FERC rejects SPP’s request to eliminate transmission revenue credits
Houston — The Federal Energy Regulatory Commission rejected a Southwest Power Pool request for revisions to its Open Access Transmission Tariff that would eliminate transmission revenue credits, a move than came out of the grid operator’s Holistic Integrated Tariff Team.
More than a year’s worth of HITT meetings and research concluded that the revenue crediting approach increased transmission service rates by roughly 2% on average and created additional directly assigned upgrade costs, so it recommended eliminating revenue crediting as an option for compensating upgrade sponsors, according to SPP.
After the SPP board’s approval, the grid operator November 22 submitted a filing to FERC (ER20-453) to eliminate the transmission revenue credits.
“We find that SPP has not shown its proposal to modify the existing term of compensation … to be just and reasonable,” FERC stated.
“In the instant proceeding, SPP has provided no justification to depart from that prior finding, and in fact, in its answer, SPP expresses its willingness to remove the proposed cap if the Commission finds that the proposed cap runs afoul of previous Commission orders,” it added.
SPP is reviewing the Commission’s order, SPP Spokesman Derek Wingfield said. “Our initial review is that the reasoning for FERC’s rejection is a simple fix that can be refiled rather quickly,” Wingfield added.
The Revenue Crediting for Upgrades tariff attachment provides that entities that fund a sponsored upgrade may receive revenue credits to reimburse them for the cost of network upgrades, with interest, that have been directly assigned to them, according to SPP.
Revenue credits provided to an upgrade sponsor that has been directly assigned network upgrade costs are funded by, and recoverable from, transmission customers taking new transmission service that could not have been provided “but for” the Creditable Upgrade, in the form of credit payment obligations.
When SPP implemented its Integrated Marketplace in 2014, it was required to comply with FERC Order 681, which required regional transmission organizations and independent system operators with organized electricity markets to make available long-term firm transmission rights and to award transmission rights to entities that fund transmission upgrades and expansions through direct cost assignment.