in the SPP Balancing Authority Area.”
Loads in the balancing area that are not also load-serving members include “non-member load-serving entities … network and point-to-point transmission service customers and other entities with grandfathered agreements,” SPP spokesman Derek Wingfield said Wednesday.
PLANNING RESERVE MARGINS
Therefore, SPP applied in March to revise its Open Access Transmission Tariff to include a new Attachment AA (Resource Adequacy), with “all the terms and conditions relevant to the establishment, compliance and enforcement of the requirement that each [load responsible entity] in the SPP Balancing Authority Area maintain sufficient capacity and planning reserves to serve its forecasted load.”
An LRE is “an asset owner with registered load in the Integrated Marketplace,” the filing states.
As a first step, the filing requires a planning reserve margin of 12% of an LRE’s “net peak demand,” except the reserve margin would be 9.89% for an LRE with a resource mix of at least 75% hydropower.
The FERC order notes that SPP plans to recalculate the planning reserve margin every two years “based on a probabilistic analysis using a loss of load expectation study.”
SPP defined “net peak demand” as forecast peak demand, minus the projected impact of demand response and behind-the-meter generation that are dispatchable but not registered in the integrated marketplace as a resource and minus the amount of megawatts included in a firm power purchase contract.
DEFICIENCY PAYMENTS
The RAR planning reserve requirement would be applicable for the period of June 1 through September 30 of each year, and failing to maintain that minimum level of reserves would entail a “deficiency payment” equal to the amount of megawatts that a LRE is deficient times a calculated cost-of-new entry (initially $85.61/kW-year) times a “CONE factor.”
The CONE factor varies according to the percentage by which the SPP Balancing Authority’s planning reserve exceeds the required planning reserve margin. If the SPP Balancing Authority’s overall planning reserves exceed the required margin by 3% or less, the CONE factor is 200%, for example. If the SPP Balancing Authority’s overall planning reserves exceed the required margin by 8% or more, the CONE factor is just 125%. When the excess is between 3% and 8%, the CONE factor is 150%.
