UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION. Southwest Power Pool, Inc. ) Docket No. ER

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Southwest Power Pool, Inc. ) Docket No. ER ANSWER OF SOUTHWEST POWER POOL, INC. Pursuant to Rule 213 of the Federal Energy Regulatory Commission s ( Commission ) Rules of Practice and Procedure, 18 C.F.R , Southwest Power Pool, Inc. ( SPP ) files this answer 1 to Kansas Power Pool s ( KPP ) protest filed in this proceeding regarding SPP s filing of an unexecuted revised Service Agreement for Network Integration Service ( NITSA ) between SPP and KPP ( KPP NITSA ). I. BACKGROUND On December 10, 2009, SPP filed the KPP NITSA and an executed, revised Network Operating Agreement ( NOA ) between SPP as the Transmission Provider, KPP as the Network Customer, and Westar Energy, Inc. ( Westar ) as the Host Transmission Owner; and an executed, revised NOA among SPP as the Transmission Provider, KPP as the Network Customer, and Midwest Energy, Inc. ( Midwest ) as the Host Transmission Owner ( December 10 Filing ) SPP seeks leave to answer the protest filed in this case to assist the Commission s decision-making process and clarify the issues. The Commission regularly allows answers for such purposes. See, e.g., Sw. Power Pool, Inc., 114 FERC 61,289, at P 14, order on reh g, 116 FERC 61,289 (2006) (accepting answer that aided the Commission s decision-making); Sw. Power Pool, Inc., 113 FERC 61,014, at P 7 (2005) (same); Sw. Power Pool, Inc., 112 FERC 61,319, at P 56 (2005) (same). KPP does not raise any issues regarding the two executed NOAs. See Protest of Kansas Power Pool, Docket No. ER , at n.2 (Dec. 30, 2009) ( KPP Protest ).

2 The December 10 Filing replaced an unexecuted NITSA and its corresponding NOA among the same parties originally filed by SPP on July 1, 2009, in this docket. The primary differences between the KPP NITSA and the NITSA initially filed are revisions to the maximum firm import capability limitations set forth in Attachments B and C. These limitations are the subject of the dispute between the parties. As explained in the December 10 Filing, after the initial filing, the parties continued negotiations regarding the maximum firm import capability limitations and SPP conducted supplemental studies. 3 Despite SPP s efforts to reduce the limitations to the lowest possible level that would preserve the safety and reliability of the transmission system, KPP continues to object to the imposition of the maximum firm import capability limitations. As explained in the December 10 Filing and in this answer, the maximum firm import capability limitations are necessary and appropriate because KPP designated insufficient Network Resources ( Designated Resources ) to serve its designated load. II. THE MAXIMUM FIRM IMPORT CAPABILITY LIMITATIONS ARE NECESSARY AND APPROPRIATE A. KPP s Designated Resource Shortfall Is Relevant To The Need For The Maximum Firm Import Capability Limitations Contrary to KPP s protest, KPP s Designated Resource shortfall is relevant to the need for the maximum firm import capability limitations set forth in Attachments B and C of the KPP NITSA. 4 Pursuant to the SPP Tariff, SPP is required to provide firm network service for the delivery of capacity and energy from Designated Resources to the 3 4 See December 10 Filing at 6. KPP Protest at 8. Notably, KPP does not deny the existence of a Designated Resource shortfall, but rather merely disputes the degree of DNR shortfall reflected in the current [KPP] NITSA. Id. 2

3 network customer s load. 5 To obtain such service, a customer must submit an application for network service for study in SPP s Aggregate Transmission Service Study ( ATSS ) process pursuant to Attachment Z1 of the SPP Tariff. 6 In the ATSS process, SPP studies the Designated Resources specified in the application and determines the upgrades necessary to accommodate the delivery of energy and capacity from those Designated Resources to the designated load. As more fully explained below, SPP plans its system and identifies the upgrades required to accommodate a service request based not only on the Designated Resources but also the order in which the customer indicates it will dispatch its generation. Through the ATSS process, SPP determined the upgrades that would be necessary to provide firm service to deliver energy from KPP s Designated Resources to its load as specified in its application for Network Integration Transmission Service ( NITS Application ). Because KPP specified insufficient Designated Resources to serve its load, part of its load may need to be served through secondary service or undesignated behind-the-meter generation. The upgrades required to facilitate KPP s request enable KPP to use firm service to serve its load from the Designated Resources specified in KPP s NITS Application, but do not assure the unfettered delivery of energy on a firm basis to make up for the Designated Resource shortfall. As a result, SPP determined that 5 6 December 10 Filing at n.18; see also SPP Tariff at Section 28.3 ( The Transmission Provider will provide firm transmission service over the Transmission System to the Network Customer for the delivery of capacity and energy from its designated Network Resources to service its Network Loads. ). See SPP Tariff at Attachment Z1, Section I. ( The Transmission Provider will combine all long-term point-to-point and long-term designated network resource requests received during a specified period of time into a single Aggregate Transmission Service Study. ) (emphasis added). 3

