On April 24, 2009, the Federal Energy Regulatory Commission (“Commission” or “FERC”) approved a wind transmission cost allocation proposal by the Southwest Power Pool, Inc. (“SPP”), designed to reduce barriers to integrating wind power in the region and thereby expand the availability of wind generation resources.
FERC’s Order updates SPP’s Open Access Transmission Tariff by making more of the costs associated with wind resources eligible for “base plan” funding. Base plan funding is SPP’s cost allocation methodology for certain network upgrades that are included in and constructed pursuant to the SPP transmission expansion plan in order to ensure the reliability of the transmission system.

SPP’s proposal generally increases base plan eligibility for network upgrade costs associated with wind resources. However, SPP also proposed a limitation that such network upgrades will qualify for base plan funding if the sum of a customer’s new and existing transmission capacity designated for wind does not exceed twenty percent of the customer’s projected system peak responsibility in the first year the customer plans to take service from the wind resource. FERC accepted the proposal, but gave SPP one year to evaluate the integration of wind generating facilities into the system and report the results to FERC to ensure that the limit will not unnecessarily impede wind resource development.

As a result, SPP will now allocate a greater percentage of network upgrade costs associated with wind resources to the entire region. FERC Chairman Jon Wellinghoff said that “our action today represents a significant step for SPP toward leveling the playing field for all generating resources. This plan also ensures that zones with substantial wind resources do not bear a disproportionate amount of the cost of network upgrades that are needed for those resources to serve loads in other zones.”

SPP is a FERC approved regional transmission organization that serves portions of Arkansas, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma, and Texas. The Commission’s order is available at: http://www.ferc.gov/whats-new/comm-meet/2009/