SUMMARY OF MOTIONS AND ACTION ITEMS - SPP

Minutes No. 5

SOUTHWEST POWER POOL, INC. Western Markets Working Group Meeting

August 20, 2020 9:00 a.m. – 6:00 p.m. CPT

Net-Conference

SUMMARY OF MOTIONS AND ACTION ITEMS

MOTIONS:

Agenda Item 3a – Consent Agenda: July WMWG Minutes

Motion: Mike Mason (TSGT) motioned to approve the consent agenda. Neil Lindgren (WAPA) provided the second. Motion carried unanimously.

Agenda Item 6 – WRR2 WEIS Market and System Change Process Clarification WMWG Comments 072020

Motion: Mike Mason (TSGT) motioned to approve WRR2 (WEIS Market and System Change Process Clarification) WMWG Comments 072020. Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

Agenda Item 9 – WRR4 WEIS URD Tolerance Correction

Motion: Mike Mason (TSGT) motioned to approve WRR4 (WEIS URD Tolerance Correction). Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

Agenda Item 11 – WRR5 Pivotal Supplier Mitigation

Motion: Mike Mason (TSGT) motioned to approve expedited review of WRR5 (Pivotal Supplier Mitigation). Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

Motion: Mike Mason (TSGT) motioned to approve WRR5 (Pivotal Supplier Mitigation) as modified. Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

ACTION ITEMS:

No new action items were taken during this meeting.

Minutes No. 5

MINUTES

AGENDA ITEM 1 – ADMINISTRATIVE ITEMS

Valerie Weigel (BEPC) called the meeting to order at 9:00 a.m., CPT. Valerie reviewed the agenda with the group.

The following members were in attendance or represented by proxy:

• Valerie Weigel (Chair), BEPC • Jeff Lindsay (Vice Chair), MEAN • Chris Powell, WAPA – Powell_August WMWG Proxy • Mike Mason, TSGT • Neil Lindgren, WAPA UGPM • Rosemary Henry, WMPA – Henry_August WMWG Proxy • Shane Messano, WAPA

AGENDA ITEM 2 – ANTITRUST STATEMENT

Daniel Harless (SPP) presented the SPP antitrust statement.

AGENDA ITEM 3 – CONSENT AGENDA

Valerie Weigel introduced the Consent Agenda item for approval.


AGENDA ITEM 4 – ROBERT’S RULES OF THE MONTH

Daniel Harless reviewed the three Robert’s Rules of the month:

• Motion to Postpone Indefinitely • Point of Order • Chair Voting Best Practice

Daniel discussed the rules with the group and answered questions.

Minutes No. 5

AGENDA ITEM 5 – MWG UPDATE

Valerie Weigel provided an update of the August 18-19, 2020 MWG meeting. She stated two revision requests were approved: RR420 (Fast-Start Order Compliance) and RR421 (Compliance Order Docket ER19-460-005 Order 841 (RR323)). The group also approved the 2019-2020 Violation Relaxation Limits (VRL) Analysis. Valerie explained the MWG discussed modeling options for Electric Storage Resources (ESRs) as directed by the Holistic Integrated Tariff Team (HITT) Initiative S3 (ESRs). The group discussed and asked questions.

AGENDA ITEM 6 – WRR2 WEIS MARKET AND SYSTEM CHANGE PROCESS CLARIFICATION WMWG COMMENTS 072020

Daniel Harless provided an overview of the objective of WRR2 (WEIS Market and System Change Process Clarification), explaining the group reviewed the WEIS revision request during the July WMWG meeting. He explained the language aligns the WEIS Protocols to current system change processes followed by SPP and the Change Working Group (CWG). Daniel noted the minor deletion proposed by the WMWG in July of a small portion of language that was inadvertently missed in the original drafting of the WRR. The group discussed and unanimously approved the comments as submitted.


AGENDA ITEMS 7 AND 7A – WEIS TARIFF FERC REJECTION ORDER & NEXT STEPS AND NON-PHYSICAL TRANSMISSION CONSTRAINT BUSINESS PRACTICE

Gary Cate provided background on the WEIS FERC filing, stating the WEIS Tariff, Western Joint Dispatch Agreement (WJDA), and WMEC Scope were filed in February 2020. SPP received a Deficiency Letter from FERC in April 2020 and a notice of rejection of the filings July 31st, 2020. Gary explained FERC noted five areas as being deficient:

Rejected filing due to:

1) Non-Participant Transmission 2) Role of Reliability Coordinator

Provided guidance to modify in subsequent filings:

3) Supply Adequacy Incentives/Penalties 4) Use of Average Losses 5) Lack of Justification for Automatic Increases to Market Mitigation Thresholds

Minutes No. 5

Gary gave on overview of each issue’s concerns, FERC guidance for that issue, and the anticipated approach to address the issue. He stated four WEIS Revision Requests were being created to address four of the five issues and they will be discussed requesting action during upcoming WMWG and WMEC joint meetings. Gary detailed the WEIS project team goals and next steps, explaining SPP is still working towards a go-live date of February 1st, 2021 and will submit a follow-up filing to FERC in September requesting a response 60 days from the filing date.

David Kelley (SPP) reviewed a draft business practice for Non-Physical Transmission Constraints in the WEIS Market, stating the business practice describes how the WEIS market will manage those constraints in the Security Constrained Economic Dispatch (SCED) solution. David reviewed the draft business practice and answered questions from the group.

AGENDA ITEM 8 – UNSCHEDULED FLOW MITIGATION PLAN (UFMP) EDUCATION SESSION

Zea Flores (SPP) provided an education session on the Western Interconnection Unscheduled Flow Mitigation Plan (WIUFMP). This education session was provided to address WMWG AI3 (SPP to facilitate discussion between the WMWG and applicable WRWGs on how the Unscheduled Flow Mitigation Plan (UFMP) works in correlation with the WEIS Market) and WMWG AI4 (SPP to facilitate discussion with Western Area Colorado Missouri (WACM) on how TOT 3 will work and be coordinated in the market). Zea reviewed the history of the congestion management methodology revision, West Reliability Coordination (RC) methodology, and the WIUFMP process. The group discussed and asked questions.

AGENDA ITEM 9 – WRR4 WEIS URD TOLERANCE CORRECTION

Daniel Harless presented the objective of WRR4 (WEIS URD Tolerance Correction), explaining a correction was needed in the calculation of the lower operating tolerance for Uninstructed Resource Deviation (URD). The WEIS revision request modifies the limits and clarifies Tariff language for the expansion of the URD tolerance during Contingency Reserve (CR) events. The group discussed and unanimously approved.


AGENDA ITEM 10 – MMU MARKET POWER STUDY

Ian Wren (SPP MMU) provided an overview of the SPP Market Monitoring Unit (MMU) Market Power Study, explaining the approach used for the study, metrics used to measure structural market power, barriers to entry and exist assessment, and the MMU’s recommendations. Ian stated the MMU’s recommendation for SPP and the WEIS Market Participant’s (MPs) is either: 1)

Minutes No. 5

Develop a mitigation measure for system-wide market power or 2) Use cost based offers, if a system market power mitigation measure cannot be implemented for go-live of the WEIS Market. The group discussed and asked questions.

AGENDA ITEM 11 – WRR5 PIVOTAL SUPPLIER MITIGATION

Daniel Harless presented the objective of WRR5 (Pivotal Supplier Mitigation), stating the WEIS revision request expands the market power test to include system level market power as the result of the SPP MMU Market Power Study for the WEIS. The study determined that there is the potential for a single resource supplier to possess structural market power at a system level which could potentially influence Locational Marginal Prices (LMPs). The group discussed and unanimously approved the WRR.



AGENDA ITEM 12 – MARKET DESIGN EDUCATION SESSION: JOINTLY OWNED UNITS (JOUS)

Daniel Harless provided a Market Design education session on Jointly Owned Units (JOUs) in the WEIS Market. Daniel explained the WEIS Market does not recognize JOU Resource shares. Daniel reviewed the current registration options for JOUs which are to register the JOU as a single Resource under a single Asset Owner (AO) or register the JOU as separate Resources registered under separate AOs. He explained that each resource registered in the WEIS Market under an AO is used in Native Load Hedging (NLH) for that specific AO. He further explained that the Integrated Marketplace implementation of Combined Interest Resources would be difficult to implement in the WEIS due to the NLH construct. Daniel reviewed examples and answered questions from the group.

AGENDA ITEM 13 – WEIS MARKET TRIALS UPDATE

Don Martin (SPP) provided an update on the WEIS Market Trials, explaining readiness activities are still in progress. He stated the Market Monitoring Portal (MMP) and Word to the WEIS customer training were delivered. Don informed the group registration modifications are due by September 15th for the November model. The group discussed and asked questions.

AGENDA ITEM 14 – OPEN DISCUSSION/GENERAL QUESTIONS

Valerie Weigel provided an opportunity for discussion and questions.

Minutes No. 5

AGENDA ITEM 15 – SUMMARY OF MOTIONS, ACTION ITEMS, FUTURE MEETINGS

Motions and new action items are listed above. Future meetings are listed below.

AGENDA ITEM 16 – WRITTEN REPORTS

Daniel Harless provided an opportunity for the group to discuss the written report: July WMWG Meeting Effectiveness Survey Results.

WMWG Meeting Tuesday, September 22nd, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference WMWG Meeting Thursday, October 29th, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference WMWG Meeting Thursday, November 12th, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference

AGENDA ITEM 17 – ADJOURNMENT

Valerie Weigel adjourned the meeting at 3:20 p.m., CPT.

Respectfully Submitted – Kristen Darden on behalf of Daniel Harless, WMWG Staff Secretary

https://www.spp.org/events/calendar/western-markets-working-group-net-conference-20200922/



P = By Phone* = By Proxy

Day 1 Full Name Company E-mailP Valerie Weigel (Chair) Basin Electric Power Co. [email protected] Jeff Lindsay (Vice-Chair) Municipal Energy Agency of Nebraska [email protected] Daniel Harless (Secretary) Southwest Power Pool [email protected]* Chris Powell Western Area Power Administration [email protected]

Lorrie Bliss Deseret Power [email protected] Mike Mason Tri-State Generation & Transmission Association [email protected] Neil Lindgren WAPA UGPM [email protected]* Rosemary Henry Wyoming Municipal Power Agency [email protected] Shane Messano Western Area Power Administration [email protected] Adam Arellano WAPA [email protected] Alycia Kramer BEPC [email protected] Beth Hume Southwest Power Pool [email protected] Brad Hans NMPP Energy [email protected] Brenda Fite Southwest Power Pool [email protected] Brett Gruesner PSCo [email protected] Carla Hartman Adapt2Solutions [email protected] Carrie Dixon Xcel Energy [email protected] Carrie Simpson Xcel Energy [email protected] Chris Bultsma WAPA [email protected] Chris Evjen WAPA [email protected] Chris Nolen Southwest Power Pool [email protected] Claire Douthit WAPA [email protected] David Daniels Southwest Power Pool [email protected] David Kelley Southwest Power Pool [email protected] Dave Neumayer WAPA [email protected] Don Martin Southwest Power Pool [email protected] Doug Clark Southwest Power Pool [email protected] Drew Gray [email protected] Eric Egge Blackhills Corp [email protected] Erin Cathey Southwest Power Pool [email protected] Farrokh Rahimi OATI [email protected] Gary Cate Southwest Power Pool [email protected] Ian Wren SPP MMU [email protected] Jason Mazigian BEPC [email protected] Jeremy West Tri-State Generation & Transmission Association [email protected] Jerry Krebs WAPA [email protected] Jerry Stone Southwest Power Pool [email protected] Jill Jones MEAN [email protected] Jim Krajecki CES [email protected] Jimmy Harty WMPA [email protected] Jodi Endres WAPA [email protected] Joe Taylor Xcel Energy [email protected] Julie Matteson WAPA [email protected] Justin Grensing OATI [email protected] Katie Southworth [email protected] Keith Collins SPP MMU [email protected] Kristen Darden Southwest Power Pool [email protected] Marisa Choate Southwest Power Pool [email protected] Mary Ann Zehr TSGT [email protected]

Western Markets Working GroupAugust 20, 2020

Attendance

P Melissa Wiseman WAPA UGP [email protected] Michael McCann Southwest Power Pool [email protected] Michelle Harris Southwest Power Pool [email protected] Mike Boughner Xcel Energy [email protected] Nick Detmer Xcel Energy [email protected] Nicole Wagner Southwest Power Pool [email protected] Patti Kelly Southwest Power Pool [email protected] Raleigh Mohr Southwest Power Pool [email protected] Richard Dillon Southwest Power Pool [email protected] Ron Thompson NPPD [email protected] Russell Quattlebaum Southwest Power Pool [email protected] Scott Brown Southwest Power Pool [email protected] Serhat Guney SPP MMU [email protected] Seth Nelson Blackhills Corp [email protected] Steve Davis Southwest Power Pool [email protected] Steve Johnson Southwest Power Pool [email protected] Steve Szablya Xcel Energy [email protected] Steve White Southwest Power Pool [email protected] Tammy Nogelmeier WAPA [email protected] Terri Eaton Xcel Energy [email protected] Tom Christensen Basin Electric Power Co. [email protected] Tony Alexander Southwest Power Pool [email protected] Will Nipper Southwest Power Pool [email protected] Will Tootle Southwest Power Pool [email protected] Yasser Bahbaz Southwest Power Pool [email protected] YHC MCG Energy [email protected] Y. Zhuang MCG Energy [email protected] Zea Flores WAPA [email protected]

August 20, 2020 August WMWG Meeting Meting No. 5

Antitrust: SPP strictly prohibits use of participation in SPP activities as a forum for engaging in practices or communications that violate the antitrust laws. Please avoid discussion of topics or behavior that would result in anti-competitive behavior, including but not limited to, agreements between or among competitors regarding prices, bid and offer practices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that might unreasonably restrain competition.

SOUTHWEST POWER POOL, INC. WESTERN MARKETS WORKING GROUP MEETING

Net-Conference Thursday, 08/20/20: 9:00 a.m. – 6:00 p.m. CPT

AGENDA

1. Call to Order, Attendance, Agenda Review ................................................................. Valerie Weigel

2. Antitrust Statement ............................................................................................................... Daniel Harless

3. Consent Agenda .................................................................................................................... Valerie Weigel

a. July WMWG Minutes

4. Robert’s Rules of the Month .............................................................................................. Daniel Harless

5. MWG Update .......................................................................................................................... Valerie Weigel

6. WRR2 WEIS Market and System Change Process Clarification WMWG Comments 072020 (Approval) ....................................................................................................................................... Erin Cathey

7. WEIS Tariff FERC Rejection Order & Next Steps .................................. Gary Cate/Daniel Harless

a. Non-Physical Transmission Constraint Business Practice ............................ David Kelley

8. Unscheduled Flow Mitigation Plan (UFMP) Education Session .................................... Zea Flores

9. WRR4 WEIS URD Tolerance Correction (Approval) ................................................... Daniel Harless

10. MMU Market Power Study ........................................................................................................... Ian Wren

11. WRR5 Pivotal Supplier Mitigation (Expedited Approval) ........................................ Daniel Harless

12. Market Design Education Session: Jointly Owned Units (JOUs) ........................... Daniel Harless

13. WEIS Market Trials Update ...................................................................................................... Don Martin

14. Open Discussion/General Questions ..................................................................................................... All

15. Summary of Motions, Actions Items, Future Meetings .......................................... Daniel Harless

16. Written Reports

a. July WMWG Meeting Effectiveness Survey Results ................................... Daniel Harless

August 20, 2020 August WMWG Meeting Meting No. 5

Antitrust: SPP strictly prohibits use of participation in SPP activities as a forum for engaging in practices or communications that violate the antitrust laws. Please avoid discussion of topics or behavior that would result in anti-competitive behavior, including but not limited to, agreements between or among competitors regarding prices, bid and offer practices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that might unreasonably restrain competition.

17. Adjournment .......................................................................................................................... Valerie Weigel

Minutes No. 4

SOUTHWEST POWER POOL, INC. Western Markets Working Group Meeting

July 20, 2020 2:00 p.m. – 6:00 p.m. CPT

Net-Conference


MOTIONS:

Agenda Item 2a – Consent Agenda: June WMWG Minutes

Motion: Rosemary Henry (WMPA) motioned to approve the consent agenda. Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

Agenda Item 5 – WRR3 WEIS Protocol Alignment

Motion: Mike Mason (TSGT) motioned to approve expedited status for WRR3 (WEIS Protocol Alignment). Rosemary Henry (WMPA) provided the second. Motion carried unanimously.

Motion: Neil Lindgren (WAPA-UGPM) motioned to approve WRR3 (WEIS Protocol Alignment). Mike Mason (TSGT) provided the second. Motion carried unanimously.

Agenda Item 6 – WMWG Scope

Motion: Mike Mason (TSGT) motioned to approve the WMWG Scope. Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

ACTION ITEMS:

Action Item: SPP to facilitate discussion between the Western Markets Working Group and applicable Western Reliability Working Groups on how the Unscheduled Flow Mitigation Plan (UFMP) works in correlation with the WEIS Market. Action Item: SPP to facilitate discussion with Western Area Colorado Missouri (WACM) on how TOT 3 will work and be coordinated in the market.

Minutes No. 4

MINUTES

AGENDA ITEM 1 – ADMINISTRATIVE ITEMS

Valerie Weigel (BEPC) called the meeting to order at 2:00p.m., CPT. Valerie reviewed the agenda with the group.

The following members were in attendance or represented by proxy:

• Valerie Weigel (Chair), BEPC • Jeff Lindsay (Vice Chair), MEAN • Chris Powell, WAPA • Mike Mason, TSGT • Neil Lindgren, WAPA UGPM • Rosemary Henry, WMPA • Shane Messano, WAPA

AGENDA ITEM 2 – CONSENT AGENDA

Valerie Weigel introduced the Consent Agenda item for approval.