4 the maximum firm import capability limitations are required to limit the import of energy on a firm basis to certain load under certain conditions, 7 to preserve the safety and reliability of the transmission system. The SPP Tariff directs SPP to include a network customer s network load in transmission system planning and to endeavor to cause to be constructed and placed into service sufficient transfer capability to deliver the Network Customer s Network Resources to service its Network Load. 8 In addition, in Order No. 890-B, the Commission clarified that the transmission provider s obligation to plan its system to serve network customers designated loads is of course dependent on the network customer designating adequate network resources as well as providing information regarding its forecasted loads and resources. 9 The Commission further indicated that situations in which a particular designated load cannot be served are best addressed on a case-by-case basis. 10 In short, SPP s obligation to plan its system to provide service to KPP s load on a firm basis is dependent on KPP designating sufficient Designated See KPP NITSA Attachments B and C. See SPP Tariff at 28.2; see also id. at Attachment Z1, Section I ( The Transmission Provider will combine all long-term point-to-point and long-term designated network resource requests received during a specified period of time into a single Aggregate Transmission Service Study. ). See Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, FERC Stats. & Regs., Regs. Preambles 31,241, order on reh g, Order No. 890-A, FERC Stats. & Regs., Regs. Preambles 31,261 (2007), order on reh g and clarification, Order No. 890-B, 123 FERC 61,299, at P 219 (2008) ( Order No. 890-B ), order on reh g and clarification, Order No. 890-C, 126 FERC 61,228, order on clarification, Order No. 890-D, 129 FERC 61,126 (2009), reh g pending sub nom. Nat l Rural Elec. Coop. Ass n v. FERC, No (D.C. Cir. Aug. 22, 2008) (emphasis added). See Order No. 890-B at P

5 Resources to serve its load, which KPP did not do. As a result, the maximum firm import capability limitations address the Designated Resource shortfall, permit KPP to serve its load with its Designated Resources on a firm basis, allow additional service on a nonfirm basis, and thereby protect the safety and reliability of the transmission system. 11 B. SPP Properly Studied The Transmission System And Identified The Network Upgrades Required To Provide The Network Service As Requested By KPP In Its NITS Application KPP s assertion that SPP should be obligated to propose upgrades that would fully relieve those constraints that give rise to the maximum firm import capability limitations 12 also misses the mark. In the ATSS process, SPP studies requests for long term network service based on the Designated Resources and other information specified in a customer s NITS Application. As part of the NITS Application, customers provide a dispatch order which specifies when each of its generating facilities will be operating. SPP uses this dispatch order in determining what network upgrades will be required to serve a customer s load from its Designated Resources. From the dispatch order provided by KPP, certain Designated Resources located within the cities (i.e., behind-themeter) were determined as being on to meet the forecasted KPP Network Load. The dispatch of these generators affects the evaluation of the need for upgrades to import power to serve KPP s loads. In significant part, SPP did not need to study how the Accordingly, the Commission cannot simply discard the maximum firm import limitations, as KPP desires, because without such limitations SPP could not maintain a safe and reliable transmission system. If KPP desires service without such limitations, it should submit an appropriate request for such service, including sufficient designated resources to serve its load, pursuant to the SPP Tariff process. KPP Protest at 12. 5

