On January 4, 2017, FERC issued an order conditionally accepting certain Open Access Transmission Tariff (“Tariff”) revisions submitted by the Southwest Power Pool, Inc. (“SPP”) in November 2016. The proposed Tariff revisions amend Attachment AE of the SPP Tariff, including the sections governing the Auction Revenue Right (“ARR”) Allocation and Transmission Congestion Right (“TCR”) Offer and Bid submittal processes in SPP’s Integrated Marketplace.

In its proposal, SPP sought to clarify the effect of Market Participant bids that impermissibly include Electronically Equivalent Settlement Locations (“EESL”) pairs in their ARR and TCR bids. SPP currently prohibits bidding between EESL pairs because such bids would otherwise essentially allow for near-infinite quantities of TCRs to be awarded at zero cost. Currently, SPP manually scrubs EESL bids from the TCR auction/allocation process; however, SPP is currently working to implement system enhancements that will automatically remove such bids from the TCR auction/allocation process. SPP’s Tariff, however, does not acknowledge that EESL-based ARR and TCR bids never make it into the relevant market analyses (regardless of whether they are removed manually or automatically). Thus, as SPP noted in its filing, the mere act of submitting such bids could be interpreted as a Tariff violation.

To remedy this confusion, SPP proposed several language revisions to the Tariff sections discussing ARRs and TCRs. One such change was to strike the term “electronically equivalent.” Another such change was to remove the term “collocated” from Attachment AE when referring to EESL pairs. A group of municipal utilities intervened to argue that SPP’s proposed revisions were just as ambiguous as the language to be replaced, and noted that SPP failed to explain its removal of “electronically equivalent.”

In its order, FERC conditionally accepted SPP’s proposed Tariff revisions, but partially agreed with the municipal utility intervenors that some of the changes created more ambiguity than clarity. In particular, FERC agreed with the intervenors that SPP failed to explain why “electronically equivalent” is problematic and should be removed. FERC also noted that the term’s proposed replacement language could “add ambiguity to the Tariff” by expanding the scope of exclusions from ARR eligibility as well as SPP’s discretion to determine the scope of these exclusions. As such, FERC accepted the proposed changes with the exception of the removal of “electronically equivalent,” and directed SPP to submit a compliance filing within thirty days demonstrating its continued use of that term in its Tariff.

A copy of FERC’s order can be found here.