SPP to use ‘highway’ method for allocating costs of interregional transmission projects

Southwest Power Pool (SPP), in its July 10 interregional Order 1000 compliance filing, said its protocol for dealing with one adjacent planning region would remain unchanged, requested a waiver for dealing with another planning region, and referenced a previously granted 120-day extension for dealing with the third adjacent planning region (FERC Docket No. ER13-1939).

SPP has a standing joint operating agreement (JOA) with the Midcontinent Independent System Operator (MISO) that covers interregional transmission planning, benefits determination, and cost allocation.

In its Order 1000 compliance filing, SPP stated that both organizations planned to “memorialize interregional coordination and cost allocation requirements … in the standing SPP-MISO” JOA as satisfaction of the Order 1000 requirements. Such an approach, SPP said, was consistent with FERC’s guidance that interregional transmission planning coordination procedures be reflected in an interregional transmission planning coordination on file with FERC, though enough detail must be provided in the utility’s open-access transmission tariff for stakeholders to follow how interregional transmission coordination will be conducted.

Accordingly, SPP amended its tariff to provide a high-level overview of the process contained in the JOA. Those tariff revisions provide basic information about how identified interregional projects will be handled within SPP’s regional process, and about allocation of costs and construction obligations within SPP.

According to SPP’s filing, the cost of approved interregional transmission projects would be recovered regionally though the highway methodology pursuant to the FERC-approved highway/byway cost allocation.

“Under this methodology, 100% of the allocation of costs related to interregional projects will be assigned on a regional (highway) basis, regardless which zone the transmission facility is located,” SPP said, adding, “Allocating costs utilizing a ‘Highway’ methodology will ensure that costs are roughly commensurate with the benefits, and that these projects that will benefit the entire SPP Region will be funded appropriately.”

As with MISO and SERTP, SPP proposed using the “avoided-cost methodology” to apportion the costs of interregional projects.

In general, the proposed avoided cost methodology involves the calculation of the total avoided cost benefits for the regions involved. In determining this interregional total, the regions would calculate the cost of all the regional transmission projects identified in their respective regional plans that would be displaced by the proposed interregional transmission project.

SPP seeks waiver of coordination with SERTP

SPP conditionally filed common tariff provisions it developed with the Southeastern Regional Transmission Planning (SERTP) region while it simultaneously requested that FERC grant a limited waiver of Order 1000’s interregional coordination and cost allocation requirements with that region. In its filing, SPP described SERTP as a group comprising both jurisdictional public utilities and utilities that are not subject to FERC’s jurisdiction and pointed out that its only interconnection with the region was through Associated Electric Cooperative, a non-jurisdictional utility “that does not intend to revise its tariff to implement the Order No. 1000 interregional coordination and cost allocation reforms.”

That connection limits SPP’s access to the jurisdictional utilities within SERTP and places SPP in a difficult position, the regional transmission organization said.

“Denying the requested limited waiver would place an undue burden on SPP and its members and stakeholders to engage in interregional coordination and cost allocation with an entity that is not subject to the requirements of Order No. 1000, and [would place] SPP in the untenable position of incorporating language into its tariff that it could possibly violate due to inaction on the part of a party that is not bound by the SPP tariff,” SPP said.

SPP engaged in discussions with the FERC-jurisdictional members of SERTP, which it said intend to implement Order 1000’s interregional coordination and cost allocation requirements through filings to modify the tariffs of those entities. However, despite good faith discussions with SERTP representatives, the parties were unable to negotiate terms that allow for meaningful interregional coordination procedures and cost allocation mechanisms that would include both jurisdictional public utility transmission providers in SERTP and non-jurisdictional SERTP sponsors, SPP said.

“For all of these reasons, the commission should grant SPP’s request for a limited waiver of the Order No. 1000 interregional coordination and cost allocation requirements with respect to SERTP, and should not require SPP to incorporate language into its tariff to effectuate interregional coordination and cost allocation procedures with SERTP,” SPP said.

SPP pointed to another FERC decision in which the commission granted a waiver to the Maine Public Service Company, which was in a similar situation. In that case, FERC ruled, “Because the non-public utility transmission provider… does not propose to comply with the requirements of Order No.1000 … [the public utility transmission provider] cannot participate in a transmission planning region that meets Order No. 1000’s regional scope requirements.”

While Maine Public’s situation is not entirely analogous, the same principle should apply because SPP cannot coordinate with SERTP through a non-participating, nonjurisdictional SERTP member, SPP said.

Despite its request, SPP conditionally filed an interregional coordination and cost allocation proposal with SERTP, which reflected a common approach and parallel tariff language to satisfy Order 1000’s interregional and cost allocation requirements. Except for two discrete areas of disagreement, the SPP-SERTP proposal provided a common approach and parallel tariff language in SPP’s and the jurisdictional public utility transmission providers’ respective tariffs to satisfy Order 1000’s interregional coordination and cost allocation requirements, SPP said.

The two areas of disagreement center on the ability of stakeholders to propose new projects and the joint evaluation of interregional transmission projects for cost allocation purposes.

With regard to stakeholders proposing new interregional projects, SPP’s proposal allows stakeholders to address transmission needs regardless of whether the needs have been previously approved in either SPP or SERTP’s regional planning processes. Under the proposal filed by the FERC-jurisdictional members of SERTP, stakeholders may propose transmission projects for consideration as an interregional project but they must be more efficient or cost-effective than transmission projects already approved in either party’s regional transmission planning process.

SPP’s compliance filing also included language intended to provide some flexibility in the event that an interregional project does not satisfy all of the threshold criteria for cost allocation for both regions, but the SPP and SERTP language differed.

SPP proposed allowing the parties to consider projects that do not meet the threshold criteria of either planning region if either region requested that a specific project be considered. Conversely, the proposal filed by the SERTP public utility transmission providers would consider such proposed interregional projects on a case by case basis.

“The minor language differences between the competing proposals of the SERTP public utility transmission providers and SPP present significant obstacles to joint evaluation of any interregional facility outside the respective criteria of the planning regions,” SPP said in requesting that FERC approve its version.

While SPP’s filing also dealt with the adjacent MISO and Midcontinent Area Power Pool (MAPP) planning regions, SPP specifically stated that – unlike compliance filings made by other planning regions around the country – theirs was not a joint filing with the other regions. Rather, SPP and the other planning regions filed separately, but coordinated the filings to provide FERC with “a clear understanding of the agreed to processes for interregional coordination between the respective planning regions.”

Further, SPP emphasized that the common tariff provisions between SPP and its neighboring regions were not identical to each other.

“Rather, each respective neighboring planning region’s interregional coordination procedures with SPP are unique in their approaches to compliance with the requirements of Order No. 1000,” SPP said.

In Order 1000, FERC explicitly recognized the differences between existing transmission planning regions, and therefore declined to adopt standardized or pro forma interregional transmission coordination procedures.

With regard to its compliance filing with the MAPP planning region, SPP and MISO on June 13 submitted a joint motion for extension of time and expedited commission action as it pertains to SPP and MISO’s compliance requirements and respective development of an interregional coordination process with NorthWestern (NYSE: NWE), which is part of MAPP’s planning region. FERC granted a 120 day extension pertaining to that portion of the filing on July 8.

SPP requested that its interregional compliance filing be made effective on the same date FERC makes its regional compliance filing effective. SPP’s regional compliance filing requests an effective date of March 30 following the commission’s acceptance of that filing.