Southwest Power Pool
REGIONAL TARIFF WORKING GROUP
Meeting Minutes
August 16, 2000 – DFW Hyatt
Agenda Item 1 – Call to Order & Introduction and Receipt of Proxies.
The Regional Tariff Working Group (RTWG) meeting was called to order at 9:30 a.m. by Chair Ricky Bittle (AECC) with a round of introductions. Other RTWG members at the meeting were: Gene Anderson (OMPA), Wes Berger (SWPS), Dennis Bethel (AEP), Kim Casey (Dynegy), Wayne Miller (ETEC) for Huntis Dittmar (ETEC), Mark Foreman (Tenaska), John Gunesch (OKGE), Rick Henley (CWL Jonesboro, AR), Ron Kite (KCPL), Mike Proctor (MOPUC), Dennis Reed (WERE), Gary Roulet (WFEC), Bob Reilley for Rick Rucker (Coral), Jim Sherwood (SWPA), Bill Rust for Charles Yeung (ENRON), Pat Bourne (SPP) and Roy Sundman (SPP). Others in attendance included, Mary Cochran (APSC), Jimmy Crosslin (OKCC), Barbara Del Grosso (SPRA), Michael Desselle (AEP), Dick Dixon (WERE), Clark Downs (AEP), Darrell Dunlap (CLWC Paragould), Robert Elrod (WFEC), Jack Fite (AEP), Tracey Hannon (SWPA), Mikel Kline (KEPCO), Mark Mac Donald (CLECO), Ron McNamara (Enron), Chris Moser (Dynegy), Christine Ryan (ETEC), Walt Shumate (SA), John Stephens (CUSPR), Sterling Taylor (AEP), Thomas Townsend (Entergy) and Mike Wise (NCE/SPS). Rick McCord (Empire) was unable to attend. Proxies were received as follows: Tracey Hannon for Jim Sherwood (SWPA) part-time, Wayne Miller for Huntis Dittmar (ETEX), Bob Riley for Rick Rucker (Coral), and Bill Rust for Charles Yeung (Enron).
Agenda Item 2 – Additional Agenda Items
Dick Dixon (WERE) reminded the RTWG of two issues removed from consideration in the Membership Agreement by the RTOWG with a request that the RTWG consider appropriately in the tariff. The first is the requirement that there be no pancaking of charges. The second is a commitment to review the use of zonal rates within five years. Pat Bourne noted that Mike Small had drafted a new Section 39 for inclusion in the tariff to reflect the decision of the RTOWG regarding the review of zonal rates. This proposed language was distributed.
Agenda Item 3 – Approval of Minutes
The minutes of the August 2, 2000 meeting were distributed. Discussion and approval were deferred in the interest of time.
Agenda Item 4 – Update on SPP Filings/Activities
Pat Bourne (SPP Staff) presented a brief summary of the status of each of the filings and activities listed on the agenda that are currently in process.
Tariff revisions for the inclusion of service on the system of Southwestern Public Service under the SPP Regional Tariff and changes to the rates for the Western Farmers zone were filed on June 28 in Docket Docket No. ER00-2973-000 and are pending before the FERC. A decision should be rendered before the end of August. An effective date of June 29 was requested.
SPP’s Generation Interconnection Procedures as filed in Docket No. ER00-2713 have been accepted by FERC without any substantial modification. A compliance filing is due on August 28.
The dispute concerning the KMEA Service Agreement has been set for hearing in Docket No. ER00-2644-000. A procedural schedule has been set with SPP’s case due September 26 with a hearing set for March 13, 2001. Settlement discussions are expected in the near future.
