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SPP eyes enhancements to market settlements for emergency energy assistance

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SPP eyes enhancements to market settlements for emergency energy assistance

The Southwest Power Pool has asked the Federal Energy Regulatory Commission to greenlight tariff changes the grid operator contends would enhance market settlements when it delivers emergency energy assistance to neighboring balancing authorities.

SPP currently provides and may receive such assistance through joint operating agreements, or JOAs, with its neighbors. Exactly what emergency energy entails and the procedures for providing it are laid out in JOAs that would not be impacted by SPP's proposal.

Rather, the proposal filed Aug. 6 addresses the settlement of market-related charges or credits tied to the provision of emergency energy assistance. That includes a settlement for the energy provided and a settlement for transmission charges to support the delivery of emergency assistance.

When emergency assistance is requested of SPP, the grid operator charges for the energy the higher of 150% of the locational marginal price at the point of delivery to provide the emergency energy or $100/MWh. The design of that cost structure, however, leaves a portion of the market settlement that is not automatically allocated to SPP market participants, the grid operator said in its filing.

SPP accordingly proposed tariff changes to specify that the settlement of these additional charges or credits will be "distributed or collected through the revenue neutrality uplift charge type … except for instances when the transmission provider implements a local reliability issue commitment in response to the request for emergency energy assistance."

Revenue neutrality uplift, or RNU, is a mechanism that calculates charges and credits to ensure that SPP remains revenue neutral in each hour of the operating day.

A local reliability issue commitment can be triggered "when transmission limitations or other 'local reliability concerns' require the commitment of specific resources to support the transfer of the emergency energy," SPP said in its proposal.

Projected local reliability requirements, operational considerations, and generation and transmission outages factor into whether such a designation is needed to facilitate or support the provision of emergency energy.

Under existing tariff language, "when a local reliability issue commitment is made, the settlement area in which the resource is located will bear the costs of making that committed resource whole," SPP explained.

The grid operator's Aug. 6 filing would "require that revenues received from the neighboring balancing authority in exchange for emergency energy provided by SPP should first be applied to cover the make-whole payment that was borne by the settlement area for the local reliability issue commitment used to support the emergency energy assistance."

SPP said any remaining market-related credits after the make-whole payment for the local reliability issue commitment has been covered would be distributed to the market through the RNU charge type.

The grid operator asked that FERC accept its tariff revisions with an Oct. 7 effective date. (FERC docket ER19-2535)

Jasmin Melvin is a reporter for S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.