6 system would operate without the behind-the-meter Designated Resources, as KPP indicated they were on to meet the forecasted KPP Network Load. For example, KPP s dispatch order indicated that behind-the-meter Designated Resources in Wellington would be dispatched in a manner such that no upgrades would be required to import energy from an external Designated Resource to serve Wellington s load. KPP complains, however, that the maximum firm import capability limitations for Wellington would require Wellington to be served by this more expensive behind-themeter generation rather than less costly external Designated Resources and that the upgrades required for KPP s network service would do nothing to improve service to Wellington. 13 Yet, based on the actual dispatch order provided by KPP with its NITS Application, upgrades were not needed to provide the requested Network Service because Wellington s behind-the-meter generation would serve all of its load and there would be no imports from external Designated Resources. SPP does not study alternative dispatch orders that are different than the merit order provided by the network customer to identify upgrades that would be necessary to accommodate different dispatch scenarios (e.g., such that would be required to improve service to Wellington ). Such a practice would be inconsistent with SPP s ATSS study process. In any event, even if SPP were to study alternative dispatch scenarios to serve KPP s load (e.g., dispatching generation from other external behind-the-meter resources to serve the Wellington load), KPP has not designated sufficient external resources as 13 KPP Protest at 5. While no upgrades were required, the existing system supported import capability of 17 MW Wellington s maximum firm import capability limitation. Thus, KPP can import 17 MW of external generation to offset the use of its behind-the-meter generation. 6

7 Designated Resources to serve the Wellington load without needing to dispatch its more expensive behind-the-meter generation. This is true for the other cities as well. The bottom line is that SPP properly studied the transmission system and identified the network upgrades required to enable KPP to serve its load on a firm basis based on KPP s designated load, Designated Resources, and dispatch order specified in its NITS Application. SPP is not required to propose upgrades for firm service beyond that requested by KPP in its NITS Application. Notably, however, the maximum firm import capability limits permit firm service to allow KPP the flexibility to use some imported generation above the amount required to be imported into the cities to serve their load as indicated by the tendered dispatch order, thus giving KPP the ability to back down a portion of its behind-the-meter Designated Resources. For example, the Clay Center behind-the-meter generation was designated in the KPP NITS Application as a Designated Resource such that 99% of the Clay Center load would be served by Clay Center behind-the-meter generation. Thus, under peak loading conditions and considering KPP s Designated Resource deficiencies, to meet the KPP load requirements would require 1% of the Clay Center load to be served by Designated Resources other than Clay Center behind-the-meter generation. The maximum firm import capability, however, allows for 90% of Clay Center load to be served by Designated Resources other than the Clay Center behind-the-meter generation. Indeed, for every city with a maximum firm import capability limitation, the limit is greater than the difference between the amount of its load and the imports required to serve its summer peak network load after dispatch of its behind-the-meter Designated 7

8 Resources, thus providing KPP latitude to use external Designated Resources to serve its load. 14 III. CLARIFICATIONS OF ATTACHMENTS B AND C OF THE KPP NITSA In its protest, KPP expresses confusion with regard to the maximum firm import capability limitations and Attachments B and C of the KPP NITSA and asserts that it is unclear of the circumstances under which the proposed import limits would apply. 15 While section 8.7 and Attachments B and C of the KPP NITSA are clear on this point, to ensure transparency and to provide additional clarity as to when the maximum firm import capability limitations apply, SPP includes the following explanation. A. When The Maximum Firm Import Capability Limitations Apply KPP questions when the maximum firm import capability limitations would apply. 16 Maximum firm import capability limitations are the assured amounts of firm service that are available to import energy into certain cities during peak loading Exhibit A to this answer provides the Maximum Firm Import Capability to Summer Network Load demonstrating the amount of load that can be served by importing power on a firm basis for each city, with the limitations in place. The percentages range from 47% to 105%. KPP Protest at 10. See KPP Protest at n.3 ( As discussed below, it is far from clear exactly what those periods would be, and who would determine that the restrictions apply at any given time. ); see id. at 3 ( Although the NITSA does not expressly say so, it appears that SPP proposes to have the limitations on firm service to Clay City, Holton and Sabetha apply during all hours in the months of June through September in every year of the NITSA service term, rather than being dependent on certain specified operating contingencies. ); see id. at 10 ( SPP has not made clear the circumstances under which the proposed import limits would apply. ) and id. ( the NITSA does not make their significance clear, e.g., whether the import limits apply only when these operating conditions apply (and if so, whether it is SPP or the Transmission Owners who determine when the conditions have been triggered). ). 8