Agenda Item 5 – RTO Issues
1. Criteria for new Zones and Revenue Distribution Among Multiple TO's in a Zone. Christine Ryan, representing East Texas Electric Cooperative (East Texas), presented the background related to their proposed motion to establish a new zone under the SPP OATT. She described the history of their dispute with AEP and indicated, that at this point, it was East Texas’ intention to apply to the SPP to establish a new zone, consisting of the East Texas facilities, while continuing their negotiations with AEP to develop a system that would provide for multiple transmission owners in the AEP zone and a sharing of revenues, allocated to the zone by the SPP, between such owners. Christine indicated that East Texas contends that there should be no double standard for the inclusion of transmission facilities, and that the definition of includable facilities should continue to be driven by a facility’s operating voltage. To change this definition to include other criteria for inclusion, at this point, would be inappropriate unless all facilities currently placed under the SPP OATT were to be evaluated and classified as includable or non-includable facilities using the same standards. Wayne Miller (East Texas) provided a description of the East Texas facilities in question, indicating that some are looped or radially operated, but configured in such a way that they could be looped. Thereafter, Wayne read their formal motion to establish a new zone and distributed printed copies (Attachment 1).
Ricky Bittle (AECC) moved that a list of proposed changes to the SPP OATT be made in order to provide for multiple transmission owners in a single zone. Copies of the proposed language changes had been distributed by the email exploder previously (Attachment 2). The motions were discussed together.
Several observations concerning Ricky’s motion were made and questions about it asked and answered. The discussions lead to several modifications to the language of his motion. Clark Downs (AEP) expressed two concerns. First, he believed that the operating voltage of the facilities is not the sole determinate of the transmission function and consequently transmission ownership. Second, he was concerned about the impact on losses if this language were applied to the AEP zone. Ricky observed that his proposal provided the needed language to enable development of an agreement between AEP and East Texas. He further observed that application of the “Seven Factor Test” was an option but should not be done now. He further characterized his motion as a solution to a transition problem. Clark indicated that AEP would object if East Texas were added to the list of transmission owners in the SPP OATT. Dennis Bethel (AEP) indicated that AEP would not object to addition of new zones if competition was expanded, there was an expansion of the geographic reach of the RTO and such new zone would not result in a cost shift. Christine Ryan (East Texas) stated that East Texas would protest the RTO filing to report that multiple owners within a zone had been rejected. She also indicated that East Texas would likely not become an SPP member if there were no revenue distribution to them. Darrell Dunlap (CLWC – Paragould, AR) stated that if a new transmission owner emerges by virtue of their construction of new facilities within an existing zone, some version of the proposed language would be needed. Others agreed that the proposed language was needed for that reason. Clark reiterated that AEP objects to any inclusion of East Texas’ revenue requirement in Attachment H to the SPP OATT until their dispute is resolved. Christine argued that the East Texas transmission facilities should not be analyzed for inclusion or rejection unless all currently included facilities are subjected to the same test. Dennis Bethel objected, stating that AEP facilities had sustained FERC’s scrutiny in the process of accepting the AEP/CSW OATT for filing and that they were recognized to be transmission facilities by the FERC. Ron Kite (KCPL) called the question.
Further discussion and clarification resulted in final modifications to the proposed language changes. The RTWG members adopted the new language by a vote of 11 to 2 with 1 abstention.
Discussion then returned to the East Texas motion to add an East Texas zone. The motion was seconded by Jim Sherwood (SPA). Ron Kite (KCPL) inquired whether these motions were mutually exclusive. Christine Ryan (East Texas) indicated that these motions are not mutually exclusive and that East Texas would continue to pursue an agreement with AEP. Dick Dixon (WERE) indicated that he saw no advantage to adding another zone and pointed out that the result would be a reduction in revenue allocation. The RTWG members defeated the motion, 6 in favor, 8 opposed.
2. All Load under Tariff (Native Load / Bundled Load / Grandfathered Load) - Transition Period. Kim Casey (Dynegy) sponsored tariff language that would modify the definition of grandfathered contracts and provide for a single three-year transition period prior to all network integration load being served under the SPP OATT. Kim had previously distributed the proposed tariff revisions by RTWG list exploder and distributed additional copies at the time (Attachment 3). She then described the basis for and purpose of the proposal. The motion was seconded by Bob Reilley (Coral). Gene Anderson (OMPA) proposed that the motion be divided into its two natural parts: that portion of the proposal dealing with the change in definition of grandfathered contracts and the proposed changes to reduce the transition period. Kim agreed.
