_Southwest Power Pool



Southwest Power Pool

REGIONAL TARIFF WORKING GROUP

January 11-12, 2000 Meeting Minutes

Embassy Suites Outdoor World Hotel – D/FW Airport

TUESDAY

Agenda Item 1 – Call to Order & Introductions

The Regional Tariff Working Group (RTWG) meeting was called to order at 9:48 a.m. by Chair Dick Dixon (WERE) with a welcome to the first meeting of this newly structured group and round of introductions. Other RTWG members present were; John Gunesch (OKGE), James Armke (CESW), Charles Yeung (ENRON), Ron Kite (KCPL), Jim Sherwood (SWPA), Scott Helyer (Tenaska), Gene Anderson (OMPA), Rick Rucker (Coral) and proxy for Kim Casey (Dynegy), Robert Elrod for Gary Roulet (WFEC), Chris Dawson for Huntis Dittmar (ETEX), Mike Proctor for Steve Dottheim (MOPUC), and Nick Brown and Pat Bourne. Others in attendance included Dave Macey (MIPU), Les Brown (OKGE), Tracey Hannon (SWPA), Barbara DelGrosso (SPRA), Rick Henley (Jonesboro), Mike Wies (SPS), Bernie Cevera (BPU), Darrell Dunlap (CLWC), Bill Spears (CESW), Wendy Isley (KCPL) and Bill Phillips (SPP). Ricky Bittle (AREC), Bob Bennett (Aquila), Rick McCord (EMDE) and Wes Berger (SWPS) were unable to attend.

Written proxy statements were received as stated above. Dick then referred to the meeting agenda and background materials distributed by Pat Bourne via the RTWG email exploder on Friday, January 7, 2000 and thanked everyone for attending this important meeting.

Agenda Item 2 – Approval of Minutes

Approval of the October 20, 1999 meeting minutes was deferred pending distribution.

Agenda Item 3 – Review of Working Group Membership

Nick Brown reported that John Marschewski had approved the RPWG recommendations for Rick McCord (EMDE) to replace Rod Nefsky (CLECO) and Rick Rucker (Coral) to replace Marvin Carraway (CLWL) on the working group. Nick stated that the Nominating Task Force will be recommending to the Board of Directors next week the existing organizational structure for approval. This approval is in conjunction with a review linked to the two-year term of the chair of the board.

Agenda Item 4 – Update on Commercial Practices Committee and Board of Directors Meetings

Nick Brown reported that the Commercial Practices Committee (CPC) and Board of Directors approved without opposition the new RTWG scope at the November 2, 1999 and November 8, 1999 meetings respectively.

Agenda Item 5 – Update on SPP Regulatory Filings

Dick Dixon reported that effective November 1, 1999, MW-mile pricing of transmission service was eliminated pursuant to Docket ER99-4327. Dick then noted that the FERC complaint between SPP and previous transmission providers Sunflower and Utilicorp in Docket EL99-95 was on FERC’s consent agenda for tomorrow’s meeting and results would be reported to the membership as soon as they are known. Nick Brown then reported that SPP had filed a series of service agreements in December in Docket ER00-839 and that on January 6, 2000 Golden Spread intervened and protested the service agreements related to SPS’s proposed merger. Nick stated that SPP would file comments on this first-of-its-kind protest for the region stating that Golden Spread’s issues were not relevant to this filing.

Dick then stated that SPP filed for ISO/RTO recognition on December 30, 1999 and was the first organization to seek such recognition under FERC Order 2000. The filing was noticed on January 5, 2000 as Docket ER00-975 and interventions and protests are due January 19, 2000. Responding to questions, Nick stated that functionally very little will change as a result of the filing as SPP already provides independent regional security coordination pursuant to industry policy and independent regional transmission administration pursuant to a FERC filed tariff. Dick noted that Staff and counsel prepared the filing and was about to submit it in early December when FERC issued the agenda for its December 15, 1999 meeting unexpectedly containing their long awaited RTO order. Dick stated that the Staff paused to review the order and that everyone was very pleased that it was consistent with the approach approved by SPP’s board last November. Nick stated that the filing documents were simply fine-tuned for citing consistency with Order 2000 and filed with FERC seeking their action before March 1, 2000 to better facilitate prompt election of non-stakeholder directors to be added to the board.