Motion: Rosemary Henry (WMPA) motioned to approve the consent agenda. Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

AGENDA ITEM 3 – MWG UPDATE

Valerie Weigel provided an update of the June 16th -17th and July 7th MWG meetings, highlighting the approval of two revision requests during the June 16th – 17th meeting: RR407 (Market and System Change Process Clarification) and RR411 (Schedule 1-A TCR Settlements Correction). Valerie also noted the approval of three HITT initiative R1 (Study ERS and ORS Results) reports: Reactive and Voltage Supply, Primary Frequency Response and Inertia, and Flexibly Capacity Supply.

AGENDA ITEM 4 – ROBERT’S RULES OF THE MONTH

Daniel Harless (SPP) reviewed the three Robert’s Rules of the month:

• Important Rules for Debate • Meeting Minutes • Reconsider Motion

Minutes No. 4

Daniel discussed the rules with the group and answered questions.

AGENDA ITEM 5 – WRR3 WEIS PROTOCOL ALIGNMENT

Daniel Harless reviewed WRR3’s (WEIS Protocol Alignment) objective, explaining the WRR is the result of eight WRRs created in response to protests of SPP WEIS Tariff filing with FERC. These WRRs were approved by the WMEC and filed with FERC. Of the eight WRRs the WMEC approved, four WRRs have impacts to WEIS Protocol sections. Daniel reviewed the language changes and answered questions from the group. The group unanimously approved the WRR with expedited status.

Motion: Mike Mason (TSGT) motioned to approve expedited status for WRR3 (WEIS Protocol Alignment). Rosemary Henry (WMPA) provided the second. Motion carried unanimously.

Motion: Neil Lindgren (WAPA-UGPM) motioned to approve WRR3 (WEIS Protocol Alignment). Mike Mason (TSGT) provided the second. Motion carried unanimously.

AGENDA ITEM 6 – WMWG SCOPE MODIFICATION

Daniel Harless reviewed the WMWG proposed scope modification, explaining the change is the result of the WMEC modifying their charter to clarify the scope of activities the group carries out. He explained the only change in the WMWG scope is adding a sixth activity for WEIS market participants to avoid activities that would result in marketing function employees of WEIS Participants gaining access to non-public transmission system information. The group discussed and unanimously approved the modified WMWG Scope.

Motion: Mike Mason (TSGT) motioned to approve the WMWG Scope. Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.

AGENDA ITEM 7 – WRR2 WEIS MARKET AND SYSTEM CHANGE PROCESS CLARIFICATION FOR THE WEST

Erin Cathey (SPP) reviewed WRR2 (WEIS Market and System Change Process Clarification) objective, explaining the changes in the WEIS revision request align the WEIS Protocol language to current system change processes followed by SPP and the Change Working Group (CWG). The group discussed and modified the WRR during the meeting. The WRR will be available for action during the August WMWG meeting.

Minutes No. 4

AGENDA ITEMS 8, 8A, 8B, AND 8C – WMWG AI1 UPDATE: WRR1 WEIGHTED AVERAGE LMPS IN CALCULATION OF WEIS SETTLEMENT QUANTITIES, WRR1 TRI-STATE GENERATION & TRANSMISSION COMMENTS 060820, WRR1 SPP COMMENTS 051820, AND WRR1 DESERET COMMENTS 071020

Daniel Harless provided an update for WMWG AI1 (WRR1 Weighted Average LMPs in Calculation of WEIS Settlement Quantities), noting SPP staff worked with Deseret in completing necessary changes to fulfill the action item. Gary Cate (SPP) stated the potential for the cost causer in this proposed design to also be the beneficiary of the higher LMPs.

Mike Mason (TSGT) reviewed Tri-State’s proposed comments, bringing awareness to Tri-State not being in favor with the design proposed in WRR1.

Daniel Harless reviewed SPP comments that were discussed during the May WMWG, reiterating SPP’s unfavorable stance on the proposed design. Gary explained SPP would be going against the RTO’s filing with FERC specific to cost causation and cost allocation. David Daniels (SPP MMU) noted SPP MMU does not support the design as proposed by Deseret in WRR1. The group discussed and made no motion to move forward with the WRR. The WRR is considered closed.

AGENDA ITEM 9 – WEIS MARKET SERVICE FLOW CONSTRAINT

Gary Cate reviewed the WEIS congestion management process, explaining there are two types of constraints: WEIS RC Constraints and Service Flow Constraints. He discussed both types of constraints in depth and answered questions from the group. The group requested additional discussions on how the Unscheduled Flow Mitigation Plan (UFMP) will work in correlation with the WEIS Market.

Action Item: SPP to facilitate discussion between the Western Markets Working Group and applicable Western Reliability Working Groups on how the Unscheduled Flow Mitigation Plan (UFMP) works in correlation with the WEIS Market. Action Item: SPP to facilitate discussion with Western Area Colorado Missouri (WACM) on how TOT 3 will work and be coordinated in the market.

AGENDA ITEM 10 – MARKET DESIGN EDUCATION SESSION: WRTBM DISPATCH

Daniel Harless presented a market design education session on the WEIS Real-Time Balancing Market (WRTBM) Dispatch. He reviewed the purpose of the WRTBM, WRTBM intervals, input data for Resource dispatch, and WRTBM dispatch. The group discussed and asked questions.

Minutes No. 4

AGENDA ITEM 11 – WEIS MODEL CHANGES TIMELINE

Tim Miller (SPP) provided an update on the WEIS registration, stating there are two opportunities to make adjustments to the model: August 15th, 2020 and September 15th, 2020. He further explained the model will be effective in production December 1st, 2020. The group discussed and asked questions.

AGENDA ITEM 12 – WEIS MARKET TRIALS UPDATE

Don Martin (SPP) provided an update on the WEIS market trials, explaining currently external readiness activities are in progress or completed. He stated the connectivity testing end date is July 31st, 2020 and weekly testing calls started July 20th, 2020.

AGENDA ITEM 13 – OPEN DISCUSSION/GENERAL QUESTIONS

Valerie Weigel provided an opportunity for discussion and questions.

AGENDA ITEM 14 – SUMMARY OF MOTIONS, ACTION ITEMS, FUTURE MEETINGS

Motions and new action items are listed above. Future meetings are listed below.

AGENDA ITEM 15 – WRITTEN REPORTS

Daniel Harless provided an opportunity for the group to discuss the written report: June WMWG Meeting Effectiveness Survey Results.

WMWG Meeting Thursday, August 20th, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference WMWG Meeting Tuesday, September 22nd, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference WMWG Meeting Thursday, October 29th, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference

AGENDA ITEM 16 – ADJOURNMENT

Valerie Weigel adjourned the meeting at 6:00 p.m., CPT.

Minutes No. 4

Respectfully Submitted – Kristen Darden on behalf of Daniel Harless, WMWG Staff Secretary

SouthwestPowerPool SPPorg southwest-power-poolHelping our members work together to keep the lights on... today and in the future. 1

ROBERT’S RULES OF THE MONTH

AUGUST 2020 WMWG

2

• A motion to “postpone indefinitely” may be made to kill a main motion being discussed. The motion to postpone indefinitely requires a second and majority approval vote. When passed, the main motion may not be reintroduced at that meeting, although it may be brought up again at a later date.

Motion to Postpone Indefinitely

3

• Any member who believes he or she has noticed a breach of proper meeting procedure can call attention to it by stating “Point of Order” at the time the suspected breach occurs and explaining why the breach is believed to have occurred. When a Point of Order has been made, the chair must make a ruling on proper procedure. No further discussion or debate on any question in place at the time may occur until the ruling is given.

Point of Order

4

In order to convey impartiality in the leadership position, the chair of larger committees (i.e., 12 or more voting members) should only vote on motions when that vote is needed to make a difference in the outcome.

Chair Voting Best Practice

WEIS Revision Request Comment Form

WRR #: 2 Date: 7/20/2020

WRR Title: WEIS Market and System Change Process Clarification

SUBMITTER INFORMATION

Name: Kristen Darden on behalf of the WMWG Company: Southwest Power Pool

Email: [email protected] Phone: 501.749.3339

OBJECTIVE OF REVISION

Objectives of WEIS Revision Request:

Describe the problem/issue this revision request will resolve.

Section 8 (WEIS Market Process and System Change Process) of the WEIS Protocols needs to be updated to be consistent with the system change process followed today by SPP and the Change Working Group. Since the Integrated Marketplace go-live, SPP has evolved and modified these processes.

Revisions have been made to clearly and correctly reflect where changes are defined as member-facing and member-impacting and to define change notification timeframes. In addition, this revision request modifies the Emergency Change language to reflect that SPP will notify the stakeholders of the change as soon as practicable, removing the current day language that states SPP will conduct a conference call to discuss the needed change, then provide action. Language is also added to explain how routine maintenance changes will be communicated to the membership. Other non-substantive clean-up and clarification edits have been made throughout.

Describe the benefits that will be realized from this revision.

This change will ensure the WEIS Protocols reflect the accurate process of how SPP facilitates the system change process and how SPP handles situations that need Emergency Changes and does not allow for any delay in correcting a system and/or process.

COMMENTS

The WMWG deleted the use of “whichever is applicable”, which was inadvertently missed in the original WRR submission. The change is highlighted below.

PROPOSED REVISION(S) In the appropriate sections below, provide proposed revisions to the WEIS Revision Request for which you are providing comments. Use the language from the WEIS Revision Request Submission Form or the Recommendation Report, whichever is more recent.

1. Open the document containing the language you would like to edit, e.g., WRR Submission Form or WRR Recommendation Report

2. Ensure Track Changes is turned off on both the forward looking protocols and this WRR Submission Form. Track Changes is located on Review tab above.

3. While in the document containing the language you are proposing edits to, select and copy the language you would like to edit

4. Paste the language to this Comment Form 5. Turn on Track Changes and make the edits you would like to propose

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WEIS Market Protocols

8. WEIS Market Process and System Change Process

This section outlines the methods that govern SPP sSystem changes that directly impact or are visible to

SPP Western RC Services Customers’ and/or SPP Western Markets Market Participants’ processes,

systems, or interfaces with SPP systems, referred to as “member-facing changes” or “member-impacting

changes”. The intent of this section is to ensure there is transparency when member-impacting or

member-facing changes occur to SPP processes and/or systems.

Once a WRR has been approved through the stakeholder process, the SPP Change Working Group

(“CWG”) will serve as the forum for coordinating the implementation of member-facing and member-

impacting efforts for process and/or system changes affecting SPP administered markets and reliability

functions.

A project is considered member-facing if:

• There are no changes required to systems owned by SPP Western RC Services

Customers and/or SPP Western Markets Market Participants needed to allow for SPP’s

change, but the change will be noticeable.

A project is considered member-impacting if:

• The change in the project will require changes to SPP Western RC Services Customers’

and/or SPP Western Markets Market Participants’ system(s) or processes; and/or

• There are required system modifications or testing to be accomplished by SPP Western

RC Services Customers and/or SPP Western Markets Market Participants, without which

their current systems will no longer work with this particular process.

The CWG will be responsible for monitoring and coordinating all planned member-impacting or member-

facing system or process changes. Member-facing system or process changes are changes that do not

meet one or moreany of the following criteria listed below for member-impacting changes, but the

change will be visible to Markets Participants:

(1) The change will result in SPP Western RC Services Customers and/or SPP Western Markets

Market Participants having to make changes to their internal systems or interfaces;

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(2) The change will require SPP Western RC Services Customers and/or SPP Western Markets

Market Participants to coordinate testing with SPP prior to the change being released to

pProduction systems;

(3) The change will cause SPP Western RC Services Customers and/or SPP Western Markets

Market Participants to change their internal processes;

(4) The change modifies or creates a system interface between SPP and its SPP Western RC

Services Customers and/or SPP Western MarketsMarket Participants;

(5) The risk associated with the change justifies inclusion as a member-impacting change.

(2) SPP will develop and maintain a plan outlining member-impacting and member-facing change

initiatives. This plan will be updated at least quarterly and posted to the CWG page on the SPP

corporate website. The plan will reflect the relative priority of all member-impacting and member-

facing change initiatives. These priorities will be determined based on the WRR priority ranking

process conducted by the SPP Western Reliability Working Group (“WRWG”) or the SPP Western

Market Working Group (“WMWG”), whichever is applicable, as well as internal project

prioritization processes in place at SPP. System changes that cannot be implemented according

to the requested priority rank will be identified and communicated to the WRWG or WMWG, after

coordination with the CWG. The plan will include, at a minimum, the following:

a) Listing and description of planned member-impacting or member-facing projects;

b) Updated current status of planned member-impacting or member-facing projects;

c) Identifiable milestones of planned member-impacting or member-facing projects, including,

but not limited to:

i) Requirements Signoff;

ii) Schedule of Testing and Training;

iii) Communication of Expectations / Specifications;

iv) Release of Required Documentation;

v) System Release Dates.

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(3) All member-impacting or member-facing change initiatives are classified as minor, minor-

informational, medium, major or emergency changes. The CWG will routinely review and discuss

initiatives classified as minor, medium, major and emergency, classification of these initiatives will

be routinely reviewed and discussed by the CWG and alternative timelines may be recommended,

depending on the scope of the individual projects. SPP will maintain a list of system changes and

their associated classifications for discussion and coordination with the CWG.

(a) Minor-Informational Change – A change to a member-facing SPP system correcting or

changing existing functionality that does not require Market Participants action, and is not

visible to Market Participants. An example of a minor-informational change is an update to

a system to address a non member-facing defect. For minor-informational changes, SPP

staff is required to notify the Market Participants at least two (2) days prior to

implementation in the member testing and production environments.

(a)(b) Minor Change – aA member-facing change to an SPP system that corrects or changes

existing functionality but does not require SPP Western RC Services Customers and/or SPP

Western Markets Market Participants to make any changes to their systems, nor test the new

functionality in a coordinated fashion with SPP. An example of a minor member-impacting

change would be an enhancement to SPP Western RC Services Customers and/or SPP

Western Markets Market Participants accessible web page that includes adding newly

available options or functionality. For minor member-impactingfacing changes, SPP staff is

required to notify the SPP Western RC Services Customers and/or SPP Western Markets

Market Participants at least one (1) week prior in the member testing environment and two

(2) weeks prior to implementation in the production environment.

(b)(c) Medium Change -– A member-impacting a change to an SPP system that involves changes

to system interfaces between SPP and its SPP Western RC Services Customers and/or SPP

Western Markets Market Participants, such as changes to XML file specifications or

Application Programmable Interfaces (API). The process for interface changes must allow

sufficient time for SPP Western RC Services Customers and/or SPP Western Markets Market

Participants to assess the impact of the change to their systems, make appropriate revisions,

and complete testing in an offline environment, where applicable. SPP staff is required to

notify the SPP Western RC Services Customers and/or SPP Western Markets Market

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Participants at least two (2) weeks prior in the member testing environment and six (6) weeks

prior to implementation in the production environment, or as defined and agreed to by the

CWG.

(c)(d) Major Change -– A member-impacting a change to an SPP system that introduces a new

member-facing application, major system functionality or wholesale process changes. These

changes will always be managed by SPP as projects, with milestones defined on the plan

that is updated quarterly, and will include SPP Western RC Services Customers and/or SPP

Western Markets Market Participants participation, coordination, and testing throughout the

project phases. For major changes that require the development of new applications or

interfaces by SPP Western RC Services Customers and/or SPP Western Markets Market

Participants, SPP staff is required to coordinate the project schedule by means of the CWG

to determine the appropriate lead times for documentation, testing, and implementation.

(e) Emergency Change - Aa member-impacting or member-facing change to an SPP system

that is required to immediately restore or correct existing functionality. If changes to SPP

Western RC Services Customers’ and/or SPP Western Markets Market Participants’ systems

or processes are required as a result of an Emergency Change, SPP staff will make the

necessary changes and send the notification of the change as soon as practicable following

the resolution of the emergency change.

In addition to the change types listed above, routine maintenance will be communicated to the Market

Participants. Routine work is defined as work on a member-facing SPP system to perform general

maintenance/housekeeping. Examples of a routine maintenance include server patching or renewing a

server certificate. For routine maintenance, SPP staff is required to notify the Market Participants at least

two (2) days prior to implementation in the member testing and production environments.

If the WRR has no member-facing or member-impacting efforts or Tariff impacts, the WRR will be

implemented in the latest version of the applicable governing document(s) following all necessary

stakeholder approvals.

SPP WEIS Revision Request Form

WRR Title: WEIS Market and System Change Process Clarification Date: 07/03/2020

SPP STAFF TO COMPLETE THIS SECTION

WRR #: 2

Impact Analysis Required? No Yes | If no, but system or process changes are needed please explain why an Impact Assessment will not be performed: System Changes No Yes | If yes, summarize expected changes: Process Changes? No Yes | If yes, summarize expected changes:


Name: Erin Cathey Company: SPP

Email: [email protected] Phone: 501-614-3239 Only Qualified Entities may submit WEIS Revision Requests.

Please select at least one applicable option below, as it applies to the named submitter(s). Signatory of the Western Joint Dispatch

Agreement Any staff member of a governmental authority

having jurisdiction over the SPP Western Market Services or any WEIS Market Participant

Any rostered individual of an official SPP WMEC organizational group

Any entity designated by a Qualified Entity to submit a WEIS Revision Request “on their behalf”

Any WEIS Market Participant SPP Western Transmission Customers or other entities

that are parties to transactions under the SPP WEIS Tariff SPP Market Monitor SPP Staff

SPP WEIS REVISION REQUEST DETAILS Requested Resolution Timing: Normal Expedited Urgent Action

Reason for Expedited/Urgent Resolution:

Type of WEIS Revision Request (select all that apply):

Correction (i.e., correcting language that is incorrect)

Clarification (i.e., revising existing language to better represent the intent/purpose, no changes to functionality)

Enhancement (i.e., revising existing language to expand upon intent or functionality)

New Methodologies impacting SPP Western Markets (i.e., new language to accommodate new functionality or rules not existing today)

NERC Standard Impact (Specifically state if revision relates to/or impacts NERC Standards, list standard(s))

FERC Mandate (List order number(s))

REVISION REQUEST RISK DRIVERS

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Are there existing risks to one or more SPP Western Market Participants or the BES driving the need for this WRR?

