Renewables oppose SPP extension request to FERC regarding elimination of membership exit fee

Houston — The American Wind Energy Association and other renewable trade groups oppose a Southwest Power Pool request for more time to comply with a US Federal Energy Regulatory Commission order to eliminate the membership exit fee for non-transmission owners.

AWEA, along with the Solar Energy Industries Association, the Advanced Power Alliance and the Solar Council, said SPP has not shown good cause for such an extension, according to a Tuesday FERC filing.

"In fact, granting SPP's motion would only serve to further delay the relief that [FERC] granted in response to AWEA/APA's complaint, as an extension would perpetuate uncertainty for prospective SPP members regarding the implications for membership," the group said in the filing.

The groups argue SPP has had ample time to adhere to a FERC December order while also holding to SPP bylaws and requirements, which the grid operator stated was the reason a delay was necessary.

FERC "should reject SPP's motion for extension of time on this issue given SPP's failure to address (or even offer an explanation for) why these limited proposed changes were not included on the January 28, 2020 meeting agenda," AWEA said in the filing.

Granting SPP's extension request would cause a six-month delay before a clear path for SPP membership, with all withdrawal-related financial obligations and calculations clearly specified, would be available for non-transmission owners, it said.

Exit fee

Wind power trade groups had complained that the exit fee – which they said could range from $700,000 to $1 million – was exorbitant and discourages independent power producers' membership of the grid operator.

FERC in April 2019 (EL19-11) ordered SPP to eliminate the membership exit fee for non-transmission owning entities. "[W]e find that SPP's exit fee for non-transmission owners is unjust and unreasonable because it creates a barrier to membership, is not needed to maintain SPP's financial solvency or avoid cost shifts, and is excessive as a means of ensuring stability in membership and members' financial commitment," the agency said.

SPP responded in August with a plan (ER19-2522) to comply with the order and eliminate the exit fee for all members except transmission owners. But it also filed an alternate plan (ER19-2523) that would instead reduce the exit fee to a minimum of $100,000, with load-serving members subject to an additional amount.

Eliminating the exit fee for all members except transmission owners, as FERC directed, would shift the costs of debts SPP has incurred for the benefit of all stakeholders to the small subset of transmission owner members, which is less than half of the current membership, SPP said. In contrast, SPP's proposed exit fee would reduce the chance that stakeholder decisions will be dominated by entities that have no financial stake in SPP's operations, the proposal said.

SPP also requested in May a rehearing of the order, which FERC denied in December and directed SPP to submit a compliance filing within 60 days to address two issues.

Specifically, the FERC ordered SPP to submit revisions to ensure that "a withdrawing non-transmission owner is only exempt from paying a share of SPP's long-term financial obligations, rather than all existing obligations associated with membership withdrawal." In addition, "a withdrawing transmission-owning member's previous year net energy for load includes the load of all load-serving entities connected to the withdrawing transmission owner's system," according to the December order.

The replacement exit fee rate will become effective December 19, 2019, the commission said.

SPP is seeking an extension for compliance with the December order to allow revisions to its Bylaws and Membership Agreement to be made in keeping with the timing laid out in the stakeholder process, according to a January 24 SPP filing.

"Our motion for extension has no impact on the effective date of the Order, which remains December 19, 2019, and was made to accommodate administrative challenges posed by the timing of FERC's decision," SPP Spokesman Derek Wingfield said. "The Order was issued to SPP on December 19, days before the Christmas holiday. It required SPP's corporate governance committee to review the order, draft compliant language and vote on changes to our bylaws, then subsequently give our membership 30 days' notice of those changes. We thus made the motion for extension to accommodate the standard posting requirements and meeting schedules of our stakeholder groups in accordance with our bylaws."