FERC should reject co-ops' claim seeking $77.1 million after February freeze: SPP

Southwest Power Pool is urging federal regulators to reject a complaint from utility cooperatives seeking $77.1 million for actions the grid operator took during the February cold snap, arguing that the co-ops should not be rewarded for taking outages during the most severe weather emergency in SPP's history.

"Complainants explicitly communicated to SPP that various of their resources would be on outage and therefore could not be relied on to generate in order to help keep the lights on," SPP told the Federal Energy Regulatory Commission in an answer filed late August 19.

The February weather event compelled SPP to issue escalating, region-wide emergency alerts, and on two occasions SPP was forced to shed load. During the period, market prices spiked above SPP's $1,000/MWh energy offer cap.

On Feb. 11, SPP directed units owned by Basin Electric Power Cooperative and North Iowa Municipal Electric Cooperative Association to ramp up and increase output. The entities reported several outages over the next few days, but the entities say that most of their resources met their obligations. Basin Electric was later informed that SPP had de-committed some its resources, instructing them to shut down or reduce their output during that period.

Co-ops' claim

On July 16, Basin Electric and NIMECA filed a complaint (EL21-90) arguing that SPP had violated its tariff when it de-committed the resources. Basin Electric claims SPP owes it $79.3 million in day-ahead awards and make-whole payments, minus $2.2 million in penalties for the units that were on outage.

But SPP argues that FERC should deny the complaint. SPP complied with its tariff and was simply taking the generator's self-declared outages into account when it ran the day-ahead market, the grid operator told FERC.

"It was not SPP that de-committed the relevant resources, but rather complainants themselves that removed those resources from subsequent commitment and dispatch processes when they declared these generators as on outage," SPP said.

SPP has no reason to doubt the operational challenges that led to the co-ops' outages, because it was a difficult time for everyone in the SPP region, the grid operator said in a footnote. But complainants cannot now seek to be compensated by abnormally high prices during that period by relying a flawed tariff interpretation that would effectively reward generators for being unavailable when they are needed most, SPP said.

MMU weighs in

SPP's market monitoring unit said that based on the limited facts in the complaint, it appears that Basin Electric is not entitled to compensation for power it did not supply. FERC should either reject the complaint or set it for hearing and discovery, the MMU said.

It does not appear that Basin Electric provided energy from the relevant generating units during the period in question, the MMU said. Therefore, if these units were on outage, the units were no longer available for commitment during the outage period, and Basin Electric would not be entitled to day-ahead awards and make-whole payments, the MMU said.

"Together, the SPP tariff and market protocols are clear that the outage commitment status overrides any other commitment status," the MMU said. "Basin Electric made the choice to put its generating units into outage, a status that trumps any other commitment status," the MMU added.