Yes No

If yes, provided details to explain the risk and timelines associated:

Compliance (Tariff, WEIS Protocols, Other)

Reliability/Operations

Financial SPP WEIS Revision Request Documents Requiring Revisions: Please select your primary intended document(s) as well as all others known that could be impacted by the requested modification request

WEIS Market Protocols Section(s): 8 Document Version: V1a WEIS Tariff Section(s): Document Version: WEIS Revision Request Process Section(s): Document Version: [NAME OF DOCUMENT] Section(s): Document Version:

OBJECTIVE OF MODIFICATION

Objectives of WEIS Revision Request: Describe the problem/issue this revision request will resolve.

Section 8 (WEIS Market Process and System Change Process) of the WEIS Protocols needs to be updated to be consistent with the system change process followed today by SPP and the Change Working Group. Since the Integrated Marketplace go-live, SPP has evolved and modified these processes.

Revisions have been made to clearly and correctly reflect where changes are defined as member-facing and member-impacting and to define change notification timeframes. In addition, this revision request modifies the Emergency Change language to reflect that SPP will notify the stakeholders of the change as soon as practicable, removing the current day language that states SPP will conduct a conference call to discuss the needed change, then provide action. Language is also added to explain how routine maintenance changes will be communicated to the membership. Other non-substantive clean-up and clarification edits have been made throughout.


This change will ensure the WEIS Protocols reflect the accurate process of how SPP facilitates the system change process and how SPP handles situations that need Emergency Changes and does not allow for any delay in correcting a system and/or process.

REVISIONS TO SPP WEIS REVISION REQUEST PROCESS DOCUMENTS

In the appropriate sections below, please provide the language from the document(s) for which you are requesting modification(s), with all edits redlined using Track Changes on from the Review tab above.

These instructions can be applied to any WRR Process Document:

1. Open the forward looking version of the WEIS Market Protocols (.a)

2. Ensure Track Changes is turned off on both the forward looking protocols and this WRR Submission Form 3. While in the forward looking protocols, select and copy the language you would like to edit

4. Paste the language to this Submission form 5. Turn on Track Changes and make the edits you would like to propose


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8. WEIS Market Process and System Change Process

This section outlines the methods that govern SPP sSystem changes that directly impact or are visible to SPP

Western RC Services Customers’ and/or SPP Western Markets Market Participants’ processes, systems, or

interfaces with SPP systems, referred to as “member-facing changes” or “member-impacting changes”. The

intent of this section is to ensure there is transparency when member-impacting or member-facing changes

occur to SPP processes and/or systems.

Once a WRR has been approved through the stakeholder process, the SPP Change Working Group (“CWG”) will

serve as the forum for coordinating the implementation of member-facing and member-impacting efforts for

process and/or system changes affecting SPP administered markets and reliability functions.

A project is considered member-facing if:

• There are no changes required to systems owned by SPP Western RC Services Customers and/or SPP

Western Markets Market Participants needed to allow for SPP’s change, but the change will be

noticeable.

A project is considered member-impacting if:

• The change in the project will require changes to SPP Western RC Services Customers’ and/or SPP

Western Markets Market Participants’ system(s) or processes; and/or

• There are required system modifications or testing to be accomplished by SPP Western RC Services

Customers and/or SPP Western Markets Market Participants, without which their current systems will

no longer work with this particular process.

The CWG will be responsible for monitoring and coordinating all planned member-impacting or member-facing

system or process changes. Member-facing system or process changes are changes that do not meet one or

moreany of the following criteria listed below for member-impacting changes, but the change will be visible to

Markets Participants:

(1) The change will result in SPP Western RC Services Customers and/or SPP Western Markets Market

Participants having to make changes to their internal systems or interfaces;

(2) The change will require SPP Western RC Services Customers and/or SPP Western Markets Market

Participants to coordinate testing with SPP prior to the change being released to pProduction

systems;

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(3) The change will cause SPP Western RC Services Customers and/or SPP Western Markets Market

Participants to change their internal processes;

(4) The change modifies or creates a system interface between SPP and its SPP Western RC Services

Customers and/or SPP Western MarketsMarket Participants;

(5) The risk associated with the change justifies inclusion as a member-impacting change.

(2) SPP will develop and maintain a plan outlining member-impacting and member-facing change initiatives.

This plan will be updated at least quarterly and posted to the CWG page on the SPP corporate website.

The plan will reflect the relative priority of all member-impacting and member-facing change initiatives.

These priorities will be determined based on the WRR priority ranking process conducted by the SPP

Western Reliability Working Group (“WRWG”) or the SPP Western Market Working Group (“WMWG”),

whichever is applicable, as well as internal project prioritization processes in place at SPP. System changes

that cannot be implemented according to the requested priority rank will be identified and communicated

to the WRWG or WMWG, after coordination with the CWG. The plan will include, at a minimum, the

following:

a) Listing and description of planned member-impacting or member-facing projects;

b) Updated current status of planned member-impacting or member-facing projects;

c) Identifiable milestones of planned member-impacting or member-facing projects, including, but

not limited to:

i) Requirements Signoff;

ii) Schedule of Testing and Training;

iii) Communication of Expectations / Specifications;

iv) Release of Required Documentation;

v) System Release Dates.

(3) All member-impacting or member-facing change initiatives are classified as minor, minor-informational,

medium, major or emergency changes. The CWG will routinely review and discuss initiatives classified as

minor, medium, major and emergency, classification of these initiatives will be routinely reviewed and

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discussed by the CWG and alternative timelines may be recommended, depending on the scope of the

individual projects. SPP will maintain a list of system changes and their associated classifications for

discussion and coordination with the CWG.

(a) Minor-Informational Change – A change to a member-facing SPP system correcting or changing

existing functionality that does not require Market Participants action, and is not visible to Market

Participants. An example of a minor-informational change is an update to a system to address a

non member-facing defect. For minor-informational changes, SPP staff is required to notify the

Market Participants at least two (2) days prior to implementation in the member testing and

production environments.

(a)(b) Minor Change – aA member-facing change to an SPP system that corrects or changes existing

functionality but does not require SPP Western RC Services Customers and/or SPP Western Markets

Market Participants to make any changes to their systems, nor test the new functionality in a

coordinated fashion with SPP. An example of a minor member-impacting change would be an

enhancement to SPP Western RC Services Customers and/or SPP Western Markets Market

Participants accessible web page that includes adding newly available options or functionality. For

minor member-impactingfacing changes, SPP staff is required to notify the SPP Western RC Services

Customers and/or SPP Western Markets Market Participants at least one (1) week prior in the

member testing environment and two (2) weeks prior to implementation in the production

environment.

(b)(c) Medium Change -– A member-impacting a change to an SPP system that involves changes to

system interfaces between SPP and its SPP Western RC Services Customers and/or SPP Western

Markets Market Participants, such as changes to XML file specifications or Application

Programmable Interfaces (API). The process for interface changes must allow sufficient time for SPP

Western RC Services Customers and/or SPP Western Markets Market Participants to assess the

impact of the change to their systems, make appropriate revisions, and complete testing in an offline

environment, where applicable. SPP staff is required to notify the SPP Western RC Services

Customers and/or SPP Western Markets Market Participants at least two (2) weeks prior in the

member testing environment and six (6) weeks prior to implementation in the production

environment, or as defined and agreed to by the CWG.

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(c)(d) Major Change -– A member-impacting a change to an SPP system that introduces a new member-

facing application, major system functionality or wholesale process changes. These changes will

always be managed by SPP as projects, with milestones defined on the plan that is updated

quarterly, and will include SPP Western RC Services Customers and/or SPP Western Markets Market

Participants participation, coordination, and testing throughout the project phases. For major

changes that require the development of new applications or interfaces by SPP Western RC Services

Customers and/or SPP Western Markets Market Participants, SPP staff is required to coordinate the

project schedule by means of the CWG to determine the appropriate lead times for documentation,

testing, and implementation.

(e) Emergency Change - Aa member-impacting or member-facing change to an SPP system that is

required to immediately restore or correct existing functionality. If changes to SPP Western RC

Services Customers’ and/or SPP Western Markets Market Participants’ systems or processes are

required as a result of an Emergency Change, SPP staff will make the necessary changes and send

the notification of the change as soon as practicable following the resolution of the emergency

change.

In addition to the change types listed above, routine maintenance will be communicated to the Market

Participants. Routine work is defined as work on a member-facing SPP system to perform general

maintenance/housekeeping. Examples of a routine maintenance include server patching or renewing a server

certificate. For routine maintenance, SPP staff is required to notify the Market Participants at least two (2) days

prior to implementation in the member testing and production environments.

If the WRR has no member-facing or member-impacting efforts or Tariff impacts, the WRR will be implemented

in the latest version of the applicable governing document(s) following all necessary stakeholder approvals.

WESTERN ENERGY IMBALANCE SERVICE MARKET

Review of FERC Order in ER20-1059, ER20-1060

2

BACKGROUND

• WEIS Tariff, WJDA, and WMEC Scope filed February 2020 in Dockets ER20-1059, ER20-1060

• Multiple rounds of protests, comments filed

• FERC issued Deficiency Letter in April 2020

• Order issued on July 31 rejecting, without prejudice, SPP’s original filing• “We recognize the potential benefits that the WEIS Market could bring to utilities

and customers in the Western Interconnection. As noted by SPP, the Commission historically has recognized the broad benefits that energy imbalance markets can bring to the bulk electric system, and we appreciate the efforts by SPP and the market participants to develop regional solutions by establishing the WEIS Market.

• We underscore that the deficiencies identified in this order address elements of SPP’s proposal and not the broader goal of establishing the WEIS Market.

3

SPP OBSERVATIONS

• While initially disappointing to not receive approval, on the whole this is a really good order

• There were lots of issues raised in the docket by many different entities

• There are only five key areas FERC identified as being deficient

• In each of the five key areas, FERC provided specific guidance

4

5 ISSUES NOTED BY FERC IN JULY 31 ORDER

Rejected Filing due to:1. Non-Participant Transmission2. Role of Reliability CoordinatorProvided Guidance to modify in subsequent filings:3. Supply Adequacy Incentives/Penalties4. Use of Average Losses5. Lack of Justification for Automatic Increases to Market

Mitigation Thresholds

5

ISSUE 1 CONCERNS

• In the FERC Deficiency Order, Question 2 inquired about additional details regarding Transmission Service• Question 2.b.3: Asked about how WEIS accounts for the rights

of transmission owners within WEIS BA who are non WEIS MP’s• SPP explained how WEIS meets the just and reasonable

standard using as available non-firm transmission service

• Alternatively, SPP proposed to modify Section 4.3 to recognize non-physical transmission limits to constrain WEIS

• Several parties protested this provision

6

FERC GUIDANCE: ISSUE 1

• “Any future proposal for the SPP WEIS Market should include the mechanisms or agreements that will ensure that the SPP WEIS Market respects the transmission capacity of non-participating entities with appropriate constraints in the SCED. If SPP is not able to reach an arrangement with non-participating entities to use their transmission capacity, SPP must include constraints in its market model to appropriately respect the transmission rights of non-participating entities when calculating the market solution.”

• “We encourage SPP to coordinate proactively with its neighbors to address these operational concerns prior to resubmitting any proposal.”

7

ISSUE 1 APPROACH TO ADDRESS

• Development of revised tariff language and associated business practice to establish constraints for use in SCED that are representative of transmission rights made available for use in the WEIS Market• Explicit rights held by WEIS Market Participants• Joint Dispatch Transmission Service on transmission owned by participating WEIS

transmission providers• Rights authorized by other agreements such as BA services agreements, bilateral

agreements with third parties, or seams agreements• Market Participants and participating Balancing Authorities required to provide

information to SPP regarding the nature of the transmission rights in order for SPP to properly define constraints that will appropriately limit the WEIS Market economic dispatch

• SPP will continuously activate the identified constraints in the SCED to constrain the WEIS Market’s economic dispatch to the transmission rights made available for use in the WEIS Market

8

ISSUE 2 CONCERNS• SPP stated in filing that it would use real-time information

provided by Reliability Coordinators and Transmission Operators as input to market solution engine

• Xcel raised concerns that the SPP West RC communication with WEIS market exceeds scope of RC agreement

• Xcel raised concerns this may erode effectiveness of RC

• SPP states that RC will not perform any incremental service

9


• “If SPP decides to submit a new proposal to implement the WEIS Market, SPP should remedy these concerns by better explaining why congestion information should be communicated by the reliability coordinator or transmission operator, and how such actions are consistent with the reliability coordinator’s role.”

• “In the alternative, SPP could propose a different arrangement to obtain needed information on transmission availability and other system conditions that does not rely on roles defined by NERC to act as a conduit for market-related information between the market participant and SPP as the market operator.”

• In addition, SPP should explain how SPP will incorporate transmission availability and congestion information into its market optimization, how its proposed approach will ensure accurate information about available transmission and congestion in real-time, and, if applicable, why WEIS Market participants will not be required to provide known transmission availability being made available for WEIS use to SPP prior to SPP running its market optimization. This is important also. They seem to be implying that we need to have participants give us information on transmission. Need to discuss how that looks. Maybe we just do this on WECC-defined paths?

10


• Clarification will be provided on refiling on WEIS Market interaction with RC function

• Not expected to have a significant impact on governing documents, market design, or schedule

11

ISSUE 3 CONCERNS

• WEIS proposal was for MP’s to submit resource plans to demonstrate they have sufficient generation to meet load

• MP’s can make plan changes no later than 30 minutes prior to the operating hour for identified inadequacy.

• SPP MMU, Platt River, MEAN all express concerns around MP’s ability to lean on market without consequences

• SPP responded that BA’s are responsible for supply adequacy and WAPA states that as a BA it is responsible for SA

12


• “If SPP submits a new proposal to implement the WEIS, SPP should also consider proposing a mechanism that will ensure market participants are incentivized to maintain supply adequacy. For example, in the Western EIM, CAISO incentivizes EIM entities by limiting the imbalance imports of EIM entities that fail a resource sufficiency test.”

13


• SPP is proposing to incorporate a pricing mechanism for MPs in a BA that experiences supply adequacy shortfalls• Assess supply adequacy at BA level through next-hour supply adequacy

assessment• Updated every 15 minutes for next quarter clock hour

• Application of pricing mechanism in deficient BA• The pricing mechanism incents MPs to be adequate because

• If they are long in a short BA, they get paid more• If they are short in a short BA, they have to pay more

• Pricing mechanism likely to be based on transmission constraint VRLs which have pricing blocks at $750, $1000, $1250, and $1500 depending on the level of supply adequacy deficiency

14

ISSUE 4 CONCERNS

• SPP proposal was to use average cost method to account for losses in the WEIS

• No parties filed direct comments on SPP’s proposal to use average losses

15


• “Therefore, if SPP submits a new proposal to implement the WEIS, SPP should consider incorporating marginal losses in dispatch and LMP, regardless of which approach SPP ultimately utilizes to settle losses with market participants.”

16


• SPP will incorporate marginal losses into dispatch and LMP• Achieves more optimal dispatch noted by FERC

• Adjustment factor applied to Imbalance Energy MW quantities in settlements to ensure loss settlements aren’t duplicated between application of marginal losses and submission of average losses in meter data

17

ISSUE 5 CONCERNS

• SPP’s proposal was based on Integrated Marketplace market power mitigation provisions.

• SPP automatically applies mitigation measures to resource offers if offer exceeds applicable thresholds and fails the market impact test

• FERC’s deficiency letter asked several questions related to market mitigation thresholds

• Several comments were filed noting concerns with potential market power

18


• “If SPP decides to submit a new proposal to implement the WEIS, SPP should either remove the automatic increase provisions or otherwise justify their inclusion.”

19


• For near-term path forward, recommendation is to simply remove the automatic increase in mitigation thresholds as recommended by FERC• No immediate impact to systems/testing/schedule

• SPP and SPP MMU will assess whether changes are appropriate to the mitigation thresholds once more WEIS Market data is available

• When/If the mitigation thresholds are proposed to be increased in the future, a filing will be made with justification for increasing the thresholds

20

WEIS PROJECT TEAM GOALS AND NEXT STEPS

• Minimize changes to systems, budget, and timeline

• Continue with implementation and market trials

• Prefiling meeting with FERC staff as soon as possible

• Prepare refiling package with goal of refiling in September

• Continued engagement with WMWG, WMEC, and interested stakeholders on issues and path forward

• Go-Live February 1, 2021

DRAFT

NON-PHYSICAL TRANSMISSION CONSTRAINTS WESTERN ENERGY IMBALANCE SERVICE MARKET

By AUTHOR/DEPARTMENT

Published on DATE

Version NUMBER

Southwest Power Pool, Inc.

REVISION HISTORY

DATE OR VERSION NUMBER

AUTHOR CHANGE DESCRIPTION

COMMENTS


CONTENTS REVISION HISTORY .......................................................................................................................................................... I

PURPOSE ............................................................................................................................................................................ 1

BUSINESS PRACTICE ...................................................................................................................................................... 1

General ................................................................................................................................................................................ 1

Managing service flow Constraints in the WEIS Market .................................................................................. 2

Setting Limits for service flow Constraints ................................................................................................... 2

Limiting WEIS Market Flows on service flow Constraints ....................................................................... 2

TERMS AND ACRONYMS ............................................................................................................................................. 3

APPENDIX 1: SERVICE FLOW CONSTRAINTS MONITORED BY THE WEIS MARKET OPERATOR ...... 4

Southwest Power Pool, Inc. Name of Current Section (Optional)

Report Name Publication DATE/Version NUMBER 1

PURPOSE This business practice describes how the Western Energy Imbalance Service (“WEIS”) Market will manage non-physical transmission constraints in the WEIS Security Constrained Economic Dispatch (“SCED”) solution.

