Southwest Power Pool, Inc.Revision History

Revision History

Date or Version Number / Author / Change Description / Comments
Version 0.0
(November 1, 2014) / Michael Odom / Initial Draft
Version 1.0 / Michael Odom / Added draft Attachment AS language and Appendix 1 to Attachment AS
Version 1.2 / Michael Odom / Added language for RM Validation and LOLE study
Version 1.3-10 / Michael Odom / Removed language deemed unnecessary by the CMTF
Version 1.14 / Michael Odom / Updated LRE definition and modified language to reflect new definition
Version 1.15 / Jim Jacoby / Updated LRE definition and modified language to reflect proposal to use Market Participant.
Version 1.16 / Michael Odom / Restructured LRE responsibilities based upon AEP updates

Southwest Power Pool, Inc.

Table of Contents

Revision History

Background and Introduction

Load Responsible Entity

Load Responsible Entity (“LRE”) definition:

Summary of LRE, MP, and SPP responsibilities:

LRE Identification

Reserve Margin

Demand Data Reporting

Capacity Data Reporting

Planning Reserve Assurance

Obligation and Performance

Background and Introduction

Reserve Margin is the amount of Deliverable or Prospective Resources minus the Net Internal Demand. The division of this difference by the Net Internal Demand provides a percentage of reserve margin, which is used interchangeably with the term reserve margin. A system possessing a reserve margin has generation capacity in excess of maximum net internal demand. Reserve margin will reduce the risk of not serving all net internal demand in situations where that demand is unusually high in combination with some portion of the generation (capacity) being unavailable. Maintaining an adequate reserve margin will decrease this risk to an acceptably low probability. Capacity margin is the same value, the difference between an entity’s resources and demand. The difference between reserve margin and capacity margin stems from the denominator used in the reserve or capacity margin percentage calculations. Reserve margin has a net internal demand denominator and capacity margin has a resource denominator. Within the electrical industry, a percentage of reserve margin is what is commonly used to determine the amount of reserve margin necessary to be maintained for reliability reasons. Planning Reserve Margin (PRM) is the term used by a majority of North American RTOs/ISOs to describe the reserve margin amount used for planning purposes.

Currently SPP Criteria section 2 specifies that a capacity margin obligation shall be maintained by a Load Serving Member. Load Serving Member, as defined by the SPP Criteria, does not cover all load in the SPP Balancing Authority Area footprint. Capacity margin or reserve margin should be calculated as a percentage above all load within a region’s boundary of reliability responsibility in order to provide adequate reliability when needed.

On March 1, 2014, SPP implemented the Integrated Marketplace and became the consolidated Balancing Authority for its region. SPP has been working with the Integrated System and SPP members to develop tariff language and agreements that will expand SPP’s footprint to integrate WAPA, Basin Electric Cooperative and Heartland by October 2015. The implementation of the Integrated Marketplace and the integration of the Integrated System have raised a need to address SPP’s PRM requirements in order to ensure continued reliability.

The SPP Balancing Authority area covers Integrated Marketplace resources and load. The SPP BA covers loads represented by both members and non-members of SPP. In addition, some facilities served by the BA are not facilities that have been placed under the functional control of SPP. For reliability reasons, SPP needs a mechanism to ensure the entire load served by the SPP BA is covered by sufficient capacity. Since the SPP Criteria outlines capacity margin requirements that only apply to SPP Load Serving Members, and does not apply to entities that simply have facilities or load registered in the market or non-registered load connected to the Transmission System, but no membership agreement with SPP, SPP has created the concept of a Load Responsible Entity. This entity will have the obligation to provide planning reserves through its Market Participant (MP). The Market Participant has an agreement directly with SPP and will be responsible for ensuring compliance with the reserve margin requirements established in the SPP Tariff and Criteria. The intent of this whitepaper is not to create contractual relationships directly between SPP and the LRE.

Load Responsible Entity

Load Responsible Entity (“LRE”) definition:

A Load Responsible Entity shall mean any Asset Owner participating in the Integrated Marketplace with registered physical assetsthat are either load or firm Export Interchange Transactions. Asset Owners with load pseudo-tied out of the SPP Balancing Authority will not be considered a Load Responsible Entity.

