On January 29, 2013, FERC approved Southwest Power Pool, Inc.’s (“SPP”) proposal to modify the SPP through-and-out rate zonal rate to a region-wide rate equal to the average rate of all SPP zones. Under its current methodology, SPP’s rate for point-to-point through-and-out transmission service is calculated using a combination of its Schedule 7 point-to-point rates and Schedule 11 zonal and regional rates. The new methodology will remove the zonal component when calculating through-and-out transmission service within SPP and implement a single regional average rate for through-and-out service.
According to SPP, its current rate methodology for through-and-out transmission service “result[ed] in substantial variability in rates among SPP’s zones.” To address this issue, SPP proposed the new methodology in an attempt to eliminate rate variability and “provide more consistent treatment of transmission service.”
Multiple parties protested SPP’s through-and-out tariff revision, alleging that the proposal was unduly discriminatory and did not allow customers a transition period to evaluate the new rate design. FERC rejected those protests, noting that the new rate “fairly and equitably recovers the Schedule 11 zonal costs when transmission service sinks outside of the SPP footprint.” FERC also rejected the request for a grace or transition period because, according to FERC, a delay would result in the perpetuation of inequitable rates among transmission customers.
The tariff revision was accepted as effective November 1, 2012. A copy of the order is available here.