BUSINESS PRACTICE

GENERAL For the purposes of this Business Practice, the constraints on the transmission system can be separated into two categories: physical transmission constraints and non-physical transmission constraints.

A physical transmission constraint is a physical limitation on the transmission system that is represented by a System Operating Limit (“SOL”) or Interconnection Reliability Operating Limit (“IROL”). When a physical transmission constraint exists, the Reliability Coordinator (“RC”) in the Western Interconnection coordinates mitigation steps to relieve a constraint. This includes the Western Interconnect Unscheduled Flow Mitigation Procedure (“WIUFMP”)1 and generation re-dispatch relief obligation to a participating Balancing Authority or the WEIS Market in accordance with its congestion management procedures SPP will activate transmission constraints and bind the WEIS Market in response to such relief obligation.

A non-physical transmission constraint is a limitation that represents the transmission capability that one or more WEIS Market Participants have made available for operating the WEIS Market. The type of non-physical transmission constraint utilized by SPP in operating the WEIS Market is a Service Flow Constraint (“SFC”). SFCs represent the transmission capability made available for use by the WEIS Market through transmission rights held by WEIS Market Participants that may be a result of full or partial ownership of certain transmission facilities or be a result of executed agreements or contracts which include provisions for rights for the WEIS Market to use certain transmission facilities. By continuously activating SFCs in the SCED algorithm, SPP will constrain the WEIS Market’s economic dispatch to not exceed the transmission capability made available for use by the WEIS Market through transmission rights provided to SPP by WEIS Market Participants or as may be permitted by other agreements or contracts.



MANAGING SERVICE FLOW CONSTRAINTS IN THE WEIS MARKET SFCs will be continuously activated in the WEIS Market. It will be the responsibility of the WEIS Market Operator to ensure the constraints are continuously activated. This ensures that the WEIS Market SCED constrains the WEIS Market’s economic dispatch from exceeding an SFC limit. The list of SFCs that will be monitored by the WEIS Market Operator is included as Appendix 1 of this Business Practice.

SETTING LIMITS FOR SERVICE FLOW CONSTRAINTS Prior to beginning participation in the WEIS Market, WEIS Market Participants are required to provide information to SPP and their participating Balancing Authority on the transmission capability being made available to the WEIS Market as necessary to model SFCs. After initial modeling of an SFC, it is expected that changes regarding the limit or status of an SFC will be provided to SPP by the participating Balancing Authority through the ICCP connection between SPP and the participating Balancing Authority or through communication directly with the WEIS Market Operator. SPP will maintain a list of activated SFCs on its public website.

SPP will incorporate changes to the limit or status of an SFC in real-time after the information is received from a participating Balancing Authority or a WEIS Market Participant.

INCREASE OR DECREASE TO TRANSMISSION CAPABILITY AVAILABLE TO WEIS MARKET

When activities, which may include but are not limited to transfer of ownership of facilities or a WEIS Market Participant reserving long-term transmission service (one year or longer in duration) or short-term transmission service (less than one year in duration), result in an increase in transmission capability across an SFC being made available to the WEIS Market, the WEIS Participating Balancing Authority will include the incremental rights in the submission of the SFC limit to SPP.

When activities, which may include but are not limited to the transfer of ownership of facilities or a decrease in the capacity of transmission service procured by a WEIS Market Participant, result in a reduction of transmission capability across an SFC being made available to the WEIS Market, the WEIS Participating Balancing Authority, will account for the reduction of transmission capability made available to the WEIS Market in the submission of the SFC limit to SPP.

LIMITING WEIS MARKET FLOWS ON SERVICE FLOW CONSTRAINTS SPP will incorporate all SFC limitations communicated to SPP by a Participating Balancing Authorities into the SCED solution by ensuring the constraints are continuously activated.



Activating an SFC in the SCED forces the algorithm to constrain the WEIS Market’s economic dispatch at or below the limit provided by the participating Balancing Authority.

The net impacts of WEIS Market flows on SFC limitations will be based on the most recent network topology from the SPP Energy Management System (“EMS”). WEIS Resource and Load impacts (generator and load shift factors) will be based on powerflow analysis to determine the net impact of incremental injections or withdrawals at those locations on the SFC limitation. Since the SFC is based on transmission rights as communicated by Market Participants, the SFC will not consider impacts from external resources and loads or embedded non-participating resources and loads (PPR and PPL) when determining impact on the SFC, thus ensuring non-participating transmission is excluded from WEIS Market economic dispatch opportunities through SCED.

TERMS AND ACRONYMS

ACRONYM TERM

SCED Security Constrained Economic Dispatch

SFC Service Flow Constraint

SPP Southwest Power Pool



APPENDIX 1: SERVICE FLOW CONSTRAINTS MONITORED BY THE WEIS MARKET OPERATOR Constraint Name WEIS Participants with

Rights Constraint Purpose

TOT 1A/WECC Path 30 TSGT, WAPA Limit WEIS Market flows internal to WACM BA to within rights of WEIS Market Participants

TOT 2A/WECC Path 31 TSGT, WAPA Limit WEIS Market flows internal to WACM BA to within rights of WEIS Market Participants

TOT 3/WECC Path 36 BEPW, TSGT, WAPA Limit WEIS Market flows internal to WACM BA to within rights of WEIS Market Participants

TOT 4B/WECC Path 38 WAPA Limit WEIS Market flows internal to WACM BA to within rights of WEIS Market Participants

TOT 5/WECC Path 39 TSGT, WAPA Limit WEIS Market flows internal to WACM BA to within rights of WEIS Market Participants

WECC Path 80 WAPA Limit WEIS Market flows between WACM BA and WAUW BA to within rights of WEIS Market Participants

172 FERC ¶ 61,115

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

Richard Glick, Bernard L. McNamee,

and James P. Danly.

Southwest Power Pool, Inc. Docket Nos. ER20-1059-000

ER20-1059-001

ER20-1060-000

ER20-1060-001

ORDER ON PROPOSED TARIFF

(Issued July 31, 2020)

On February 21, 2020, as amended on May 22, 2020, pursuant to section 205

of the Federal Power Act (FPA)1 and section 35.12 of the Commission’s regulations,2

Southwest Power Pool, Inc. (SPP) submitted: (1) a tariff to implement the Western

Energy Imbalance Service Market (WEIS Market) in the Western Interconnection (WEIS

Tariff); (2) Western Joint Dispatch Agreements (WJDA) executed by seven entities; and

(3) the Western Markets Executive Committee (WMEC) Charter (collectively, SPP’s

proposal). SPP requests that the Commission accept the proposed WEIS Tariff, WJDAs,

and WMEC Charter to be effective February 1, 2021. In this order, we reject the filings

without prejudice to SPP submitting revised filings that address the issues discussed

below.

I. Background

SPP has been authorized as a regional transmission organization (RTO) since

October 1, 2004.3 In its role as an RTO, SPP administers the Integrated Marketplace, a

1 16 U.S.C. § 824d (2018).

2 18 C.F.R. § 35.12 (2019).

3 Sw. Power Pool, Inc., 109 FERC ¶ 61,009 (2004), order on reh’g,

110 FERC ¶ 61,137 (2005).

20200731-3037 FERC PDF (Unofficial) 07/31/2020

Docket No. ER20-1059-000, et al. - 2 -

centralized day-ahead and real-time energy and operating reserve market with locational

marginal pricing (LMP) and market-based congestion management in the Eastern

Interconnection.4 In addition, as of December 3, 2019, SPP has served as a Reliability

Coordinator (SPP West RC) for certain utilities in the Western Interconnection. As

relevant to these filings, SPP West RC is responsible for overseeing reliable operations

across the area encompassing both the Western Area Colorado Missouri (WACM)

balancing authority area (BAA) and the Western Area Power Administration Upper

Great Plains West (WAUW) BAA, in addition to surrounding BAAs.5

SPP states that, over the course of 2019, it worked with stakeholders in the

Western Interconnection to develop a standalone tariff setting forth the rules and

procedures to provide a market-based mechanism to supply energy imbalance service

in the Western Interconnection.6 On February 21, 2020, SPP filed a proposed tariff

for the WEIS Market in Docket No. ER20-1059-000 and the WJDAs and WMEC

Charter in Docket No. ER20-1060-000.

II. SPP Filings

The proposed WEIS Tariff provides for SPP’s implementation of a five-minute

energy imbalance service market, which is currently planned to commence operations

on February 1, 2021. SPP states that the WEIS Tariff is based on the framework of the

4 Transmittal at 2.

5 Id. at 11.

6 Id. at 3. The Commission requires public utility transmission providers to offer

energy imbalance service to transmission customers and generators as ancillary services

under the pro forma open access transmission tariff (OATT). Promoting Wholesale

Competition Through Open Access Non-Discriminatory Transmission Services by Public

Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order

No. 888, FERC Stats. & Regs. ¶ 31,036, at 31,705 (1996) (cross-referenced at 75 FERC

¶ 61,080), order on reh’g, Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 (cross-

referenced at 78 FERC ¶ 61,220), order on reh’g, Order No. 888-B, 81 FERC ¶ 61,248

(1997), order on reh’g, Order No. 888-C, 82 FERC ¶ 61,046 (1998), aff’d in relevant

part sub nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C.

Cir. 2000), aff’d sub nom. New York v. FERC, 535 U.S. 1 (2002); Preventing Undue

Discrimination and Preference in Transmission Service, Order No. 890, 118 FERC

¶ 61,119, order on reh’g, Order No. 890-A, 121 FERC ¶ 61,297 (2007), order on reh’g,

Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on reh’g, Order No. 890-C, 126

FERC ¶ 61,228, order on clarification, Order No. 890-D, 129 FERC ¶ 61,126 (2009). In

addition, balancing authorities are responsible for maintaining balance between supply

and demand in their areas.


Docket No. ER20-1059-000, et al. - 3 -

energy imbalance service market that it operated in the Eastern Interconnection from

2007-2014.7 SPP explains that it will administer the WEIS Market as a contractual

service that it will operate separately from SPP’s existing Integrated Marketplace.8 At

launch, SPP states that the WEIS Market will consist of the WACM and WAUW BAAs.

The SPP RC West footprint includes the initial entire WEIS Market footprint.9 However,

SPP asserts that the WEIS Market is flexible enough to operate across multiple reliability

coordinator footprints.10

SPP states that the WEIS Market initially will consist of the following seven

utilities: Western Area Power Administration (WAPA), separately and individually

as WAPA Colorado River Storage Project, WAPA Rocky Mountain Region, and

WAPA Upper Great Plains Region; Basin Electric Power Cooperative (Basin); Tri-State

Generation and Transmission Association, Inc. (Tri-State); Municipal Energy Agency

of Nebraska (MEAN); and Wyoming Municipal Power Agency (WMPA).11

SPP states that, in order to participate in the WEIS Market, an entity must execute

the WJDA with SPP.12 The WJDA establishes the legal relationship between SPP and

the market participant and includes the provisions for SPP’s administration of the WEIS

Market and the obligations of customers to pay administrative costs. SPP has filed

executed WJDAs with the seven market participants in the WEIS Market. SPP proposes

to recover initial implementation and ongoing costs through the WEIS Rate, which is

calculated in accordance with the WJDA.13 The WEIS Rate proposed for the first year

7 Transmittal at 3; see also Sw. Power Pool, Inc., 114 FERC ¶ 61,289, order on

reh’g, 116 FERC ¶ 61,289 (2006).

8 Transmittal at 2-3.

9 SPP Answer at 42.

10 Transmittal at 12.

11 Deseret Generation & Transmission Co-operative, Inc. (Deseret) notes in its

comments that it has executed a WJDA with SPP to join the WEIS Market. However,

SPP has not filed this WJDA.


13 Id.


Docket No. ER20-1059-000, et al. - 4 -

of WEIS operations is $0.22 per MWh of Net Energy for Load, calculated based on an

estimated $5 million per year operating costs.14

According to SPP, the WEIS Market will implement a security constrained

economic dispatch (SCED) market optimization software to centrally dispatch all

available participating resources across the WEIS Market footprint to help balance load

and generation.15 SPP will calculate each market participant’s quantity of imbalance

energy within the settlement area every five minutes and settle at the LMP for that area.

Market participants will be required to submit resource plans for each hour of the

operating day that demonstrate that they have sufficient generation to meet their expected

load and ancillary service obligations.16 SPP will assess these resource plans, identify

any inadequacies, and notify the inadequate market participants and the associated

balancing authority of any identified inadequacies. SPP states this supply adequacy

analysis is not intended to replace any existing responsibility for participating balancing

authorities; rather, it provides an additional tool and transparency into projected operating

conditions.17

Additionally, under SPP’s proposal, all imbalance energy within participating

BAAs will be settled in the WEIS Market; therefore, all load and generation within the

footprint must be registered with the WEIS Market.18 SPP represents that the WACM

and WAUW BAAs contain approximately 8,000 MW of generation and approximately

3,600 MW of load and that the seven entities that have executed the WJDA represent

approximately 7,100 MW of that generation.19 These entities will directly register with

SPP, and SPP will directly settle their imbalance energy.20 Entities within participating

BAAs that opt to not execute the WJDA will be represented by their host BAA in the

14 Id. at 16.

15 Id. at 4-5.

16 Id.

17 Id.

18 Id. at 9.

19 Id. at 10.

20 Id. at 9.


Docket No. ER20-1059-000, et al. - 5 -

WEIS and SPP will settle any associated imbalance energy with the BAA on behalf of

such entities.21

SPP proposes that SPP’s internal, independent market monitor (SPP MMU) will

perform market monitoring services for the WEIS Market.22 Additionally, the SPP MMU

is developing a market power analysis that is expected to be completed prior to the start

of market trials, which are scheduled to begin in August 2020.23

SPP notes that the WEIS Market “does not include consolidation of BAA

operations, nor markets for day-ahead unit commitment and energy deployment,

operating reserves, or transmission congestion rights.”24 Further, market participants

are not transferring functional control of their generation or transmission assets to SPP,

and the market does not contain provisions for unit commitment decisions by SPP or

the clearing of any operating reserve products.25

SPP requests a February 1, 2021 effective date but asks that the Commission

issue an order by July 21, 2020.26

III. Notice of Filings and Responsive Pleadings

Notice of SPP’s filings in Docket Nos. ER20-1059-000 and ER20-1060-000

was published in the Federal Register, 85 Fed. Reg. 11,982 (Feb. 28, 2020), with

interventions and protests due on or before March 13, 2020. On March 5, 2020,

Sustainable FERC Project, Advanced Power Alliance, American Wind Energy

Association, and Western Resource Advocates filed a motion requesting that the

Commission extend the time for submitting comments in response to SPP’s filings to

21 Id.

22 Id. at 13.

23 Id. at 13-14.

24 Id. at 8.

25 Id. at 8-9.

26 SPP initially requested a May 21, 2020 effective date in order to provide SPP

sufficient time to make any necessary compliance filings and to have certainty regarding

market rules when conducting market trials beginning on August 3, 2020. Transmittal at

1, 49. When SPP amended its filings in Docket Nos. ER20-1059-001 and ER20-1060-

001, as described below, SPP requested that the Commission issue an order by July 21,

2020.


Docket No. ER20-1059-000, et al. - 6 -

March 23, 2020. On March 11, 2020, the Commission’s Secretary issued a notice

extending the deadline to March 20, 2020.27

Timely motions to intervene were filed by: Western Farmers Electric

Cooperative; Western Power Trading Forum; Oklahoma Municipal Power Authority;

Kansas Power Pool; Deseret; National Rural Electric Cooperative Association; Western

Resource Advocates; WMPA; and Sustainable FERC Project and Natural Resources

Defense Council. American Public Power Association (APPA) and NorthWestern

Corporation (NorthWestern) filed motions to intervene out of time.

Colorado Public Utilities Commission (Colorado PUC) filed a notice of

intervention and comments. In addition, Deseret filed comments in support and a limited

protest; Public Interest Organizations28 filed comments; Black Hills Service Company,

LLC (Black Hills Service Company), on behalf of Black Hills Power, Inc. (Black Hills

Power) and Cheyenne Light, Fuel & Power Company (Cheyenne Light), Holy Cross

Electric Association (Holy Cross), and Xcel Energy Services Inc. (Xcel) filed motions to

intervene and protests; Platte River Power Authority (Platte River) filed a motion to

intervene, motion to reject, protest, and request for hearing and settlement procedures;

and Colorado Springs Utilities (Colorado Springs), Clean Energy Associates,29 MEAN,

Black Hills Colorado Electric, LLC (Black Hills Colorado), WAPA, Tri-State, and Basin

filed motions to intervene and comments. The SPP MMU filed a motion to intervene and

comments in Docket No. ER20-1059-000. On April 3, 2020, the SPP MMU filed an

answer. On April 9, 2020, WAPA, Basin and Tri-State, and SPP filed answers.

On April 20, 2020, Commission staff issued a letter informing SPP that its

filings were deficient and requesting additional information (Deficiency Letter). On

May 22, 2020, SPP filed a response to the Deficiency Letter in Docket Nos. ER20-1059-

001 and ER20-1060-001 (Deficiency Response). Notice of SPP’s Deficiency Response

was published in the Federal Register, 85 Fed. Reg. 32,376 (May 22, 2020), with

interventions and protests due on or before June 12, 2020. The SPP MMU, the Colorado

PUC, Basin, and WAPA filed comments regarding the Deficiency Response. Black

Hills Service Company, Platte River, and Xcel filed protests regarding the Deficiency

Response. The California Independent System Operator Corporation (CAISO) filed a

27 Notice of Extension of Time, Docket No. ER20-1059-000 (Mar. 11, 2020).

28 Public Interest Organizations includes Earthjustice, Natural Resources Defense

Council, Sustainable FERC Project, Western Grid Group, and Western Resource

Advocates.

