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FERC affirms approval of SPP Day Two markets


From the March 29, 2013 issue of Public Power Daily

Originally published March 29, 2013

By Robert Varela
Editorial Director
On rehearing, the Federal Energy Regulatory Commission made only a few changes to its earlier order approving the Southwest Power Pool’s proposal to implement "Day Two" markets, including a day-ahead energy and operating reserve market, a real-time balancing market and a market-based congestion management process. SPP currently operates a real-time energy imbalance market. 

In response to concerns about SPP’s limited day-ahead must-offer requirement, the commission clarified that the SPP market monitor’s report must monitor for and report excessive day-ahead prices. FERC also clarified that a ban on manipulative practices covers actions that result in excessive day-ahead clearing prices. The concerns about the day-ahead market had been raised by the city of Independence, Mo.; Kansas Power Pool; Missouri Joint Municipal Electric Utility Commission; and West Texas Municipal Power Agency.

The commission denied a request by the same public power entities to allocate day-ahead make whole payment costs to supply-increasing transactions. With respect to the treatment of low-voltage facilities, FERC granted their request to clarify that local resources committed to address reliability issues will be deemed "SPP-committed" for purposes of being eligible for make whole payments.

FERC denied a request by Independence, et al., to move up the deadline for SPP to file a proposal to offer long-term financial transmission rights. They said the commission should not be concerned with whether SPP can implement such provisions in the first year of its new markets; rather, the commission should be concerned with whether customers can live without long-term congestion management provisions for the first year. The commission asserted that its deadline for the filing "carefully balanced Congress’s intention that implementation of long-term firm transmission rights occur as soon as possible against the potential harm, i.e., a delay in market-start-up, that could occur by requiring immediate compliance." SPP will provide customers with a hedging mechanism during the first year of operation of the new markets, the commission said.

The commission rejected a request by the Nebraska Public Power District to require a transitional refund mechanism to mitigate the initial impact of using marginal losses. The commission said it had directed SPP to make a further filing on its proposed refund mechanism and NPPD will be able to comment on that filing.

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Senior Vice President, Publishing 
Jeanne Wickline LaBella
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Editorial Director
Robert Varela
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Jeannine Anderson
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