9 conditions, respective to certain predictive most limiting criteria violations. Any service in excess of the maximum firm import capability limitation will be considered secondary service. As SPP stated in the December 10 Filing, the maximum firm import capability limitations only apply during peak loading conditions as identified by Midwest and Westar. 17 Peak loading conditions are the hours during the day in specific months when the transmission system is at peak usage. The months in which peak loading conditions occur are set forth as the Applicable Period in the charts in Attachments B and C. SPP confirms that the maximum firm import capability limitations apply only during peak loading conditions, not for the entire Applicable Period. The most limiting criteria violations listed in Attachments B and C are physical constraints monitored in the operation of the transmission system that could occur during peak loading conditions. 18 These violations were identified as events that could impact the transmission system based on the results of the supplemental studies conducted by SPP. 19 If, these monitored events are limiting, the Transmission Owner would call for curtailment of any service above the maximum firm import capability limitation. For example, in such circumstance, KPP would be able import 17 MW into Wellington on a firm basis, and any amount in excess of 17 MW would be considered secondary service. Should the Transmission Owner determine that a most limiting criteria violation is See KPP NITSA at Attachment In its protest, KPP asserts that SPP s filing does not demonstrate the existence of particular physical constraints that would support imposition of the proposed import limits. KPP Protest at 9. The most limiting criteria violations are the physical constraints that necessitate the import limitations. See December 10 Filing at 6. 9

10 probable, 20 the Transmission Owner first would curtail as necessary the secondary service in excess of 17 MW in accordance with good utility practice, thus giving priority to the 17 MW. 21 B. Transmission Owners As The Operators Of Their Transmission Systems Are The Appropriate Entities To Determine When The Maximum Firm Import Capability Limitations Apply As stated in the December 10 Filing, the Transmission Owners, i.e., Westar and Midwest, determine when the maximum firm import capability limits apply. The Transmission Owners are in the best position to monitor their own facilities to determine if a most limiting criteria violation needs to be enforced to relieve excessive transmission loading. Transmission Owners continually monitor their own system to determine if their system is at risk for a most limiting criteria violation. KPP is concerned that allowing the Transmission Owners to make this determination will subject KPP to additional risk because the Transmission Owners marketing affiliates compete with KPP. 22 This concern is unfounded, however, because the transmission function arm, not the marketing affiliate branch of the Transmission Owner, determines when to apply the limits. The marketing affiliates that compete with KPP have no control over the determination. Furthermore, the Transmission Owners and Specifically, the Creswell-Sumner County No. 4 Rome 69kV Ckt 1 overload for Gill-Peck 69 kv outage. See KPP NITSA at Attachment B. If, after curtailment of secondary service, the maximum firm import capability amount could not be provided, then the Transmission Owner s network load impacting the most limiting criteria violation and Wellington s maximum firm import capability (17 MW) would be curtailed on a pro rata basis in accordance with Good Utility Practice. See KPP Protest at

11 their marketing affiliates are required to adhere to the Standards of Conduct that would prohibit any collusion to the detriment of KPP. 23 C. Clarifications Of The Tables In Attachments B And C KPP expresses confusion regarding the tables in Attachments B and C of the KPP NITSA throughout the KPP Protest. As KPP has specific concerns regarding how the tables apply to the cities of Clay Center and Winfield, SPP focuses on the tables with respect to those cities. However, the concepts described with regard to applying the tables to those cities apply universally to all of the cities. With respect to Clay Center, Attachment C of the KPP NITSA lists the maximum firm import capability limitations for Clay Center that are applicable during peak loading conditions after certain listed network upgrades required to provide KPP s requested network service are complete. 24 Since network upgrades are not listed for Clay Center (because no network upgrades were required to provide firm service to Clay Center), the maximum firm import capability limits apply before and after the network upgrades required to provide firm service pursuant to KPP s request are completed. During peak loading conditions in the months of June through September, Clay Center will be assured the ability to import 15 MW of firm service to serve its load, when the identified most limiting criteria violation is anticipated to occur. 25 In other words, it has a maximum firm import capability of 15 MW. Any power in excess of 15 MW will be considered See 18 C.F.R. Part 358 (Standards of Conduct for Transmission Providers). See KPP NITSA at Attachment C (page 54). Clay Center and the other cities only will be limited to their maximum firm import capability limits when the relevant most limiting criteria violation is expected to occur. 11