29 Clean Energy Associates includes American Wind Energy Association, the

Solar Energy Industries Association, the Advanced Power Alliance, Interwest Energy

Alliance, and the Solar Council.


Docket No. ER20-1059-000, et al. - 7 -

motion to intervene and comments regarding SPP’s February 21, 2020 filings and

Deficiency Response. WAPA, SPP, and Tri-State filed motions for leave to answer and

answers in response to certain protests and comments regarding the Deficiency Response.

On July 10, 2020, Black Hills Service Company submitted a motion for leave to answer

and answer to SPP and WAPA’s answers regarding certain protests and comments

regarding the Deficiency Response.

IV. Discussion

A. Procedural Matters

Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.214 (2019), the notice of intervention and timely, unopposed motions

to intervene serve to make the entities that filed them parties to these proceedings.

Pursuant to Rule 214(d) of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.214(d) (2019), we grant APPA’s and NorthWestern’s late-filed

motions to intervene, given their interest in the proceedings, the early stage of the

proceedings, and the absence of undue prejudice or delay.

Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure, 18 C.F.R.

§ 385.213(a)(2) (2019), prohibits an answer to a protest or answer unless otherwise

ordered by the decisional authority. We accept the answers because they have provided

information that assisted us in our decision-making process.

B. Substantive Matters

We recognize the potential benefits that the WEIS Market could bring to utilities

and customers in the Western Interconnection. As noted by SPP, the Commission

historically has recognized the broad benefits that energy imbalance markets can

bring to the bulk electric system,30 and we appreciate the efforts by SPP and the

market participants to develop regional solutions by establishing the WEIS Market.

However, as discussed below, we find that SPP’s proposed WEIS Tariff has not

been shown to be just and reasonable as it is insufficiently clear regarding SPP’s use of

transmission and the role of the reliability coordinator in the WEIS Market. Although we

reject SPP’s proposed WEIS Tariff, we do so without prejudice31 and provide guidance

on other aspects of SPP’s proposal that may require revisions to ensure SPP’s proposal

30 See, e.g., Sw. Power Pool, Inc., 114 FERC ¶ 61,289 at P 2; Cal. Indep. Sys.

Operator Corp., 147 FERC ¶ 61,231, at P 75 (2014).

31 Because SPP submitted its proposal as a package, we reject both filings,

including the WJDAs and WMEC Charter.


Docket No. ER20-1059-000, et al. - 8 -

is just and reasonable. Specifically, as discussed more fully below, we provide guidance

on supply adequacy, marginal losses, and market power, should SPP choose to submit a

modified proposal.32 We underscore that the deficiencies identified in this order address

elements of SPP’s proposal and not the broader goal of establishing the WEIS Market.

1. Use of Non-Participants’ Transmission Capacity

a. SPP Filings

SPP states that the WEIS Market will use market participants’ existing

transmission service arrangements for generators and loads within the participating

BAAs to facilitate intra-hour economic transfers of energy within the WEIS Market.

Additionally, the WEIS Market will use non-firm, as-available intra-hour transmission

service, referred to as Joint Dispatch Transmission Service, within the WEIS Market

across the transmission facilities of Joint Dispatch Transmission Service Providers.33

SPP specifies that Joint Dispatch Transmission Service will have the lowest priority of

non-firm transmission, which will be curtailed consistent with established congestion

management processes in the Western Interconnection. The proposed rate for Joint

Dispatch Transmission Service is $0.00/MWh.

b. Protests

Several protesters argue that the WEIS Market will infringe on the transmission

rights of non-participants in the WEIS Market. Black Hills Service Company notes

that its affiliates Black Hills Power and Cheyenne Light own and operate transmission

facilities within the WEIS Market footprint and requests that SPP make clear that

transmission owner participation in the WEIS Market, and the provision of Joint Dispatch

Transmission Service, is voluntary.34 Black Hills Service Company requests that SPP

clarify that the WEIS Market will not be administered in a way that negatively affects

or inappropriately makes use of transmission facilities over which WEIS Market

32 Because SPP has not shown that these enumerated aspects of its proposal are

just and reasonable and not unduly discriminatory or preferential, we make no findings

regarding the other aspects of SPP’s proposal.

33 SPP defines a Joint Dispatch Transmission Service Provider as “[a]ny Market

Participant that provides Joint Dispatch Transmission Service and that is in a Balancing

Authority participating in the WEIS Market or SPP as the Transmission Service

Provider.” WEIS Tariff, § 1 (J - Definitions).

34 Black Hills Service Company Protest at 31.


Docket No. ER20-1059-000, et al. - 9 -

participants have no ownership or contractual rights.35 Black Hills Service Company

and MEAN express concerns that it is unclear whether non-participating transmission

providers in the WEIS Market will be forced to provide Joint Dispatch Transmission

Service and whether these entities will be required to revise their OATTs to document

the Joint Dispatch Transmission Service charge of $0.00 per MWh.36 Black Hills Service

Company and Black Hills Colorado express concerns that SPP’s proposal to use the

transmission capacity of the BAA up to its physical limits will not respect existing

transmission rights and agreements. Black Hills Service Company and Black Hills

Colorado further argue that SPP has not explained how it will avoid unreserved use

across seams with non-participating transmission providers within the WEIS Market

footprint, or how non-participating transmission providers will be compensated if such

market flows occur.37

Xcel expresses similar concerns, noting that its affiliate, Public Service Company

of Colorado (PSCo), administers the PSCo BAA, which is adjacent to the WEIS Market

footprint and whose transmission facilities are highly interconnected with and overlap

with the Tri-State and WAPA transmission systems.38 Similarly, Platte River notes

that it jointly owns transmission facilities with WEIS Market participants and therefore

faces risks of unreserved transmission use analogous to those described in the Xcel

comments.39 Xcel notes that, unlike the PSCo Joint Dispatch Agreement (PSCo JDA),40

the WEIS Market does not plan to limit transmission usage internal or adjacent to the

WEIS Market footprint based on the ownership of transmission rights, and, as a result,

the WEIS Market’s SCED would use all of the physical capability of a transmission line

or path, even though the WEIS Market participants do not have contractual rights to that

capacity.41 Xcel argues that the proposed WEIS Tariff does not explain how SPP intends

35 Id. at 32.

36 Id. at 29-31; MEAN Comments at 6-7.

37 Black Hills Service Company Protest at 33; Black Hills Colorado Comments

at 4.

38 Xcel Comments at 7-8.

39 Platte River Protest at 22.

40 PSCo, Black Hills Colorado, Platte River, and Colorado Springs are parties to a

joint dispatch agreement under PSCo’s OATT that facilitates the centralized intra-hour

dispatch of resources within PSCo’s BAA. PSCo JDA participants plan to join the

Western EIM in April 2022.

41 Xcel Comments at 9-10.


Docket No. ER20-1059-000, et al. - 10 -

to prevent unreserved use or limit Joint Dispatch Transmission Service to only the

capacity rights of WEIS participants.42 Xcel, Colorado Springs, and Holy Cross argue

that SPP should be required to develop a joint operating agreement or other coordination

mechanism for SPP and the PSCo JDA participants to address seams issues.43 Colorado

Springs further notes that it may be useful for the Commission to institute a preliminary

technical conference to explore transmission issues and to discuss the parameters for

further discussion of a joint operating agreement.44

Xcel also states that SPP’s filings provide insufficient detail to determine the

terms and conditions under which congestion management will occur within and in

areas adjacent to the WEIS Market footprint.45 Platte River supports and joins Xcel’s

comments arguing that SPP’s failure to address seams issues will create unreasonable

risks to the reliable and efficient operations of transmission facilities that intertwine

with the systems of the proposed WEIS participants.46

c. Answers

In disagreement with protestors, SPP contends that its filings provide protections

or assurances that the WEIS Market will not infringe upon transmission rights of non-

participating entities and will not result in unreserved use of non-WEIS transmission.

SPP asserts that protestors’ arguments are based on “speculative hypotheticals that ignore

the realities of existing operational practices” and the language of the WEIS Tariff.47

SPP states that much of the concern appears to center around loop flows and argues

that the loop flow impacts of the WEIS Market are no different than the other loop flow

impacts in the Western Interconnection. SPP asserts that protesters fail to provide

credible evidence for the Commission to conclude that the loop flow impacts from the

WEIS Market will detrimentally affect the rights of other entities.48

42 Id. at 10.

43 Id. at 2, 9; Holy Cross Protest at 5.

44 Colorado Springs Comments at 6.

45 Xcel Comments at 9.


47 SPP Answer at 51.

48 Id. at 51-52.


Docket No. ER20-1059-000, et al. - 11 -

SPP agrees with protesters that the unreserved use of non-participating

transmission systems would not be an efficient outcome. However, SPP stresses the

importance of distinguishing between unavoidable parallel flows and intentional

unreserved use. SPP explains that the WEIS Market’s use of the existing transmission

rights of WEIS Market participants, the unused available capacity on the transmission

systems of WEIS Joint Dispatch Transmission Service Providers, and WEIS Market

participants’ existing transmission rights on non-participating transmission systems does

not constitute unreserved use because the holders of the capacity rights on those systems

have agreed to allow SPP to utilize those rights for WEIS Market transactions.49

SPP states that the determination of what constitutes unreserved use is made by

transmission providers enforcing the terms of their respective tariffs. Additionally, SPP

asserts that it has not proposed any requirement that non-participating transmission

providers amend their OATTs or make available non-firm, intra-hour Joint Dispatch

Transmission Service capacity.50

On seams issues, SPP rejects calls for it to form joint operating agreements with

neighboring entities.51 First, SPP contends that protesters’ arguments that rely on the fact

that some of the PSCo JDA entities may begin participating in the Western EIM52 are

premature and speculative, and notes that this potential future participation does not

present current seams issues.53 Second, SPP argues that no party has presented evidence

to demonstrate that the WEIS Market will result in congestion that does not exist today.

SPP states that the Commission rejected similar arguments in response to CAISO’s

proposal to establish the Western EIM.54 SPP adds that utilities in the Western

Interconnection have established congestion management practices in place, and that

parties in this proceeding have not demonstrated that it is inappropriate for the WEIS

49 Id. at 53.

50 Id. at 55.

51 Id. at 54.

52 The Western EIM refers to the real-time energy market in the Western

Interconnection administered by CAISO. The Western EIM began operations in 2014.

53 SPP Answer at 38-39.

54 Id. at 42 (citing Cal. Indep. Sys. Operator Corp., 147 FERC ¶ 61,231, at

PP 261-62, order on reh’g, clarification, and compliance, 149 FERC ¶ 61,058, at P 69

(2014)).


Docket No. ER20-1059-000, et al. - 12 -

Market to rely on these practices.55 Additionally, SPP argues that as the market operator,

it will not have functional control of any transmission within the WEIS Market footprint,

and thus it is uncertain how or why a joint operating agreement would be appropriate

between an entity that operates transmission facilities and one that does not.56

SPP argues that although some commenters bring up deficiencies in congestion

management in the West, these issues are preexisting, and it would be appropriate to

address them in another forum where all stakeholders can participate.57

d. Deficiency Letter, Deficiency Response, Protests to the

Deficiency Response, and Answers

In the Deficiency Letter, Commission staff requested further explanation on what

proposed measures would ensure that the WEIS Market accounts for the transmission

rights of non-participating transmission owners within the WEIS Market footprint.

In response, SPP states that the WEIS Tariff requires each market participant to

submit a resource plan to indicate that it has committed and/or scheduled enough supply

to meet its forecasted demand. SPP states that the requirement that market participants

submit valid resource plans ensures that the market has a feasible operating plan that only

utilizes the existing transmission arrangements of market participants prior to real-time.

However, SPP also asserts that it “appears just and reasonable to allow all unused

transmission capability within a participating [b]alancing [a]uthority, whether explicitly

reserved by a WEIS Market participant or otherwise unused,”58 to be made available for

purposes of achieving the least cost dispatch of imbalance energy to all customers located

within a participating balancing authority.59 SPP reasons that this is appropriate because

all load and generation, whether directly participating in the WEIS Market or not, is

subject to energy imbalance obligations.

SPP argues that the WEIS Market will not infringe upon the transmission use of

entities within the WEIS Market footprint who are not WEIS Market participants because

the WEIS Market will use only transmission capability that is available and otherwise

unused in real-time. SPP also notes that this construct will allow those non-participating

55 Id. at 41-42.

56 Id. at 43.

57 Id. at 45-50.

58 SPP Deficiency Response at 19 (emphasis in original).

59 SPP Answer to Protests to Deficiency Response at 18-20.


Docket No. ER20-1059-000, et al. - 13 -

entities to enjoy the benefits of the WEIS Market’s least cost dispatch for providing

imbalance energy. SPP also argues that allowing a non-participating transmission owner

or customer within a participating balancing authority to withhold otherwise unused

available transmission capability from being used by the WEIS Market raises market

manipulation concerns and would likely result in additional congestion in the market,

affecting LMPs for all market participants.60 Finally, although SPP asserts that its

approach does not infringe upon the rights of non-participating entities, it proposes to

modify section 4.3 of Attachment A of the WEIS Tariff to provide that non-participating

entities may work with their balancing authority to establish a limitation, if appropriate,

on the amount of transmission the WEIS Market may use in performing the least cost

dispatch.61

In protests to SPP’s Deficiency Response, Xcel, Black Hills Colorado, Black Hills

Service Company, Colorado Springs, and Platte River continue to express concerns that

the WEIS Market will infringe on the rights of non-participating entities. Xcel disputes

SPP’s assertion that all unused transmission capability within a participating balancing

authority should be made available to the WEIS Market because the balancing authority

is obligated to provide energy imbalance to its customers. Xcel reiterates that PSCo’s

transmission capacity is exclusively governed by PSCo’s OATT. Xcel argues that SPP’s

proposed use of unused transmission capability is unauthorized because the balancing

authority would not reserve service under PSCo’s OATT.62

Black Hills Service Company argues that SPP cannot, through this proceeding,

obtain the right to use the transmission of non-participants without reserving and

scheduling such use and otherwise following the OATT rules for transmission customers,

including the rules for redirecting service if SPP wishes to make use of transmission

reserved by WEIS Market participants. Black Hills Service Company asserts that any

user of Black Hills Power and Cheyenne Light’s transmission systems must pay a fair

share of costs pursuant to their respective OATTs. Black Hills Service Company states

that if SPP fails to reserve and pay for transmission service, it must pay a penalty for

unreserved use.63 Additionally, Black Hills Service Company argues that SPP’s proposal

60 Id. at 20.

61 SPP Deficiency Response at 21.

62 Xcel Protest to Deficiency Response at 10-11.

63 Black Hills Service Company Protest to Deficiency Response at 3-4.


Docket No. ER20-1059-000, et al. - 14 -

to allow transmission owners to ask the balancing authority to inform SPP of non-

physical limits to include in the dispatch model is inadequate.64

Additionally, Xcel, Black Hills Service Company, and Colorado Springs argue

that SPP’s proposal ignores the fact that an intra-hour market is operating within and

around the WEIS footprint and express concerns that the proposed WEIS Market will

harm the operation of the PSCo JDA.65 Xcel explains that SPP’s approach will cause

the WEIS Market’s SCED to “intentionally dispatch into the full physical capability it

identifies as ‘available’ on the system based on its simplified methodology of comparing

facilities ratings to facility loadings.”66 Xcel and Black Hills Colorado state this would

include capacity used by the PSCo JDA and transmission rights that are not held by

WEIS Market participants.67 Black Hills Colorado further notes that “[d]ecreased

available physical flow could also affect the economics applicable to the [PSCo] JDA,

therefore increasing pricing.”68

Black Hills Service Company avers that SPP seeks to materially change the nature

of the imbalance service WAPA currently provides. Black Hills Service Company

explains that, in its effort to achieve the least-cost economic dispatch, the WEIS Market

will more frequently dispatch generation, beyond the current scope of imbalance, and

therefore use transmission in ways that WAPA does not under today’s construct.69

Specifically, Black Hills Service Company notes that “a reorganized dispatch likely

will involve wheeling of power across multiple transmission systems and intervening

transmission owners that may not themselves have any imbalance, in a given hour, but

nevertheless could be required to provide free transmission service to others who do.”70

Black Hills Service Company states that the Commission must require SPP to place

non-physical limits in its model to prevent intentional unreserved use of non-participant

systems, which will align the proposed WEIS Joint Dispatch Transmission Service with

the joint dispatch transmission service provided under the PSCo JDA (which Black

64 Id. at 14.

65 Xcel Protest to Deficiency Response at 8-10; Colorado Springs Protest to

Deficiency Response at 2-3; Black Hills Colorado Protest to Deficiency Response at 2.

66 Xcel Protest to Deficiency Response at 9.

67 Id. at 9-10; Black Hills Colorado Protest to Deficiency Response at 2.

68 Black Hills Colorado Protest to Deficiency Response at 2.

69 Black Hills Service Company Protest to Deficiency Response at 5.

70 Id. at 6.


Docket No. ER20-1059-000, et al. - 15 -

Hills Service Company asserts has been effective in respecting non-participating and

neighboring entities’ transmission rights).71 Black Hills Service Company notes that

Black Hills Power and Cheyenne Light remain open to negotiating with SPP for use of

service on their systems.