Agenda Item 6 – Resolution of Compliance/Rehearing Issues on Comprehensive Tariff

Dick then called everyone’s attention to FERC’s December 20, 1999 order on SPP’s comprehensive tariff filing in Docket ER99-4392 and stated that SPP must submit a compliance filing by January 18, 2000. Dick then asked Nick to facilitate discussion of the six primary outstanding issues related to the order. Nick and Pat Bourne briefly explained the issues and then began detailed discussion of each issue to seek RTWG consensus on SPP’s position for the compliance filing.

Discount for Service Into ERCOT

Nick stated that this issue was based on FERC’s order to apply a discount on point-to-point service into ERCOT as contained in CESW’s tariff. Several options were considered and following discussion the RTWG accepted application of this discount in the same manner as CESW currently applies the discount under their tariff. This approach was opposed by Rick Rucker based on his preference that the discount apply to all service terminating in ERCOT, rather than only to those load-serving entities subject to ERCOT’s annual transmission cost allocation. The transmission owners agreed to meet at the end of the day’s session to discuss allocation of the discounted revenue.

User Obligation

Nick stated that this issue was based on FERC’s rejection of SPP’s imposition of obligations to non-member customers due to lack of ISO recognition. The RTWG reached agreement to seek rehearing on this point due to SPP’s subsequent filing seeking ISO/RTO recognition. The RTWG also asked that the rehearing seek clarification on which obligations the commission was rejecting – all six or just the two specifically mentioned in the protests. Additional discussion led to a conclusion that SPP’s authority to order redispatch would be for network security reasons only and not for economic reasons. Gene Anderson opposed this conclusion on the basis that it was a step backwards.

Administrative Charge for Network Service

Nick stated that this issue was based on FERC’s rejection of SPP’s proposed transition provision to cap network service customer’s administrative fee at 5 cents/MWh for two years to provide regional service incentive so that fees on all service could be lowered as quickly as possible. Nick stated that without protest withdrawal on this issue, rehearing was unlikely and that the result would be that no regional network service would be sold until the current point-to-point debt has been repaid. Nick stated that this is estimated to occur sometime in 2001. Nick also stated that he had discussed this issue with Coral, Dynegy, Enron and Tenaska (protestors on this point) and that they were unwilling to withdraw their protest and SPP Staff had neither time nor the authority to negotiate a compromise. Much discussion ensued on this issue prior to RTWG resolution to comply with the order. Gene Anderson stated his opposition to this conclusion due to its lack of allowing a needed transition provision to regional network service.

Redispatch Cost Cap

Nick stated that this issue was based on FERC’s requirement to reapply a cap on redispatch costs to maintain committed service that would otherwise have been applied under individual member tariffs. Following discussion the RTWG reached agreement to comply with the order, but also agreed to remove the transmission owner obligation to provide such redispatch since its cost recovery was in question. Gene Anderson opposed this conclusion, again on the basis that it was a step backwards. Gene also suggested that FERC be told that they put SPP in a no-win situation with their order. Nick and Bill Phillips stated that SPP would continue to facilitate voluntary actions by market participants.

Opportunity Cost for Deferred Maintenance

Nick stated that this issue was based on the desire for more detail in the tariff pertaining to the opportunity cost formula for recovery of deferred maintenance costs. Nick stated that this particular issue was set for hearing and that a pre-hearing conference was held January 6, 2000 where the parties agreed to settle and agreed to a procedural schedule that sets a conference for January 24, 2000. Nick stated that Pat Bourne had distributed via the RTWG email exploder the procedural schedule and that SPP was asked to make best effort to distribute to the parties a strawman proposal by January 14, 2000. The RTWG offered no suggestions on what to include in the strawman proposal.

Cost Assignment for Network Upgrades and Revenue Distribution

Nick stated that this issue was based on FERC’s denial of “AND” pricing and that SPP has a current situation where base or incremental revenues, depending on allocation, will not ensure cost recovery for transmission owners constructing new facilities. Pat suggested an approach where the “higher of” revenues would be allocated to the constructing owner first, and remaining revenues allocated to other providers consistent with current allocation methodology. The RTWG accepted this proposed approach without opposition.

