On September 20, 2012, FERC conditionally accepted Southwest Power Pool, Inc.’s (“SPP”) proposal to incorporate systematic and automated curtailments of new Non-Dispatchable Resources in SPP’s Energy Imbalance Service Market during periods of congestion.  In doing so, the Commission determined that SPP will afford “Non-Dispatchable Resources equal curtailment priority treatment and exposure to Uninstructed Deviation Charges commensurate with other resources that are similarly situated, on the basis of their transmission reservation rights and whether their output is scheduled or unscheduled.”  However, FERC limited the application of SPP’s proposal to new Non-Dispatchable Resources that become commercially operable on or after October 15, 2012, subject to a compliance filing from SPP demonstrating that its proposal should also apply to existing Non-Dispatchable Resources.

Previously, SPP issued curtailment instructions to Non-Dispatchable Resources – defined in SPP as “Intermittent Resources,” and including Wind and Solar Generators, Qualifying Facilities, and resources that are operating in a Start-up/Shut-down or Test mode or operating under Exigent conditions – manually via telephone.   Under those circumstances, SPP usually only curtails the largest Non-Dispatchable Resource contributing to a constraint.  SPP argued in its proposal that by making the curtailments automated, it will achieve a more efficient, and a more equitable, process of curtailment.  SPP also noted that this issue is of particular importance as the quantity of Non-Dispatchable Resources has increased over time, with an expectation that there may be an additional 4,000 MW of Non-Dispatchable Resources added to SPP’s system over the next three years. 

Under SPP’s proposal, if there is insufficient Energy Balance Service available during periods of congestion, SPP will curtail all transmission schedules that impact the congestion, working from the lowest to highest priority.  Therefore, Non-Dispatchable Resources, including wind and solar resources, will be curtailed based on their existing transmission service priority.

Priority will be determined based on whether the Non-Dispatchable Resource is: “(1) scheduling against a transmission reservation; (2) a [Qualifying Facility (“QF”)] exercising its rights under [the Public Utility Regulatory Policies Act (“PURPA”)] to deliver its net output to their host utility; or (3) using unscheduled service.”  QF output sold under PURPA will be curtailed proportionally and will be considered the equivalent of firm service.  All other Non-Dispatchable Resources will have curtailment priority for scheduled output based on the curtailment priority of its scheduled service.  Unscheduled output will have the same curtailment priority as hourly non-firm transmission service.  Furthermore, security-constrained economic dispatch will be exhausted before any Non-Dispatchable Resources are curtailed.  If Non-Dispatchable Resources fail to comply with curtailment instructions and dispatch as directed, they will now be subject to SPP’s Uninstructed Deviation Charges. 

Notably, FERC determined that SPP did not justify that its proposal should apply to existing Non-Dispatchable Resources.  Accordingly, as accepted by the Commission, the proposal is limited to Non-Dispatchable Resources that become commercially operable on or after October 15, 2012, the effective date of SPP’s proposal.  Going forward, FERC ordered SPP to undertake a stakeholder process to develop a revised proposal that addresses existing Non-Dispatchable Resources.  If accepted, SPP’s compliance filing regarding existing Non-Dispatchable Resources will become effective on September 20, 2013. 

FERC also directed SPP to modify its tariff so that SPP will only use the actual output, as opposed to the total firm transmission rights associated with a given Non-Dispatchable Resource, in its curtailment analysis.  FERC also noted that Order No. 764 gives Regional Transmission Organizations until June 22, 2013 to implement 15-minute scheduling capability.  As such, FERC declined to require SPP to implement 15-minute scheduling or to make other real-time adjustments to SPP’s scheduling.  Finally, FERC ordered SPP to address in its compliance filing how Non-Dispatchable Resources will be treated within the SPP’s Integrated Marketplace filing in Docket No. ER12-1179-000.

For a copy of the order, click here.