In its comments on the Deficiency Response, WAPA states that the WEIS

Market’s use of unused transmission capability only on an intra-hour, as-available basis

is no different than the current practice where the balancing authority has access to all

available transmission in its BAA to resolve energy imbalance in real time. WAPA

agrees with SPP that it is both beneficial and necessary for all load and generation to

allow all unused transmission capability within a participating BAA, whether explicitly

reserved by a WEIS Market participant or otherwise unused on an intra-hour, as-available

basis, to be made available to achieve least-cost dispatch of imbalance energy to all

balancing authority customers.72

In response to the concerns raised by Black Hills Service Company, Platte River,

and Colorado Springs regarding the potential unreserved use of their transmission

facilities, SPP states that it is providing a service to the participating balancing authority

which all transmission customers must take. SPP asserts that transmission providers

should have appropriate mechanisms in place to charge for the use of their systems,

including unreserved use, and that SPP’s modifications to the WEIS Tariff in response

to the Deficiency Letter restrict the WEIS Market’s use of transmission rights of

transmission owners who are not WEIS Market participants.73 In its answer to protests

and comments, WAPA similarly reiterates that SPP’s proposed modifications to the

WEIS Tariff would protect all transmission owner rights. WAPA states that it intends to

work alongside SPP and its balancing authority customers to efficiently provide energy

imbalance while adhering to reasonable limitations.74

In its answer to SPP, WAPA and Tri-State’s answers, Black Hills Service

Company reiterates that SPP’s proposal would change the nature of transmission use

associated with energy imbalance from a limited and constrained use of transmission

assets to meet a reliability-driven need, to leveraging transmission assets, including those

of non-market participants, to minimize production costs on a real-time basis across the

71 Id. at 15.

72 WAPA Comments on Deficiency Response at 4-5.

73 SPP Answer to Protests to Deficiency Response at 7.

74 WAPA Answer to Protests to Deficiency Response at 3-4.


Docket No. ER20-1059-000, et al. - 16 -

balancing authority footprint.75 Black Hills Service Company also argues that any non-

physical transmission limitations should be determined by the responsible transmission

service provider or North American Electric Reliability Corporation (NERC) registered

transmission owner or transmission operators and submitted directly to SPP for

implementation within the WEIS Market SCED model. Black Hills Service Company

states that the WEIS Tariff does not provide any criteria regarding the type or amount

of non-physical limits that the balancing authority may approve or reject, the standard to

be applied, or any remedy or recourse for the balancing authority’s denial of requests.76

e. Commission Determination

We find that SPP has not met its burden under section 205 of the FPA to

demonstrate that the proposed WEIS Tariff is just and reasonable because, based on

SPP’s representations in its Deficiency Response, SPP makes clear that it believes the

proposed WEIS Tariff authorizes it to use non-participating entities’ transmission in a

manner that we find is inconsistent with the requirements of Order Nos. 890 and 890-A.

Under the pro forma OATT, a transmission customer must reserve and pay for

transmission service on a transmission provider’s system.77 Although SPP indicates

its intent to use transmission that is reserved and contributed by participating entities,

SPP also argues that it appears just and reasonable to allow all unused transmission

capability within participating BAAs, whether reserved or otherwise unused on an intra-

hour, as-available basis, to be made available to the WEIS Market’s least cost dispatch.78

Intentionally using the transmission capacity of non-participating entities that have not

elected to provide Joint Dispatch Transmission Service or made other arrangements

to provide transmission service in the WEIS Market would be inconsistent with the

requirements of the pro forma OATT and Order Nos. 890 and 890-A.79

75 Black Hills Service Company Answer to SPP’s Answer at 3-4.

76 Id. at 4-5.

77 Pursuant to Order Nos. 890 and 890-A, if an entity does not reserve and pay

for transmission service, but uses the transmission system, it must pay a penalty for

unreserved use. Order No. 890, 118 FERC ¶ 61,119 at P 834; Order No. 890-A,

121 FERC ¶ 61,297 at P 447.

78 See SPP Deficiency Response at 19.

79 We emphasize that our concerns are not focused on inadvertent loop flows

that may be unavoidable due to the physics of the grid; rather, we are concerned with


Docket No. ER20-1059-000, et al. - 17 -

We are not persuaded by SPP and WAPA’s arguments that because the balancing

authority today may use any transmission in the WACM and WAUW BAAs to serve

imbalance, the WEIS Market may also use all available, unused transmission capabilities

in these BAAs.80 Although non-participating entities who take imbalance service from

WAPA under existing contracts may currently have an expectation of WAPA’s use of

their transmission to serve imbalances on their systems, SPP has not justified its proposal

to alter WAPA’s current use of transmission to serve customers’ imbalance needs to a

potentially more expansive use of transmission for the WEIS Market. As Xcel points out,

this proposal would allow the WEIS Market to use a far greater amount of a customer’s

transmission capacity than the customer’s amount of imbalance in order to serve other

customers. In fact, as Black Hills Service Company asserts, it appears that under the

proposal the WEIS Market could use non-participating entities’ transmission capacity

without compensation, even when those non-participating entities have no need for

imbalance service in a particular hour, because the reorganized dispatch will likely

involve wheeling of power across multiple transmission systems. SPP’s proposal

therefore may limit the use of non-participating entities’ transmission capacity that is

currently available for other purposes, such as the PSCo JDA.81 For these reasons, we do

not find it reasonable for SPP to conclude that all unused available transmission within

the WEIS BAAs is available for use in the WEIS Market on the basis that WAPA

currently has access to transmission to meet imbalance needs.

We find that SPP’s proposal to allow non-participating entities to work with their

balancing authority to establish a limitation, if appropriate, on the amount of transmission

the WEIS Market may use in performing the least cost dispatch82 does not adequately

protect the transmission rights of non-participating entities. The proposed tariff language

SPP’s proposed intentional use of the intra-hour transmission capacity of non-

participating entities in its market solution without their agreement.

80 We note that this purported access to transmission is not documented in any

filed agreements or the WEIS Tariff, but is only referenced in the Deficiency Response

and WAPA’s comments.

81 Xcel Protest to Deficiency Response at 8; Colorado Springs Protest to

Deficiency Response at 3-4; Black Hills Colorado Protest to Deficiency Response at 2.

82 WEIS Tariff, Attachment A, § 4.3(2) (providing that participating WEIS

balancing authorities will inform SPP of non-physical transmission limitations that are

necessary to constrain the WEIS Market from using transmission capacity other than the

unused transmission located in a participating BAA or Joint Dispatch Transmission

Service, and that SPP will incorporate the limitations into the WEIS Market dispatch

solution).


Docket No. ER20-1059-000, et al. - 18 -

inappropriately requires non-participating entities to opt-out of having their transmission

capacity used without permission for a market in which they are not a participant.

Similarly, the proposal requires non-participating transmission owners to justify their

non-physical transmission limitations to the balancing authority and to ensure that the

WEIS Market respects those limits.83 In so doing, the proposal incorrectly presumes

that such transmission is SPP’s to use for the WEIS Market in the first instance, and

that the obligation to ensure that the WEIS Market respects non-participating entities’

transmission rights rests with those entities, rather than with the WEIS Market itself.

Any future proposal for the SPP WEIS Market should include the mechanisms or

agreements that will ensure that the SPP WEIS Market respects the transmission capacity

of non-participating entities with appropriate constraints in the SCED.84 If SPP is not

able to reach an arrangement with non-participating entities to use their transmission

capacity, SPP must include constraints in its market model to appropriately respect the

transmission rights of non-participating entities when calculating the market solution.

Finally, we recognize protesters’ concerns regarding the need for transmission

and congestion management coordination with neighboring BAAs, given the highly

interconnected and overlapping transmission systems in this region, including

transmission facilities jointly owned by market participants and non-participants. We

note that the Commission has previously required neighboring BAAs to coordinate to

address seams issues during times of expansion or change.85 Additionally, in the Western

EIM context, the Commission partially relied on the existence of a Memorandum of

Understanding among Bonneville Power Administration, CAISO, and PacifiCorp in

finding that CAISO had taken sufficient steps to ensure that Western EIM transfers

would not adversely impact non-participant systems.86 We encourage SPP to coordinate

83 Further, under the proposed tariff language, the balancing authority must agree

with the non-participating entities’ stance that the transmission should not be available to

the market and decide to share this information with SPP.

84 Black Hills Service Company has indicated that it is open to negotiating with

SPP to find an alternative solution that they can bring to the Commission. Black Hills

Service Company Protest to Deficiency Response at 15-16.

85 See, e.g., Alliance Cos., 100 FERC ¶ 61,137, at P 53 (2002) (requiring “an

overall joint operational plan to be filed by Midwest ISO and PJM under which both

organization[s] will manage seams and any reliability or operational issues thereunder”).

86 See Cal. Indep. Sys. Operator Corp., 147 FERC ¶ 61,231 at P 250 (“We find

that CAISO has taken sufficient steps to ensure that EIM transfers between EIM Entity

BAAs and CAISO will not adversely impact non-participant systems and so accept

CAISO’s proposal. In particular, the [MOU] with PacifiCorp and BPA, planned market

simulation, and proposed normal and emergency operations procedures should help


Docket No. ER20-1059-000, et al. - 19 -

proactively with its neighbors to address these operational concerns prior to resubmitting

any proposal.87

2. Role of Reliability Coordinator

a. SPP Filings

In its initial filings, SPP states that in administering the WEIS Market, “SPP

coordinates projected and real-time market data and actions closely with the reliability

coordinator and balancing authorities.”88 Further, SPP notes that SPP as the market

administrator, SPP West RC, and the participating balancing authorities will collaborate

to ensure reliable and efficient operation of the transmission system. SPP asserts that the

sharing of the supply adequacy analysis with participating balancing authorities, the

incorporation of relevant data from reliability coordinators, and the increased visibility

available to SPP West RC through projected market operations will have a synergistic

effect on reliability and efficiency throughout the WEIS Market footprint. SPP states that

it will administer the WEIS Market from the same control room utilized by SPP West

RC, providing efficiency and standardization in communication and data exchange.89

SPP notes that the SPP RC West footprint encompasses the entirety of the portion

of the Western Interconnection that includes the WEIS Market footprint and the

transmission systems of the entities in the PSCo JDA.90

b. Deficiency Letter, Deficiency Response, and Answers

In the Deficiency Letter, Commission staff asked SPP to describe how market

participants communicate to SPP the availability of existing transmission service and

joint dispatch transmission service for each dispatch interval.

to preclude adverse impacts to non-participants. We expect CAISO will continue to

work with adjacent and neighboring non-participating balancing authorities to ensure

appropriate coordination and communication procedures, and to implement any necessary

additional controls if unforeseen issues arise.”).

87 SPP notes that it and CAISO already coordinate their respective reliability

coordinator functions.


89 Id. at 11.

90 SPP Answer at 42.


Docket No. ER20-1059-000, et al. - 20 -

SPP states in its Deficiency Response that there is no centralized party in WEIS

that will be responsible for determining transmission availability, and that the WEIS

Market does not depend on market participants explicitly communicating up-to-the-

minute information on transmission availability.91 SPP explains that, instead, “when

system conditions are such that transmission capability is physically constrained in

real-time, SPP will initiate binding constraints in the Security Constrained Economic

Dispatch at the direction of a Reliability Coordinator or local Transmission Operator

to limit the market’s use of the constrained transmission.”92 SPP states that, because it

will model constraints based on the physical availability of transmission communicated

to it from reliability coordinators and local transmission operators, additional real-time

communication directly from market participants is not required and would add

administrative burden and costs.93 SPP explains that its proposed “real-time

communication of physical transmission availability is more direct and more timely

as compared to alternative designs that rely upon an intermediary to communicate

transmission limitations forty minutes or more in advance of the operating hour.”94

Xcel raises concerns that the communication of real-time availability of

transmission capability from SPP West RC in support of the WEIS Market appears to

exceed the scope of the reliability coordinator role as defined in the NERC functional

model and the Reliability Coordinator Services Agreement between SPP and PSCo.95

Xcel argues that the reliability coordinator role does not include facilitating market

dispatch by providing real-time information on available transmission capability.96 Xcel

states that the information provided by SPP is insufficient to establish that SPP West

RC’s provision of this information will neither erode the effectiveness of the SPP West

RC role nor result in cost shifting.

91 SPP Deficiency Response at 12-13.

92 Id. at 13.

93 Id. at 12-13.

94 Id. at 17.

95 Xcel Protest to Deficiency Response at 24-25.

96 Id. at 25.


Docket No. ER20-1059-000, et al. - 21 -

In its Answer to Protests to the Deficiency Response, SPP states that Xcel’s

concerns around SPP West RC go beyond the scope of the docket.97 However, SPP

notes that SPP West RC “will not be required to perform any incremental service for

the WEIS Market” and that “[a]ny information relied upon by the WEIS Market is

information that the SPP West [Reliability Coordinator] produces in its role as a

[Reliability Coordinator].”98

c. Commission Determination

We find that SPP has not demonstrated that its proposal to rely on reliability

coordinators and transmission operators to communicate the availability of transmission

to SPP is just and reasonable. First, SPP has not demonstrated that its proposal will

ensure accurate information about available transmission and congestion in real-time. It

is not clear from the proposed tariff language or SPP’s explanations in its Deficiency

Response how, or when, SPP, as market operator, would receive information on

congestion in the market from reliability coordinators or transmission operators, and

whether the proposed timeline for receiving this information will allow the market to

calculate an efficient solution that respects all relevant constraints and properly prices

congestion. To the extent SPP would consider all transmission in the WEIS Market

footprint available until such time as the reliability coordinator or transmission operator

communicates to SPP how much transmission is unavailable due to hourly transmission

schedules, outages, or other factors, this may result in SPP not having full constraint

information in time for effective market optimization.

Second, we are concerned that SPP’s proposal may impose an obligation on

reliability coordinators to act as a conduit for market-related information in a way that is

outside of the responsibilities of a reliability coordinator as defined by NERC.99 While

this obligation is not currently a concern because SPP is both the reliability coordinator

and market operator for the entire WEIS footprint, SPP states that the WEIS Market is

flexible to operate across multiple reliability coordinator footprints. If the market

expands to include participants that are not within the SPP West RC footprint, it could

potentially impose an obligation on neighboring reliability coordinators to act as a

conduit for market-related information in a way that is outside of the role for reliability

coordinators envisioned by NERC. While many reliability coordinators are also

transmission providers or RTO/ISO market operators, the role of reliability coordinator

as defined by NERC does not include administering market-related functions. Moreover,

it is unclear what type of congestion information SPP would expect from reliability

97 SPP Answer to Protests to Deficiency Response at 9.

98 Id. at 9-10.

99 See NERC Rules of Procedure, Appendix 2 at 19-20 (June 2018).


Docket No. ER20-1059-000, et al. - 22 -

coordinators, if this information differs from information generally exchanged by

reliability coordinators, and whether such information is already covered by existing

information sharing and coordination agreements between SPP and other reliability

coordinators.

If SPP decides to submit a new proposal to implement the WEIS Market, SPP

should remedy these concerns by better explaining why congestion information should

be communicated by the reliability coordinator or transmission operator, and how such

actions are consistent with the reliability coordinator’s role.100 In the alternative, SPP

could propose a different arrangement to obtain needed information on transmission

availability and other system conditions that does not rely on roles defined by NERC to

act as a conduit for market-related information between the market participant and SPP

as the market operator. In addition, SPP should explain how SPP will incorporate

transmission availability and congestion information into its market optimization, how

its proposed approach will ensure accurate information about available transmission and

congestion in real-time, and, if applicable, why WEIS Market participants will not be

required to provide known transmission availability being made available for WEIS use

to SPP prior to SPP running its market optimization.

3. Other Issues

In the following sections, the Commission discusses three issues – Supply

Adequacy, the use of average losses for calculating LMPs, and the WEIS Market’s

market power mitigation construct – for SPP and market participants’ consideration,

should SPP to decide to submit a new proposal.

a. Supply Adequacy

i. SPP Proposal

SPP proposes to utilize as part of the WEIS Market both day-ahead and hour-

ahead supply adequacy analyses. Market participants must submit resource plans to

demonstrate they have sufficient generation to meet their expected load and resource

obligations. SPP will identify any supply inadequacies in the resource plans and notify

the supply inadequate market participant of its supply inadequacy and the associated

balancing authority of the supply inadequacy in its BAA. Market participants must make

100 We acknowledge SPP’s statement that to the extent SPP West RC identifies

any reliability issues impacting neighboring reliability coordinators, those issues will

be addressed pursuant to applicable coordination agreements. Transmittal at 12-13.


Docket No. ER20-1059-000, et al. - 23 -

modifications to their resource plans no later than 30 minutes prior to the operating hour

for any identified inadequacy.101

ii. Protests and Answers

Several commenters express concerns with the sufficiency of the proposed supply

adequacy framework. Platte River remarks that, unlike the Western EIM, the WEIS

Market only proposes to report inadequacies to the Commission after-the-fact, but

includes no transfer limitations on resources that fail the supply adequacy analysis.102

The SPP MMU argues that there are no incentives for participants to meet their supply

obligation or deterrents for participants to not lean on the market.103 Similarly, MEAN

states that the proposed measures may be insufficient to ensure supply adequacy. In

order to discourage leaning on the WEIS Market for supply adequacy, MEAN suggests

designating the balancing authority as ultimately responsible for supply adequacy and for

the application of any penalties for failure.104

In its answer, SPP claims that the WEIS Tariff already addresses the supply

adequacy concerns raised by protestors to the extent it needs to, and that further

implementation details are provided in the newly adopted WEIS Market Protocols. In

response to MEAN’s request that SPP outline host BAA supply adequacy obligations

in the WEIS Tariff, SPP asserts that balancing authorities are already required by NERC

to ensure supply adequacy, and that additional tariff provisions are unnecessary.105

SPP explains that after the 30-minute window has passed to revise the resource

plan, changes can only be made by calling SPP. SPP states that if any market participant

submits a supply inadequate resource plan, SPP will inform the applicable balancing

authority. SPP states that the supply adequacy analysis enables both the reliability

coordinator and balancing authority to take appropriate actions, including selling excess

power, directing generators to start or curtail load, or arranging for emergency power if

needed. SPP states that if the insufficiency contributes to a market surplus or shortage

that results in an emergency condition, SPP will report to the Commission after-the-fact.

