On March 3, 2017, Southwest Power Pool, Inc. (“SPP”) filed revisions to its Open Access Transmission Tariff (“Tariff”) to implement a Resource Adequacy Requirement (“RAR”) applicable to all entities responsible for serving load (“LREs”) within the SPP Balancing Authority Area (“BAA”). SPP seeks to implement the RAR for the forthcoming summer period from June 1, 2017 through September 30, 2017, while delaying the assessment of penalties for non-compliance until the 2018 RAR cycle.

According to the filing, SPP staff and stakeholders have been discussing the need for resource adequacy within the SPP BAA since 2014. SPP maintains that its existing mechanisms to assure adequate resource and planning reserve capacity have been rendered insufficient by the integration of new transmission facilities and load covering an ever-widening geographic footprint.

SPP’s proposed RAR is an enforceable requirement that each LRE in the SPP BAA maintains sufficient capacity and planned reserves to serve its load. SPP intends to implement the RAR by adding a new Attachment AA to its Tariff and revising the existing Attachment AE of its Tariff. The Tariff revisions establish a planning reserve margin requirement equal to an LRE’s net peak demand multiplied by 12%, or 9.89% for LREs that utilize firm capacity that is 75% hydro-based generation. Additionally, the Tariff revisions establish the RAR summer compliance period as June 1 through September 30 of each calendar year. For LREs that fail to comply, SPP seeks to impose deficiency payments based on the Cost of New Entry (“CONE”) for new natural gas peaking generation facilities to be constructed in the SPP region. SPP proposes an initial CONE of $85.61 per kilowatt year. SPP proposes to distribute collected deficiency payments to LREs that have excess capacity above the amount needed to comply with the RAR. Additionally, SPP’s proposed Tariff revisions include registration and reporting requirements for LREs that will allow SPP to track RAR compliance.

The SPP RAR filing is available here.