SPP Tariff Definitions

Asset Owner:An owner of any combination of: (1) registered physical assets (Resource, load, Import Interchange Transaction, Export Interchange Transaction, Through Interchange Transaction), (2) Transmission Congestion Rights, (3) Virtual Energy Offers, (4) Virtual Energy Bids, or (5) Bilateral Settlement Schedules.

Market Participant: An entity that generates, transmits, distributes, purchases, or sells electricity or provides Ancillary Services with respect to such services (or contracts to perform any of the foregoing activities) within, into, out of, or through the Transmission System. Market Participant expressly includes:

(a) Transmission Owner(s) and any of their Affiliates including Transmission Owners providing transmission service to: (i) bundled retail load for which such Transmission Owners are taking neither Network Integration Transmission Service nor Firm Point-To-Point Transmission Service under this Tariff; and (ii) load being served under Grandfathered Agreements for which such Transmission Owners are taking neither Network Integration Transmission Service nor Firm Point-To-Point Transmission Service under this Tariff, (b) Transmission Customers, (c) Network Customers, (d) Generation Interconnection Customers, (e) any Eligible Customer offering Resources for sale into the Energy and Operating Reserve Markets that executes the Service Agreement specified in Attachment AH, or on whose behalf an unexecuted Service Agreement has been filed at the Commission, (f) any retail customer or eligible person that is not precluded under the laws or regulations of the relevant electric retail regulatory authority including state-approved retail tariff(s) from participating directly in wholesale demand response programs in the Energy and Operating Reserve Markets and that is technically qualified to offer Demand Response Load (as defined in Attachment AE of this Tariff) into the Energy and Operating Reserve Markets or an aggregator of such retail customers that offers qualified Demand Response Load into the Energy and Operating Reserve Markets under Section 2.8 of Attachment AE, and (g) an entity that executes the Service Agreement specified in Attachment AH and registers the assets of one or more Asset Owners.

Summary of LRE, MP, and SPP responsibilities:

LRE Identification

An MP may represent and aggregate the PRM and reporting obligations of one or more LREs.

SPP

SPP, in coordination with applicable Market Participants, must identify the Load Responsible Entity(ies).

Reserve Margin

SPP

SPP will validate the LRE reserve margin compliance through discrete calculations based upon LRE submitted data.

SPP will compile LRE reserve margin calculations and provide a report of the findings to the LREs and SPP Stakeholders before and after the summer peak period.

The Market Participant has the legal relationship with SPP and will ensure that all LREs, represented by the Market Participant, meet the PRM obligationsand provides the required data to SPP so that SPP can independently verify compliance. If an LRE refuses to either 1) become a Market Participant or 2) procure a third party Market Participant to represent them, SPP will file an unexecuted Market Participant Agreement with FERC.

LRE

The LRE will ensure the obligation for PRMrequirements is metpursuant to requirements to be established in the SPP Tariff.Pseudo tied loads that are subject to the PRM obligations of another Balancing Authority shall not be subject to LRE requirements.

Demand Data Reporting

SPP

SPP will validate that the demand values submitted for PRM requirements against the previous year(s) forecasts.

The Market Participant will ensure that the LRE provides the necessary demand value data needed to calculate planning reserves to SPP.

LRE

The LRE will ensure that demand values reported for the planning reserve calculation are accurately reflective of the LRE’s system peak responsibilitypursuant to requirements to be established in the SPP Tariff.

Capacity Data Reporting

SPP

SPP will validate that the resource MW values used for PRM requirements are accredited properly per the latest unit testing results conducted in accordance with the SPP Criteria (or SPP Tariff if the procedures are replicated there).

The Market Participant will ensure that the LRE provides the necessary resource MW value data needed to calculate planning reserves to SPP.

LRE

The LRE will ensure that resources used to meet the PRM requirement are properly accredited and tested per the SPP Criteria. The Criteria testing procedures could be replicated in the Tariff in order to have a self-contained set of requirements.

Planning Reserve Assurance

LRE

A Planning Reserve Assurance policy will establish guidelines and actions for the LRE to abide by in order to ensure that PRM requirements are met. Circumstances in which the Planning Reserve Assurance policyis applicable:

LRE fails to submit to SPP the data necessary for planning reserve calculation
LRE fails to meet PRM obligation as specified by the Tariff

Obligation and Performance

LRE – MP – SPP

The LRE,through its Market Participant, submits necessary planning reserve data directly to SPP. The LRE maintains PRM and the MP maintains the performance obligation. SPP performs data validation and planning reserve calculation.