101 Id. at 11.


103 SPP MMU Comments at 6.

104 MEAN Comments at 4.

105 SPP Answer at 64-65.


Docket No. ER20-1059-000, et al. - 24 -

SPP’s report would be in addition to any reporting NERC Reliability Standards require

of balancing authorities or reliability coordinators.106

WAPA states that, as a balancing authority, it is responsible for ensuring supply

adequacy. WAPA further states that it is working to align its tariff and rates to prepare

for its participation in the WEIS.107

iii. Commission Determination

Based on the record before us, it is not clear how the proposed construct will

properly incentivize market participants to maintain supply adequacy and not lean on

other market participants. While the NERC Reliability Standards establish requirements

for the reliable operation of the Bulk Electric System, it is not clear that reliance on these

standards and after-the-fact reporting to the Commission is sufficient to avoid market

participants excessively leaning on the other market participants for energy supply.

When SPP proposed its Energy Imbalance Service in 2005, it similarly did not initially

include clear tariff provisions that set forth a requirement to maintain supply adequacy.

The Commission noted this lack of clear tariff provisions, raised concerns that market

participants may lean on the system (creating reliability concerns), and stated that SPP

should clearly set forth language explaining these obligations.108

If SPP submits a new proposal to implement the WEIS, SPP should also consider

proposing a mechanism that will ensure market participants are incentivized to maintain

supply adequacy. For example, in the Western EIM, CAISO incentivizes EIM entities by

limiting the imbalance imports of EIM entities that fail a resource sufficiency test.109

b. Use of Average Losses for LMP

i. SPP Proposal

SPP proposes to exclude the marginal loss component from LMP in the WEIS

Market. In its Deficiency Response, SPP explains that it proposes to use the “average

cost” method of accounting for losses and that this method relieves market participants

of the need to revise their tariffs to adjust for the marginal loss component in their

106 SPP Deficiency Response at 34-35.

107 WAPA Comments on Deficiency Response at 7.

108 Sw. Power Pool, Inc., 112 FERC ¶ 61,303, at P 26 (2005).

109 CAISO Tariff, section 29.34(n)(1).


Docket No. ER20-1059-000, et al. - 25 -

transmission charges, as some entities do in the Western EIM.110 Relatedly, the SCED

optimization in SPP’s proposal also does not include marginal losses. No parties filed

comments on this issue; however, in its protest to the Deficiency Response, Black Hills

Service Company requests that SPP be required to explain how Black Hills Power and

Cheyenne Light will be made whole for transmission losses, so that their loads will not be

required to absorb losses or imbalance charges that should be paid by the entity actually

making use of the imbalance service.111

ii. Commission Determination

Under a locational marginal pricing construct, the Commission has held that

the use of marginal losses better represents the optimal and efficient solution for

settlements.112 As such, if SPP submits a new proposal to implement the WEIS, SPP

should consider including marginal losses in dispatch and LMP in order to minimize

imbalance costs, provide prices that accurately reflect marginal costs, and preserve

resources’ incentives to follow dispatch. The omission of marginal losses from dispatch

prevents production costs from being minimized and could result in a less efficient

market solution, especially in a geographically large market such as the WEIS Market.

A market design that includes marginal losses would be consistent with other markets

such as the Western EIM113 and the Commission’s finding when directing PJM

Interconnection, L.L.C. to implement marginal losses that “[t]he locational marginal loss

110 Deficiency Response at 32 (citing PacifiCorp OATT, Schedule 4). The

Western EIM uses a marginal loss component in dispatch and LMP. However,

PacifiCorp removes the price component for marginal losses when settling with its

transmission customers.

111 Black Hills Service Company Protest to Deficiency Response at 13.

112 See Cal. Indep. Sys. Operator Corp., 105 FERC ¶ 61,140, at P 77 (2003) (“We

find that the CAISO’s proposal to reflect marginal losses in its calculation of LMPs is

appropriate because this is required to assure a least-cost dispatch. In a large geographic

area, such as the CAISO’s footprint, losses can be significant, and pricing them on a

marginal basis is important to establishing nodal prices that accurately reflect the cost of

supplying additional load at each node; these are the prices that are required to balance

supply and demand at each location. An average loss mechanism results in prices that

produce a higher cost dispatch, and adds to uplift charges. Although an average loss

approach may be acceptable if losses are small, or as a transition mechanism, we agree

with the CAISO that an approach that promotes greater efficiency, i.e., using marginal

losses, is preferable.”); see also Atl. City Elec. Co., 115 FERC ¶ 61,132, at P 22 (2006).

113 See supra note110.


Docket No. ER20-1059-000, et al. - 26 -

provision is consistent with similar tariff provisions in other RTO tariffs” and the “total

cost of meeting load would be reduced” and “would produce a more efficient allocation

of resources.”114 Therefore, if SPP submits a new proposal to implement the WEIS, SPP

should consider incorporating marginal losses in dispatch and LMP, regardless of which

approach SPP ultimately utilizes to settle losses with market participants.

c. Market Power

i. SPP Proposal

Attachment B of the WEIS Tariff sets out the market power mitigation plan for

the WEIS Market. The market power mitigation plan is heavily based on the market

power provisions in place for the Integrated Marketplace. SPP states that the proposed

market power mitigation plan provides for mitigation of horizontal and vertical market

power by market participants. SPP states that the proposed Tariff contains the conditions

for determining local market power through the local market power test including

establishment of frequently constrained areas115 and the pivotal supplier test.116 SPP

explains that it will automatically apply mitigation measures to submitted resource

energy offer curves if the submitted energy offer curve exceeds the applicable conduct

threshold, the resource is determined to have local market power, and the resource fails

the market impact test. SPP states that when a resource’s energy offer curve is replaced

with its mitigated energy offer curve, the LMP is impacted and that impacted LMP is

systematically passed to all downstream systems.117

In the Deficiency Letter, Commission staff asked SPP to justify the use of certain

thresholds, developed for the Integrated Marketplace, in the WEIS Market. Specifically,

staff inquired about: (1) the 500-hour threshold for identifying frequently constrained

areas; (2) the energy offer curve conduct threshold both for resources in a frequently

114 Atl. City Elec. Co., 115 FERC ¶ 61,132 at P 22.

115 A frequently constrained area is defined in the WEIS Tariff as “an electrical

area . . . that is defined by one or more binding transmission constraints that are expected

to be binding for at least five-hundred (500) hours during a given twelve (12)-month

period and within which one (1) or more suppliers are pivotal.” WEIS Tariff, Attachment

B, § 3.1.1.


117 Id. at 14.


Docket No. ER20-1059-000, et al. - 27 -

constrained area and resources not in a frequently constrained area;118 (3) $25/MWh

thresholds below which an energy offer curve will not be subject to mitigation measures;

(4) the LMP impact threshold of $25;119 and (5) the use of the SPP Integrated

Marketplace system marginal energy component of LMP in the calculation of resource-

specific opportunity costs in the WEIS Market.

In the Deficiency Response, SPP proposed revisions to the WEIS Tariff to tighten

some of the thresholds identified in the Deficiency Letter. Specifically, SPP proposed

to revise: (1) the energy offer curve conduct threshold for resources within frequently

constrained areas from 17.5% to 0%; (2) the energy offer curve conduct threshold for

resources not within a frequently constrained area from 25% to 15%; (3) the threshold

below which energy offer curves are not subject to mitigation from $25/MWh to

$5/MWh; and (4) the LMP impact threshold from $25/MWh to $5/MWh. For the

threshold below which energy offer curves are not subject to mitigation and the LMP

impact threshold, per the SPP MMU’s recommendation, SPP further revised the WEIS

Tariff to automatically increase the thresholds by $10/MWh every six months until

they return to the $25/MWh thresholds. SPP states that this will allow the SPP MMU

to evaluate each threshold and make recommendations as needed to address any

inefficiencies identified.120

ii. Commission Determination

Other than an unsupported reference to the SPP MMU’s analysis of six hubs, SPP

has not provided any justification for its proposal to automatically increase the threshold

below which energy offer curves are not subject to mitigation and the LMP impact

threshold.121 If SPP decides to submit a new proposal to implement the WEIS, SPP

118 The energy offer curve conduct threshold controls by how much a resource’s

energy offer curve may exceed its mitigated energy offer curve, without becoming

subject to mitigation. SPP notes that conceptually, the conduct thresholds are designed to

compensate for uncertainties and likely inaccuracies that may be present in calculated

cost used by a market participant in developing its mitigated energy offer curves. See

Deficiency Response at 24.

119 The LMP impact threshold is the amount by which the LMP in the mitigated

market solution must exceed the LMP from the initial market run before SPP will use

LMP from the mitigated market solution.

120 Deficiency Response at 26-27.

121 Id. at 27, n.42.


Docket No. ER20-1059-000, et al. - 28 -

should either remove the automatic increase provisions or otherwise justify their

inclusion.

The Commission orders:

SPP’s filings are hereby rejected, without prejudice, as discussed in the body of

this order.

By the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.


Document Content(s)

ER20-1059-000.DOCX....................................................1-28


WIUFMP

Zea FloresMITF Chair (WAPA)WMWG, 8/20/2020

1

WMWG Action Items

Constraint Management Procedure review on July 20• SPP to facilitate discussion on how UFMP works with

the Market with the appropriate working groups.

• SPP to facilitate discussion with WACM on how TOT 3 will work and be coordinated in the market.

2WIUFMP

MITF

• MITF authored the Congestion Management Methodology revision

The Market Integration Task Force (MITF) will review interactions between SPP’s Reliability Coordination and SPP Western Energy Imbalance Service (WEIS) Operations in the Western Interconnection to determine potential impacts. The MITF will also review current SPP Western Interconnection RC Congestion Management Methodology and recommend necessary changes. The Task Force will monitor the progress of the recommended changes adopted for implementation

• MITF reports to SPP’s Western Reliability Working Group (WRWG) who reports to Western Reliability Executive Committee (WREC)

3WIUFMP

West RC Congestion management methodology1. Validation and Op-

guide execution2. WIUFMP3. Address deviators ACE

and NSI4. PSTs and Control

Devices evaluation5. Re-call Outages

6. Re-configuration evaluation

7. Generation Re-dispatcho SPP West RC BAs & WEIS

Re-dispatch obligation

8. Emergency Operation. Request assistance from neighboring RC

9. Load Shed

Western Interconnection Unscheduled Flow Mitigation Plan (WIUFMP)https://spp.org/organizational-groups/qualified-owners-and-operators/unscheduled-flow-committee/https://spp.org/organizational-groups/qualified-owners-and-operators/

5WIUFMP

https://spp.org/organizational-groups/qualified-owners-and-operators/unscheduled-flow-committee/

https://spp.org/organizational-groups/qualified-owners-and-operators/

WIUFMP

• FERC approved tariff for Western interconnection• In conjunction with IRO-006-WECC-1

• Qualified Path Unscheduled Flow (USF) Relief• SPP is the administrator of the plan• Unscheduled Flow Committee (UFC) reports to Qualified

Operator and Owners (QOO) works with the administrator

• UFC interpret the provisions of the WIUFMP and successor documents (together these may be referred to as the “Plan”) guiding the Western Interconnection’s unscheduled flow program and recommend changes to the QOO as required or deemed necessary.

WIUFMP 6

WIUFMP

Purpose: The purpose of the Western Interconnection Unscheduled Flow Mitigation Plan (WIUFMP) is to mitigate flows on Qualified Paths to reliable levels during real-time operations. This is accomplished in two primary ways –First, by the use of Qualified Controllable Device(s) that can change flow dynamics within the interconnection, and Second, by the use of curtailments.

WIUFMP 7

WIUFMP, RC and WEIS

• Phase Shifter Operation can be used in conjunction or independently of Curtailments

• The plan is executed in adherence with the tariff• Curtailments are achieved utilizing the OATI

Enhanced Curtailment Calculator (ECC) • Vendor Manager is RC West• All RCs are part of the contract• The tool is programed to cut scheduled in accordance with

the tariff. Compliance is monitored by the administrator, RCs, and committees.

WIUFMP 8

WIUFMP

• A reliability tool to reduce actual flows on the system within reliability standards.

• The tariff provides a mechanism for compensation to those who participate in the plan.

• The NERC standards require applicable entities to comply.

• Mitigation of transmission overloads due to unscheduled flow on Qualified Transfer Paths

• Applicable entities are RC and BA

WIUFMP 9

WIUFMP, RC and WEIS

• WIUFMP is step 2 in the SPP’s Congestion Management Methodology Reliability Coordinator Area Western Interconnection

• This Congestion Management Methodology will provide the SPP RC established procedures for mitigating System Operating Limit (SOL) and Interconnection Reliability Operating Limit (IROL) exceedances in Real-time operations for both pre- and post- Contingency conditions to secure the safe and reliable operation of the Bulk Electric System (BES) in the Western Interconnection.

WIUFMP 10

WIUFMP, RC and WEIS

• MITF was created to advise SPP with interactions between the RC and the energy imbalance market

• Has reviewed the steps in the Congestion Management Methodology and agrees it shall be implemented prior to generation re-dispatch

• Generation re-dispatch will occur at the request of the RC and will be accomplished via WEIS for the market’s obligation portion……

• This will not take place until step 7 and only if WIUFMP and previous mitigation steps are not sufficient or applicable

WIUFMP 11

WIUFMP, RC and WEIS

• UFC has evaluated WEIS interactions with the plan• The only impact might be new schedules

• Limitations should be minimal• All committees are active to investigate potential

issues

WIUFMP 12

WEIS CONGESTION MANAGEMENT

Description of Activation Modes and Options for Service Limits

04/28/2020

By Southwest Power Pool


1. REVISION HISTORY

DATE OR VERSION NUMBER AUTHOR CHANGE

DESCRIPTION COMMENTS

07/01/2020; v1 Gary Cate


2. CONTENTS

1. Revision History ............................................................................................................................................................... i

2. Contents ............................................................................................................................................................................. ii

3. WEIS Constraint Types ................................................................................................................................................ 1

3.1 WEIS RC Constraints ...................................................................................................................... 1

3.2 Service Flow Constraints ............................................................................................................... 1

4. Congestion Management Modes .............................................................................................................................. 1

5. Exclude PPR Mode ......................................................................................................................................................... 2

5.1 Limit Set ........................................................................................................................................ 2

5.2 Use Case ........................................................................................................................................ 2

5.3 Flow Calculation ............................................................................................................................ 2

5.4 Responsibility ................................................................................................................................ 2


P a g e 1

3. WEIS CONSTRAINT TYPES

The WEIS congestion management process will differ from the Integrated Marketplace congestion management process. This is due to a multitude of reasons and requires a deeper discussion here on the constraint types and how they will be handled.

3.1 WEIS RC CONSTRAINTS These are SOL/IROL constraints that the WEST RC directs the WEIS Market to provide relief for. They could be associated with Western Interconnect Unscheduled Flow Mitigation Procedure (WIUFMP), arise from the WEIS dispatch of resources or created due to other flows on the system. They will all follow the Western Congestion Management Process where physical movement of generation is near the last step of the process and will occur after re-configuration, outage recalls, phase shifter movement etc.

3.2 SERVICE FLOW CONSTRAINTS Represents constraints that ensure protection against "over-usage" of the non-WEIS transmission and ensure appropriately priced congestion. These constraints are not based on the physical limitation of a line or element, but are based upon the transmission service that the WEIS is being allocated across a certain path or group of elements. These constraints will be continuously activated in the WEIS Market and will be the responsibility of the WEIS Market Operator to ensure they are activated and are controlling to the appropriate limit.

4. CONGESTION MANAGEMENT MODES

Attempting to quantify the different constraint management options and how those will be used and implemented.

Table 1 describes the types of constraints in the WEIS market and the activation modes which may be used for each type of constraint.

Table 1. Activation Modes Used by Constraint Type.

Constraint Type

Activation Mode

Exclude PPR Flow

WEIS RC Constraints (IROL/SOL) Yes

Service Flow Constraint Yes

The following congestion management modes are utilized in the WEIS and are described in Sections 5-6 below:


P a g e 2

• Exclude PPR Flow

5. EXCLUDE PPR MODE

Represents constraints where the impact of non-participating load and generation must be removed from the flow of the constraint. The current feeling within SPP is that this will only be needed if PPR service cannot be used by the WEIS Market and thus forcing the exclusion of PPR flows.

5.1 LIMIT SET For WEIS RC Constraints, these will be expressed in the amount of relief needed from the WCMP (Initial Market Flow - Relief Required)

For service flow constraints, the limit will come from the WEIS participating Balancing Authorities. More discussion as to how that will occur is in Section 7.

5.2 USE CASE Same as Market Flow Mode. The decision as to whether this is needed or not will most likely be made by FERC. There is a potential for other use cases where we might exclude PPR load/generation. As those are identified, this document will be updated.

5.3 FLOW CALCULATION Only internal to WEIS flow impacts are considered. Additionally, PPR generation and non-participating load will be excluded from these calculations.

5.4 RESPONSIBILITY For constraints that are a part of the WCMP, the West RC or TOP will be responsible for communicating the amount of relief required, and the WEIS Market Operator will be responsible for activation of these constraints at the instruction of the RC or TOP.

For constraints that are SFCs, the WEIS Market Operator will be responsible for activation and management of these constraints. While it is expected that these constraints will primarily be statically defined and activated at all times, situations may arise in the operation of the WEIS Market where either a constraint needs to be de-activated or a new SFC constraint needs to be created.

