FEDERAL ENERGY REGULATORY COMMISSION WASHINGTON, D.C. 20426 OFFICE OF ENERGY MARKET REGULATION Southwest Power Pool, Inc. 201 Worthen Drive Little Rock, AR 72223 Southwest Power Pool, Inc. Docket No. ER17-1092-000 May 10, 2017 Attention: Reference: Christopher Nolen Attorney Scarcity Pricing Methodology Dear Mr. Nolen: On March 2, 2017, Southwest Power Pool, Inc. (SPP) filed proposed revisions to Attachment AE of its Open Access Transmission Tariff (Tariff) to revise the methodology through which scarcity pricing reflects the value of Regulation and Operating Reserves in the Integrated Marketplace (March 2 Filing). 1 Please be advised that the filing is deficient, and additional information is required by the Commission to process the filing. Please provide the information requested below. (1) SPP proposes to change the term Operating Reserve Demand Curve Price to Contingency Reserve Demand Curve Price in section 8.3.4.2(2) of Attachment AE of the SPP Tariff describing how Scarcity Prices are reflected in Market Clearing Prices. 2 Please explain why corresponding changes to the term Operating Reserve Demand Curve Price are unnecessary in subsequent sections of the Tariff, such as 1 Southwest Power Pool, Inc., FERC FPA Electric Tariff, Open Access Transmission Tariff, Sixth Revised Volume No. 1, Att. AE (MPL) 8.3.4, Attachment AE (MPL) section 8.3.4, 5.0.0. 2 SPP Transmittal at 7.
Docket No. ER17-1092-000-2 - section 8.3.4.2(4) of Attachment AE. (2) SPP states that the proposed revisions to its Tariff more appropriately reflect the value of Regulation and Operating Reserve when Scarcity Pricing is initiated by instituting a variable demand curve within the market clearing engine. 3 a. SPP proposes to divide its Contingency Reserve Demand Curve into three segments, each representing a higher severity of scarcity and correspondingly higher impact of Scarcity Pricing on locational marginal prices. Please provide additional information, support, or testimony regarding the derivation and rationale for the division of the demand curve into three segments, the specific proposed cutoff points for each segment of the variable demand curve, and the scarcity factors used at each segment of the Contingency Reserve Demand Curve. b. SPP proposes to divide its Regulation-Up Demand Curve and Regulation-Down Demand Curve into six segments, each representing a higher severity of scarcity and correspondingly higher impact of Scarcity Pricing on locational marginal prices. Please provide additional information, support, or testimony regarding the derivation and rationale for the division of the demand curves into six segments, the specific proposed cutoff points for each segment of the variable demand curve, and the scarcity factors used at each segment, of the demand curves. (3) SPP proposes to revise section 8.3.4.2(2) of Attachment AE of its Tariff regarding the calculation of Regulation-Up and Regulation-Down demand curve prices. In particular, SPP proposes to utilize a Regulation Base Demand Price as a component in determining Regulation-Up and Regulation-Down scarcity prices. 4 SPP references section 4.1.5.3 of the SPP Market Protocols (Protocols) to describe the methodology for calculation of the Regulation Base Demand Price, and further states that, in calculating the Regulation Base Demand Price each month, the average cost per MW to commit a resource will be determined based on the previous three months of historical offer data 3 Id. at 5. 4 Id. at 7.
Docket No. ER17-1092-000-3 - for Resource offers. 5 In addition, Exhibit No. SPP-1 of the March 2 Filing contains section 4.1.5.3 of the Protocols which describes the calculation of the Regulation Base Demand Price as a function of the cost to commit a Resource to provide ramp or capacity to the market in accordance with certain rules. 6 Please provide additional detail on how the Regulation Base Demand Price is calculated, including formulas, and additional information on the rationale for calculating the price in the manner proposed. Further, please provide an example of what the Regulation Base Demand Price, as calculated according to the proposed pricing methodology, would have been for each of the last three months. This letter is issued pursuant to 18 C.F.R. 375.307 (2016) and is interlocutory. This letter is not subject to rehearing pursuant to 18 C.F.R. 385.713 (2016), and a response to this letter must be filed within 30 days of the date of this letter by making an amendment filing in accordance with the Commission s electronic tariff requirements. For your response, please use Type of Filing Code 180, Deficiency Filing. 7 In addition, submit an electronic version of your response to Mark Armamentos at mark.armamentos@ferc.gov. The information requested in this letter will constitute an amendment to your filing and a new filing date will be established. 8 Failure to respond to this letter within the time period specified may result in a further order rejecting your filing Sincerely, Penny S. Murrell, Director Division of Electric Power 5 Id. at 6. 6 Id., Exhibit No. SPP-1 at 2-3. 7 Electronic Tariff Filings, 130 FERC 61,047, at P 3-8 (2010) (an amendment filing must include at least one tariff record even though a tariff revision might not otherwise be needed). 8 See Duke Power Co., 57 FERC 61,215 (1991).
Docket No. ER17-1092-000-4 - Regulation Central
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