By Tom Kleckner
FERC on Thursday directed SPP to eliminate its exit fee for members who are not transmission owners or load-serving entities, granting a complaint by the American Wind Energy Association and the Wind Coalition (EL19-11).
The commission found the RTO’s exit fee to be unjust and unreasonable “because it creates a barrier to SPP membership for non-transmission owners and because it appears to be excessive.”
“SPP’s exit fee for non-transmission owners … is not needed to maintain SPP’s financial solvency or avoid cost shifts, and is excessive as a means of ensuring stability in membership and members’ financial commitment,” the commission said.
AWEA applauded FERC’s decision, saying the exit fee prevented environmental groups, consumer advocates, independent power producers, power marketers and other market participants from “contributing to [SPP’s] decision-making process.”
“We look forward to working with SPP to develop a more inclusive stakeholder process that will lead to better outcomes for ratepayers,” Amy Farrell, AWEA’s senior vice president of government and public affairs, said in a statement.
SPP said it was unable to respond to the order until it reviews it to “fully determine its implications.”
AWEA and the Wind Coalition, now known as the Advanced Power Alliance (APA), filed the complaint in November, charging that the exit fee results in unjust and unreasonable rates “because there is no causal relationship between a non-TO/LSE’s termination of membership and the majority of the exit fee” and because the exit fee is “a practice that directly affects jurisdictional rates … by creating a barrier to membership for non-TOs/LSEs,” resulting in their under-representation as voting members in SPP.
The complainants argued than an administrative fee would be a more “appropriate mechanism” for SPP to recover its ongoing obligations, as do other RTOs and ISOs. They contended SPP does not attempt to correlate the exit fee’s assessment with the amount of costs caused by a withdrawing non-TO/LSE member, saying a public interest entity with no market activity would pay the same exit fee as an entity with thousands of megawatts of generation in the RTO.
FERC agreed, noting the only instance of an exit fee’s assessment came in 2015 when Trans-Elect Development Co. was charged $822,008 upon the involuntary termination of its membership for nonpayment of obligations. The commission said SPP calculates that the exit fee for an entity without load would be approximately $621,851, as of October 2018, and found that at even that level, the exit fee “could place a significant burden on smaller entities or new market entrants that are not transmission owners.”
The commission pointed to comments from DC Energy, EDF Renewables, E.ON Climate & Renewables, Invenergy Energy Management, TradeWind Energy, Texas Industrial Energy Consumers, Interwest Energy Alliance and public interest organizations that indicated they had not become members “because of the potential burden associated with paying the exit fee.”
SPP requires its members to pay a $6,000 annual membership fee. The exit fee is defined as the sum of the withdrawing member’s existing obligations (including any unpaid dues or assessments and any costs directly incurred by SPP because of the membership termination) and the member’s share of SPP’s outstanding long-term financial obligations (loans, leases and pensions) and general and administrative overhead for a three-month period.
FERC said SPP has grown “significantly” since 2006, when it last ruled on its exit fees. At the time, long-term financial obligations amounted to about $25 million, the commission said. But as the RTO has grown by building out its transmission footprint and administering an energy imbalance market and its Integrated Marketplace, it said, so have SPP’s long-term obligations.
SPP’s long-term debt peaked at more than $258 million in 2012, when it was developing the Integrated Marketplace. The markets went live in 2014, and SPP’s long-term debt has subsequently dropped to more than $215 million.
Membership benefits include the ability to: vote on SPP initiatives; elect members to the Board of Directors; propose changes to the Tariff, business practice manuals and governing documents; serve on committees, task forces and working groups; participate in closed or executive session discussions; request dispute resolution; and appeal decisions to the board.
Nonmembers or their representatives can attend open meetings and submit comments on proposals. They can also participate in the Integrated Marketplace and take transmission service under the Tariff.
Steve Gaw, a former Missouri legislator and regulator, has long represented the APA at SPP stakeholder meetings. As a regulator, Gaw also served on SPP’s first Regional State Committee.
SPP Granted Delay for Tariff Revisions
In a second order Thursday, the commission granted SPP’s request to defer revisions to its Tariff because of an implementation delay in a new settlement management system (ER17-1568).
SPP said several Tariff revisions were dependent on changes built into the settlement system, but that the system had “encountered developmental delays.”
The new settlement system was originally projected to go live May 1. However, that date has now been pushed back to Feb. 1, 2020.