In response to a question from Kim Casey, Pat Bourne (SPP Staff) reported that staff’s initial estimate of the quantity of total annual energy throughput on the SPP system provided under grandfathered contracts did not include service to the native load of Kansas City Power & Light, Western Resources and AEP-West under their own OATTs. If these agreements were included as grandfathered agrements, a thumbnail estimate of the total energy transmitted pursuant to grandfathered agreements would be about two thirds of the total SPP system throughput. Pat also reported that Staff had requested SPP members to itemize the agreements to which they are a party, as provider or customer, that they considered to be grandfathered. This request was made since the RTOWG desired that a list, identifying all grandfathered contracts, be included in the RTO filing.
Gene Anderson (OMPA) stated that he supported the revised language, since it represents his understanding of the original intent of the members. Ricky Bittle (AECC) asked AEP which specific services were included in their self-service NITS agreements. Clark Downs (representing AEP) indicated that all bundled service loads were covered under that agreement. Dennis Reed (WERE) objected to any change that only partially altered the definition of grandfathered contracts based on the fact that the Transmission Owner’s merchant function would be put at a competitive disadvantage. The only way to maintain a level playing field would be to eliminate all grandfathering. Kim objected that the existing language serves to keep a new provider from participating in the market. Bob Reilley (Coral) questioned Western Resources concerning their position on whether the transition language in the tariff applies to the load served under their self-service NITS agreement. Ricky Bittle asked Dick Dixon whether there is a significant difference in the SPP rate versus their OATT rate. Dick indicated that there is little difference now; however, there will be a difference under the SPP formula rate approach. Dick indicated that he did not know why Dynegy was pursuing this due to the fact that retail customers in Kansas do not have access to the competitive market.
Ron Kite (KCPL) stated that the RTWG does not have authority to abrogate contracts by changes in tariff language. He indicated that KCPL may terminate the agreement at sometime in the future, but controlling the timing of that event is important to them. Kim contended that Order 888 applies to this situation and governs. Bob Reilley (Coral) asked Ron Kite about the term of KCPL’s self-service NITS agreement. Ron was not sure. In response to the same question AEP responded that their agreement had a term of 20 years. Gene Anderson (OMPA) asserted that exclusion of this load would not be acceptable to FERC and that if this was the outcome of these discussions, we should not make the RTO filing. Dennis Reed (WERE) stated that the current tariff provided a total transition period of 10 years and Western would be willing to live with that result. John Stephens (Springfield) asked if all load is self-served, why should such utility get an allocation of revenue from SPP OATT transactions. Dennis Reed stated that it was Western’s intention to live with the outcome of the agreed-upon transition language for all load; therefore, the definition language need not change and the Section 37 language will control. John Gunesch called the question. The first half of Kim’s motion failed 6 for and 7 against with one abstention.
Gene Anderson stated that he believes that the current tariff language should remain, but it is not likely to pass muster at FERC again. Bob Reilley (Coral) asked AEP whether, in their view, the 20 year term contract controls or the tariff language controls. Clark Downs (AEP) stated that he was unable to answer that question at that time. Ron Kite (KCPL) asked about the explicit date when the transition period begins. Kim answered that February 1, 2000 is the start date and that she would modify the proposal to reflect that specific date. Dick Dixon (WERE) asked whether the results of the decision on this change would be included in the RTO filing. Ricky Bittle (chairman) responded that it would. Bob Reilley asked for clarification on the applicability of Section 38.3 language to the self-service NITS agreements. In response, Dick Dixon and Ron Kite agree that the 10 year transition applied to these contracts. John Gunesch called the question. The second half of the motion failed 5 for and 7 opposing, with 2 abstentions.
Clark Downs (AEP) stated that, based on discussions with his client, he was able to agree with the position taken by WERE and KCPL, that the SPP OATT language concerning the transition period governs.
Ron Kite (KCPL) proposed an offer from the transmission owners that the transition language be modified to provide a 4 year plus 4 year transition period from 2/1/2000. In response, Bob Reilley (Coral) proposed a 0 year plus 8 year. AEP and OG&E did not agree. Ron moved that the language of Sections 38.1 and 38.2 both be modified to include a period of 4 years from 2/1/2000 and that the time period in Section 1.44a also be changed to 4 years from 2/1/2000. Dennis Bethel (AEP) seconded the motion. The motion passed 8 for and 3 against.