12 secondary service. As a result, if the Transmission Owner determines that the most limiting criteria violation has occurred in peak loading conditions, the secondary service would be curtailed as necessary to relieve the excessive transmission loading prior to the 15 MW of assured maximum firm import capability. 26 These same curtailment priorities apply to all of the maximum firm import capability limitations for all cities set forth in Attachments A and B. 27 With respect to Winfield, there are three values of maximum firm import capability because of the possible occurrence of three different most limiting criteria violations before the upgrades set forth in the KPP NITSA are complete. 28 Winfield is assured the ability to import firm service of 47, 52, or 53 MW depending on the specific monitored most limiting criteria violation that is anticipated to take place. The three most limiting criteria violations are dependent on different system configurations, and these system configurations will be analyzed in real-time by the Transmission Owner. 29 Again, the curtailment priorities would apply If, after curtailment of secondary service, the maximum firm import capability amount could not be provided, then the Transmission Owner s network load impacting the most limiting criteria violation and Clay Center s maximum firm import capability (15 MW) would be curtailed on a pro rata basis in accordance with Good Utility Practice. See supra discussion at 9-11 & n.21. See KPP NITSA at Attachment B (page 51). Once the upgrades in the KPP NITSA are complete there will be only one most limiting criteria violation that will limit firm service to Winfield on an individual basis. 12

13 Because Winfield, Oxford, and Wellington 30 contain common constraints limiting simultaneous maximum firm import capability for the group of cities, these cities are subject to simultaneous import capability limitations as well as individual limitations. Individually, the cities are assured a certain amount of firm network service as outlined in the table. Should certain listed most limiting criteria violations be likely to occur, however, the three cities only will have a combined total maximum firm import capability ranging from 47 or 65 MW, depending on the particular violation. Finally, SPP clarifies that the use of the term Current Projected Load in the tables in Attachments A and B indicates that the maximum amount the city can import is the amount of its forecasted load indicated in its NITS Application (i.e., there is no maximum firm import capability limitation). IV. THE COMMISSION SHOULD ACCEPT THE KPP NITSA AS FILED, WITHOUT SETTING THE MATTER FOR HEARING OR SETTLEMENT JUDGE PROCEDURES Contrary to KPP, SPP has justified the need for the maximum firm import capability limitations included in the KPP NITSA. Moreover, KPP raises no disputed issues of material fact that warrant a hearing. 31 Therefore, the Commission should accept the KPP NITSA based on the written record without setting the matter for hearing Similar to Clay Center, Wellington s individual maximum firm import capability limit applies both before and after the network upgrades required to accommodate KPP s request are completed. See Destin Pipeline Company, L.L.C., 85 FERC 61,057, at 61,185 (1998) ("[A]n evidentiary trial-type hearing is necessary only where material issues of fact are in dispute that cannot be resolved on the basis of the written record."); see also BP W. Coast Products LLC v. Calnev Pipe Line L.L.C, 129 FERC 61,109, at P 18 (2009) ( The Commission is not required to hold a hearing when issues of material fact are not in dispute. ). 13

14 Settlement judge procedures also are unnecessary. The fact that KPP has submitted a new network service request that may or may not eliminate the need for the maximum firm import capability limitations in the KPP NITSA does not support establishing settlement procedures, as KPP suggests. 32 Section 8.7 of the KPP NITSA already provides that the maximum firm import capability limitations will be enforced subject to later restudies, facility improvements, and/or modifications to Network Customer s network loads and/or resources. 33 To the extent that subsequent network service requests by KPP may impact the need for the maximum firm import capability limitations set forth in the KPP NITSA (e.g., by increasing KPP s specified Designated Resources), those impacts should be addressed in conjunction with those requests and not here KPP Protest at 8 and 14. KPP NITSA at Attachment

15 V. CONCLUSION For the reasons stated in the December 10 Filing and in this answer, the Commission should accept the KPP NITSA without modification based on the written record and should not set this matter for hearing or establish settlement judge procedures. Respectfully submitted, /s/ Tyler R. Brown Barry S. Spector Carrie L. Bumgarner Tyler R. Brown Wright & Talisman, P.C G Street, N.W., Suite 600 Washington, D.C (202) spector@wrightlaw.com bumgarner@wrightlaw.com brown@wrightlaw.com Counsel for Southwest Power Pool, Inc. K:\SPP\KPP Protest - SPP ANSWER FINAL.doc 15

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18 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Washington, D.C., this 19th day of January, /s/ Tyler R. Brown Tyler R. Brown Wright & Talisman, P.C G Street, N.W., Suite 600 Washington, D.C (202) Attorney for Southwest Power Pool, Inc.

19 Document Content(s) KPP Protest - SPP ANSWER FINAL.PDF