On October 18, 2012, FERC conditionally approved Southwest Power Pool, Inc.’s (“SPP”) revised tariff to implement its “Integrated Marketplace,” making SPP the last RTO/ISO to adopt a day-ahead market. The Integrated Marketplace will include a market-based congestion management program and energy markets. The energy markets will consist of day-ahead and real-time energy and operating reserves that utilize locational marginal pricing. Additionally, the new marketplace will include: (1) an allocation of auction revenue rights (“ARR”); (2) a market for the auction of transmission congestion rights (“TCR”); (3) virtual transactions; and (4) a revised mitigation plan. Further, SPP will consolidate sixteen balancing authorities into a single balancing authority that is intended to facilitate integrating wind-power into SPP.

In February 2012, SPP filed the tariff revisions proposing the Integrated Marketplace (see March 12, 2012 edition of the WER). SPP currently only operates a real-time Energy Imbalance Service (“EIS”) market. The new marketplace will not only add the day-ahead, real-time, and operating reserve markets and transmission congestion rights markets, but SPP will now serve multiple roles. SPP will function as the reliability coordinator, balancing authority, transmission service provider, planning coordinator, reserve sharing group administrator, interchange authority and market operator. According to SPP, the new marketplace could provide between $45 million to $100 million in net benefits each year.

Although the Commission approved most of SPP’s proposed tariff amendments, the Commission did deny SPP’s request to allow for a one year moratorium on registering new market participants. The requested moratorium would have begun six months before the new marketplace is implemented, and SPP asked for this moratorium to ensure the system is prepared for the launch of the new marketplace. The Commission said this request was “unsupported and overly burdensome.”

FERC also took issue with numerous proposal details, requiring a 90-day compliance filing that adjusts certain tariff provisions and clarifies certain terms within the tariff. Notably, with regard to SPP’s congestion management proposal, the Commission listed the following provisions that must be added to its tariff as part of the compliance filing:

  1. SPP must include a process for awarding ARRs for contracts that provide for the rollover of transmission agreements;
  2. SPP must identify how pseudo-tied resources and load will be treated with regard to ARR allocation;
  3. SPP must add a provision stating that the TCR auction is subject to review by the market monitor and mitigation, as needed;
  4. SPP must also provide a process for handling two or more winning bids in case there is a tie; and
  5. SPP must submit tariff provisions explaining the process for awarding ARRs and TCRs between the start-up date of the market (March 1, 2014) and the start date for the annual TCR year (June 1, 2014).

FERC also conditioned acceptance of the new marketplace on SPP filing “Readiness and Reversion Plans” and a “Readiness Certification.” Additionally, SPP will be required to file an informational report 15 months after the new marketplace is implemented to evaluate the new Integrated Marketplace based on a full year of data.

At the Commission’s monthly meeting, both Commissioners Norris and Moeller commended SPP and emphasized the importance of the new marketplace. Commissioner Norris also spoke about how the new marketplace may “require more work” before being implemented.

A copy of the Commission order conditionally accepting SPP’s tariff is available here.