Agenda Item 10 – Approval of Principles on Transmission Planning Procedures for New Generation

Dick Dixon then referred to the transmission planning procedures for new generation developed by the Transmission Assessment Working Group and stated that the document had been reviewed and commented on by the Engineering & Operating Committee and Commercial Practices Committee (CPC), and was now in the hands of the RTWG for regulatory processing. Nick Brown stated that regulatory formatting needed to occur after RTWG agreement on principles in the document. Following this agreement, RTWG, CPC and Board of Directors approval of the specific document would be required prior to FERC filing.

The RTWG then raised the following issues for resolution:

• Should apply to all generation within SPP,

• Need for definitions,

• Section 1.1.1 and throughout - no implications for “AND” pricing,

• Section 1.8.2 – describe connection rights,

• Change impact study time from 60 days to 60-90 days,

• Section 1.4.1 – describe attachment facilities,

• Section 1.6.1 – describe milestones,

• Appendix B last section – delete or generalize.

Nick stated that this project was already five months behind and that quick resolution of these issues was needed. Charles Yeung, Rick Rucker, Dick Dixon, Scott Helyer, James Armke and Jim Sherwood agreed to meet in Little Rock on January 25, 2000 to resolve these issues. Transmission Assessment Working Group chair Mike Gevaza will be asked to attend as well. Nick asked that those raising the issues provide Bruce Rew of the SPP Staff an email as soon as possible describing the issue, a proposed solution and reason why the proposed solution resolves the issue. Nick stated that Staff would begin on the regulatory formatting of the document and merge these sections when the group had finished their work.

Agenda Item 9 – Approval of Tariff Modifications on Deposits

Nick Brown stated that SPP’s tariff requires deposits for service in order to limit financial risk for non-payment of invoiced bills. Nick noted that while some transmission providers have waived these deposits, the service that SPP sells is based on the assets of entities other than SPP and that financial securitization was important. However, Nick reported that SPP lost over $100,000 during 1999 in interest differential between what SPP pays depositors and what SPP receives from its financial institution. Nick stated that due to the size of potential deposits for network service, that Staff was seeking a tariff provision allowing their discretion in requiring deposits and/or performance bonds. Following discussion, the RTWG agreed to tariff modifications allowing for this Staff discretion.

Dick Dixon then recessed the meeting at 5:18 p.m. The transmission owning members met additionally from 5:35 p.m. until 6:31 p.m. discussing revenue allocation related to discounted revenue for service into ERCOT under provisions of CESW’s tariff.

WEDNESDAY

Dick Dixon brought the meeting back to order at 8:06 a.m. and asked Tom Mallinger of the SPP Staff for a report from the Scheduling Task Force.

Agenda Item 8 – Position Approval on Scheduling Deadlines & Utilization of Designated Network Resources

Tom Mallinger reported that the NERC Market Interface Committee was asked by the Security Coordinators Subcommittee to comment on scheduling deadlines for firm and non-firm point-to-point transmission service due to their transmission loading relief (TLR) implications. Tom, Nick Brown and Bill Phillips stated SPP’s strong desire for consistent scheduling deadlines within the industry and hoped that this could be achieved through FERC’s current notice of proposed rulemaking on business practices. Tom referred to an issue write-up distributed with the meeting background materials and stated that RTWG concurrence with the Security Working Group (SWG) and Scheduling Task Force (STF) position was being sought in order for this position to be promoted within the NERC arena. Staff pointed out that while the positions were not in conflict with SPP tariff language the details should at some time receive FERC blessing through pro forma modifications, NERC’s TLR policy, and/or SPP’s tariff.

Tom described SPP’s procedures in detail and noted that late firm reservations will be scheduled by SPP “if practicable” given current or expected system conditions and remaining ATC. Charles Yeung stated his discomfort with the vagueness of the “if practicable” language and Tom noted that Staff decisions were based on security assessment tools and not merely personal judgments. Tom also noted that SPP does not curtail existing non-firm service to allow late scheduling of firm service. Tom then stated that the SWG and STF propose allowing firm service to start after the scheduling deadline and/or during TLR events, even to the point of interrupting previously scheduled non-firm service, if the schedule was to call on a designated network resource. Tom noted that this approach allows equal treatment of designated network resource within and external to a given control area. Following discussion, the RTWG approved SPP’s positions for promotion at NERC with one abstention (Charles Yeung).

Agenda Item 12 – Resolution of Source to Sink Billing Revenue Credits

Tom then asked about RTWG resolution of the Tariff Operations Task Force issue of revenue rebating for true source to true sink billing. Nick Brown suggested that in the absence of current relevance, the issue be dropped until a case is developed specifically supporting the practice with implementation details for RTWG consideration. The RTWG concurred with dropping the issue at this time.

Agenda Item 11 – Set Process for Formulary Rate Development

Pat Bourne stated that the data templates had been improved and finalized for requesting transmission cost of service data from SPP members for formula rate development. Pat noted that today’s FERC agenda contained orders relevant to treatment of transmission refunctionalization and that they should be reviewed prior to any data request. The RTWG agreed to not ask for 1998 data as was previously decided, and rather request 1999 data for receipt by July 1, 2000. The RTWG confirmed their previous decision to post rate changes annually on October 1 for implementation on the following January 1.

Agenda Item 7 – Approval of Technical Corrections for Network Service Billing

Nick Brown then referred to tariff modifications that had been distributed to the RTWG on two previous occasions concerning technical corrections for network service billing and asked for RTWG approval of these modifications for filing development. With little discussion, the RTWG approved the related modifications without opposition.

Agenda Item 13 – Set Future Meeting Schedule

The RTWG agreed to a next meeting on Thursday, February 24, 2000 from 9:30 a.m. until 4:00 p.m. at the D/FW Airport Hyatt Hotel. The primary focus of this meeting will be to finalize the transmission planning procedures for interconnection of new generating facilities for presentation to the CPC at their March 20-21 meeting.

Other Items

Nick Brown reported that the transmission owners agreed at their meeting the previous evening to allocate the discounted revenues for service into ERCOT in the same manner as all other point-to-point service revenues. Nick also reported that the group agreed to seek rehearing on the application of this discount in the implementation of regional transmission service tariff.

Agenda Item 14 – Review of Action Items

Nick Brown then summarized the following assignments resulting from meeting discussion:

Nick Brown will distribute January 11-12, 2000 meeting minutes on January 13 and Pat Bourne will distribute October 21, 1999 meeting minutes as soon as possible.

• The RTWG will provide any necessary roster data changes to Susan Skipper.

• Pat Bourne will distribute the Golden Spread protest in Docket ER00-839 via the RTWG email exploder as soon as it is available and SPP will file comments stating that SPP’s docket is an inappropriate place to raise Golden Spreads issue with SPS’s merger.

• SPP will submit its compliance filing and request for rehearing of certain issues relating to SPP’s comprehensive tariff in Docket ER99-4392, consistent with RTWG agreement as reflected in these meeting minutes.

• Staff will make best effort to distribute to the RTWG and hearing settlement parties on January 14, 2000 the opportunity cost strawman formula for deferred maintenance costs.

• James Armke will provide SPP Staff information necessary for implementation of the CESW discount for point-to-point service into ERCOT.

• Pat Bourne will prepare a filing for tariff modifications related to the network service billing corrections and discretionary deposit waivers as soon as practicable for routing through SPP’s approval process.

• SPP Staff will present SPP’s position to the NERC MIC on scheduling deadlines and utilization of designated network resources at upcoming NERC meetings.

• Pat Bourne will review FERC’s recent orders on transmission refunctionalization and will subsequently distribute to SPP members a data request for 1999 transmission cost of service data for development of formula rates for 2001 implementation.

• The small group designated in these minutes will meet at SPP’s offices on January 25 to resolve outstanding issues with the transmission planning procedures for interconnection of new generation.

• Staff will begin regulatory formatting of the transmission planning procedures for interconnection of new generation.

Agenda Item 15 – Adjournment

With no further business, Dick Dixon adjourned the meeting at 10:09 a.m.

Nicholas A. Brown, RTWG Facilitator

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