1

SPP WEIS Revision Request Form WRR Title: WEIS URD Tolerance Correction Date: 7/29/2020


WRR #: 4

Impact Analysis Required? No Yes | If no, but system or process changes are needed please explain why an Impact Assessment will not be performed: No IA is needed, because SPP is currently still in the development phase of the WEIS Market and this will be included in development. System Changes No Yes | If yes, summarize expected changes: Calculation changes will need to be made in the settlements system and the shadow settlements system. Process Changes? No Yes | If yes, summarize expected changes:


Name: Daniel Harless Company: Southwest Power Pool



Agreement

Any staff member of a governmental authority having jurisdiction over the SPP Western Market Services or any WEIS Market Participant



Any WEIS Market Participant

SPP Western Transmission Customers or other entities that are parties to transactions under the SPP WEIS Tariff;

SPP Market Monitor

SPP Staff


Reason for Expedited/Urgent Resolution:


mailto:[email protected]

2




New Methodologies impacting SPP Western Markets (i.e, new language to accommodate new functionality or rules not existing today)





Yes No




Financial: The URD calculation calculates an upper and a lower limit used to determine if a Resource will be charged URD. The current calculation of the lower limit is incorrect because the base value for the lower limit should be negative and currentl it is positive. This could lead to instances of Resources getting URD when they should not. SPP WEIS Revision Request Documents Requiring Revisions: Please select your primary intended document(s) as well as all others known that could be impacted by the requested modification request

WEIS Market Protocols Section(s): 4.5.6.3, A.3.3 Document Version: v1a

WEIS Tariff Section(s): Attachment A - Section 4.1 Document Version:

WEIS Revision Request Process Section(s): Document Version: [NAME OF DOCUMENT] Section(s): Document Version:


3


An issue was found in the calculation of the lower operating tolerance for URD. The limits where brought in as a positive value to calculate the base tolerance and they should be negative. This WRR corrects that issue and it also clarifies the language in the Tariff for the expansion of the URD tolerance during Contingency Reserve events and clarifies that the URD charges are based on the actual output verses the average setpoint.


This WRR corrects a calculation to prevent Resources from receiving a URD charge when they are operating in the intented operating tolerance band.


In the appropriate sections below, please provide the language from the document(s) for which you are requesting modification(s), with all edits redlined using Track Changes on from the Review tab above. These instructions can be applied to any WRR Process Document:

1. Open the forward looking version of the WEIS Market Protocols (.a) 2. Ensure Track Changes is turned off on both the forward looking protocols and this WRR Submission Form 3. While in the forward looking protocols, select and copy the language you would like to edit 4. Paste the language to this Submission form 5. Turn on Track Changes and make the edits you would like to propose


4.5.6.3 UNINSTRUCTED RESOURCE DEVIATION AMOUNT

In any Dispatch Interval in which the Resource has operated outside of its Operating Tolerance

and that Resource has not been exempted from URD per Section 4.4.2.4.1, the incremental Energy

MW’s associated between absolute value of the actual Energy output and the Resource’s average

real-time setpoint Desired Dispatch will be subject to a charge. The URD charge will be based on

the following:

1) A generating unit Resource’s Operating Tolerance in each Dispatch Interval is equal to the

Resource’s Maximum Economic Capacity Operating Limit multiplied by five percent (5%),

subject to a minimum of five (5) MW and a maximum of twenty (20) MW.

4

2) A Dispatchable Demand Response Resource’s Operating Tolerance in each Dispatch Interval

is equal to the Resource’s Maximum Economic Capacity Operating Limit multiplied by five

percent (5%), subject to a minimum of five (5) MW and a maximum of twenty (20) MW.

3) The Common Bus Operating Tolerance for each Market Participant registered at a Common

Bus is equal to the sum of that Market Participant’s Resources’ Maximum Economic Capacity

Operating Limits for Resources that are on-line multiplied by five percent (5%), subject to a

minimum of five (5) MW and a maximum of twenty (20) MW.

For the purposes of determining URD exemptions for Resources that are part of a Common

Bus as described under Section 4.4.2.4.1, each Resources’ combined average ramped MW

Setpoint Instruction and combined actual average MW output at the Common Bus will be

used to calculate URD Megawatts at the Common Bus for the Dispatch Interval.

4) If the absolute value of a Resource’s URD is greater than the Resource’s Operating Tolerance

in any Dispatch Interval, SPP shall calculate an URD Charge equal to the Resource URD

Megawatt multiplied by the Locational Marginal Price for that Settlement Location.

5) A Resource’s Operating Tolerance in each Dispatch Interval is increased by the quantity of

Regulation service being maintained on the Resource as indicated in the Ancillary Service Plan

(MW) for the Operating Hour and any additional MWh for a Reserve Sharing Group event.

In the event a Resource does not receive a URD exemption in a Dispatch Interval, SPP shall

determine through the dispute process, in accordance with the invoice dispute process as

provided in Attachment A, Section 7.3, of the WEIS Tariff whether an exemption to a URD will be

given. The Market Participant may provide SPP with adequate documentation in order for the

Market Participant to be eligible to avoid such URD. Adequate documentation may include but is

not limited to an audio file documenting a call between the Market Participant and SPP.

A.3.3 UNINSTRUCTED RESOURCE DEVIATION AMOUNT

In any Dispatch Interval in which the Resource has operated outside of its Operating Tolerance

and that Resource has not been exempted from URD per Section 4.4.2.4.1, an incremental Energy

5

adjustment associated with difference between absolute value of the actual Energy output and

the Resource’s Desired Dispatch average real-time setpoint. The URD adjustment is calculated as

follows:

IF (EISURD5minQty a, s, i > EISResOpHiTol5minQty a, s, i

OR EISURD5minQty a, s, i < EISResOpLoTol5minQty a, s, I )

AND ( EISXmptDev5minFlg a, s, i = 0 )

THEN

#EISRtURD5minAmt a, s, i =

(ABS(EISURD5minQty a, s, i ) * EISRtLmp5minPrc s, i) / 12

ELSE

EISRtURD5minAmt a, s, i = 0

(A.3.3.1) #EISURD5minQty a, s, i =

Max ( EISRtBillMtr5minQty a, s, i * (-1), 0 ) - EISRtAvgSetPoint5minQty a, s, i

(A.3.3.2) #EISResOpHiTol5minQty a, s, i =

Min ( EISURDMaxTol5minQty i , Max (EISURDMinTol5minQty i ,

EISURDTol5minPct i * EISRtDispMaxEmerconCapOL5minQty a, s, i ) ) +

EISRtRegUp5minQty a, s, i + EISRtSpin5minQty a, s, i + EISRtSupp5minQty a, s, i

(A.3.3.3) #EISResOpLoTol5minQty a, s, i =

(Min ( EISURDMaxTol5minQty i , Max (EISURDMinTol5minQty i ,

6

EISURDTol5minPct i * EISRtDispMaxEconCapOL5minQty a, s, i ) ) * -1) -

EISRtRegDn5minQty a, s, i

1) For each Asset Owner, an hourly amount is calculated at each Settlement Location. The hourly

amount is calculated as follows:

EISRtURDHrlyAmt a, s, h = ∑i

EISRtURD5minAmt a, s, i

2) For each Asset Owner, a daily amount is calculated at each Settlement Location. The daily

credit amount is calculated as follows:

EISRtURDDlyAmt a, s, d = ∑h

EISRtURDHrlyAmt a, s, h

3) For each Asset Owner associated with Market Participant m, a daily amount is calculated. The

daily amount is calculated as follows:

EISRtURDAoAmt a, m, d = ∑s

EISRtURDDlyAmt a, s, d

4) For each Market Participant, a daily amount is calculated representing the sum of Asset Owner

amounts associated with that Market Participant. The daily amount is calculated as follows:

EISRtURDMpAmt m, d = ∑a

EISRtURDAoAmt a, m, d

7

The above variable is defined as follows:

Variable

Unit

Settlement

Interval

Definition

EISRtURD5minAmt a, s, i $ Dispatch

Interval

URD Adjustment per AO per Settlement

Location per Dispatch Interval in the RUC

Make-Whole Payment Eligibility Period –

The reduction in RUC Make-Whole

Payment Amount associated with AO a’s

eligible Resource at Settlement Location s

for Dispatch Interval i when the Resource’s

EISURD5minQty a, s, i is outside of the

Resource’s EISResOpTol5minQty a, s, i.

EISURD5minQty a, s, i MW Dispatch

Interval

Uninstructed Resource Deviation per AO

per Settlement Location per Dispatch

Interval – The Uninstructed Resource

Deviation associated with AO a’s Resource

at Settlement Location s in Dispatch

Interval i.

EISResOpHiTol5minQty a, s, i MW Dispatch

Interval

Resource Operating High Tolerance per AO


Interval – The Resource Operating High

Tolerance associated with AO a’s Resource


Interval i.

8

Variable

Unit

Settlement

Interval

Definition

EISResOpLoTol5minQty a, s, i MW Dispatch

Interval

Resource Operating Low Tolerance per AO


Interval – The Resource Operating Low

Tolerance associated with AO a’s Resource


Interval i.

EISURDMaxTol5minQty i MW Dispatch

Interval

Uninstructed Resource Deviation Maximum

Tolerance per Dispatch Interval – The

maximum value of EISResOpTol5minQty

a, s, i that is currently set at 20 MW.

EISURDMinTol5minQty i MW Dispatch

Interval

Uninstructed Resource Deviation Minimum

Tolerance per Dispatch Interval – The

minimum value of EISResOpTol5minQty

a, s, i that is currently set at 5 MW.

EISURDTol5minPct i Percen

t

Dispatch

Interval

Uninstructed Resource Deviation Tolerance

Percentage per Dispatch Interval – The

percentage used to calculate the value of

EISResOpTol5minQty a, s, i that is currently

set at 5%.

9

Variable

Unit

Settlement

Interval

Definition

EISRtAvgSetPoint5minQty a, s, i MW Dispatch

Interval

Real-Time Average Setpoint Instruction MW

per AO per Settlement Location per

Dispatch Interval – The average Setpoint

Instruction over Dispatch Interval i for AO

a’s Resource at Settlement Location s.

EISXmptDev5minFlg a, s, i none Dispatch

Interval

URD Exemption Flag per AO per Resource

Settlement Location per Dispatch Interval –

A flag associated with AO a’s eligible

Resource at Settlement Location s

indicating that a Resource that has

operated outside of its Operating

Tolerance is or is not exempt from any

associated penalty charges in Dispatch

Interval i. If the flag is equal to zero, the

Resource is not exempt. Otherwise, the

flag will be set to a positive integer number

which will indicate the reason of the

exemption as specified under Section

4.4.2.4.1.

10

Variable

Unit

Settlement

Interval

Definition

EISRtDispMaxEconCapOL5minQ

ty a, s, i

MW Dispatch

Interval

Real-Time Maximum Economic Capacity

Operating Limit Quantity per AO per

Settlement Location per Dispatch Interval –

The Maximum Economic Capacity

Operating Limit associated with AO a’s

eligible Resource at Settlement Location s

for Dispatch Interval i.

EISRtLmp5minPrc s, i

$/MW

h

Dispatch

Interval

Real-Time LMP - The value defined under

Section A.3.1 at Settlement Location s for

Dispatch Interval i.

EISRtBillMtr5minQty a, s, i MW Dispatch

Interval

Real-Time Actual Meter Quantity per AO

per Location per Dispatch Interval - The

value defined under Section A.3.1 for

Dispatch Interval i.

EISRtRegUp5minQty a, s, i MW Dispatch

Interval

Real-Time Cleared Regulation-Up Service

Quantity per AO per Settlement Location

per Dispatch Interval - The total amount of

Regulation-Up Service MW represented by

AO a’s cleared Regulation-Up Service

Offers in WRTBM that includes Resource

Settlement Location s, for Dispatch Interval

i, as described under Section 4.4.2.4(2)(d)

11

Variable

Unit

Settlement

Interval

Definition

EISRtSpin5minQty a, s, i MW Dispatch

Interval

Real-Time Cleared Operational Spinning

Reserve Quantity per AO per Settlement

Location per Dispatch Interval - The total

amount of spinning reserve MW

represented by AO a’s cleared spinning

reserve Offers in WRTBM that includes

Resource Settlement Location s, for

Dispatch Interval i, as described under

Section 4.4.2.4(2)(d)

EISRtSupp5minQty a, s, i MW Dispatch

Interval

Real-Time Cleared Operational

Supplemental Reserve Quantity per AO per

Settlement Location per Dispatch Interval -

The total amount of supplemental reserve

MW represented by AO a’s cleared

supplemental reserve Offers in WRTBM

that includes Resource Settlement

Location s, for Dispatch Interval i, as

described under Section 4.4.2.4(2)(d)

12

Variable

Unit

Settlement

Interval

Definition

EISRtRegDn5minQty a, s, i MW Dispatch

Interval

Real-Time Cleared Regulation-Down

Quantity per AO per Settlement Location

per Dispatch Interval - The total amount of

regulation-down represented by AO a’s

cleared regulation-down Offers in the

WRTBM that includes Resource Settlement

Location s, for Dispatch Interval i.

EISRtURDHrlyAmt a, s, h $ Hour Real-Time Uninstructed Resource Deviation

Amount per AO per Settlement Location per

Hour - The amount for AO a for an eligible

Resource Settlement Location s in Hour h

for an Uninstructed Resource Deviation

Amount resulting from an URD

adjustment.

EISRtURDDlyAmt a, s, d $ Operating

Day

Real-Time Uninstructed Resource Deviation

Amount per AO per Settlement Location per

Operating Day - The amount for AO a for

eligible Resource Settlement Location s in

Operating Day d for an Uninstructed

Resource Deviation Amount resulting from

an URD adjustment.

13

Variable

Unit

Settlement

Interval

Definition

EISRtURDAoAmt a, m, d $ Operating

Day


Amount per AO per Operating Day - The

amount for AO a associated with Market

Participant m in Operating Day d for an

Uninstructed Resource Deviation Amount

resulting from an URD adjustment.

EISRtURDMpAmt m, d $ Operating

Day


Amount per MP per Operating Day - The

amount to MP m in Operating Day d for an

Uninstructed Resource Deviation Amount

resulting from an URD adjustment.

a none none An Asset Owner.

I none none A Dispatch Interval.

h none none An Hour.

d None none An Operating Day.

s none none A Settlement Location.

m none none A Market Participant.

14

WEIS Tariff – Attachment A

4.1 DISPATCH PROCESS

(a) Throughout the Operating Day, generally every 5 minutes, SPP shall:

(i) Perform a security constrained economic dispatch (“SCED”) for the WEIS Region

utilizing an optimization method to determine the least costly means of obtaining

Energy to serve the next increment of load based upon submitted Offer Curves,

Resource operating data submitted as part of the Resource Plan, binding

transmission constraints, forecasted WEIS Region load and system conditions from

the State Estimator; relaxation of operating limits (Violation Relaxation Limit or

“VRL”).

(ii) Communicate to Market Participants dispatch instructions that specify the desired

megawatt output of Dispatchable Resources based upon the security constrained

economic dispatch solution;

(iii) Communicate OOME to Market Participants that specify the desired output of

Dispatchable Resources and/or Non-Dispatchable Resources;

(iv) Calculate an Adjusted Net Scheduled Interchange for each Balancing Authority in

the WEIS Market Footprint to account for the Dispatchable Resource dispatch

instructions, including any OOMEs, and communicate this Adjusted Net Scheduled

Interchange to the Balancing Authorities for implementation.

Procedures for communication of dispatch instructions shall be specified in the WEIS

Market Protocols.

(b) In performing the security constrained economic dispatch under this Section 4.1, SPP shall

ensure that the Energy dispatch of Dispatchable Resources does not conflict with any

specified provision of the Ancillary Service Plan with said Dispatchable Resources. To

accomplish this, SPP shall limit the dispatchable Energy range of Dispatchable Resources

to between the Resource’s Economic Minimum Limit and Economic Maximum Limit.

Details of the Dispatchable Resource dispatchable Energy range adjustment shall be

specified in the WEIS Market Protocols.

(c) An acceptable operating tolerance will be defined for Dispatchable and Non-Dispatchable

Resources. A Resource shall be considered as following a dispatch instruction in a

15

Dispatch Interval if the actual output of that Resource is within the acceptable operating

range. Resources whose actual output falls outside this operating tolerance shall be

considered as failing to follow a dispatch instruction. A Resource’s acceptable operating

range shall be defined by a high and low tolerance level calculated as follows subject to a

minimum range of 5 megawatts above or 5 megawatts below the expected output level and

a maximum acceptable operating range of 20 megawatts above or 20 megawatts below the

expected output level:

RHi = Max( 5 , Min ( ( MaxMWi * DBP ) , 20) ) + REGUP

RLi = Max ( 5, Min ( ( MaxMWi * DBP ) , 20) ) + REGDN

Where:

RH = Resource high operating tolerance or over generation limit (megawatt)

RL = Resource low operating tolerance or under generation limit (megawatt)

i = Dispatch Interval within Operating Hour.

MaxMW = Maximum Capacity Operating Limit - Resource physical maximum

sustainable output for each Operating Hour from Resource Plan.

DBP = Dead band percentage for all Resources is initially set to 105 %,

REGUP = Regulation up service being maintained on the Resource as indicated in the

Ancillary Service Plan (MW) for the Operating Hour.

REGDN = Regulation down service being maintained on the Resource as indicated in the

Ancillary Service Plan (MW) for the Operating Hour.

Resources providing carrying contingency reserve service shall be considered following

dispatch instructionswill have the amount of contingency reserve service carried, as

indicated in the Ancillary Service Plan, added to the resource high operating tolerance

during any Dispatch Interval in which these Services have been deployed.

(d) To the extent that a Resource is determined by SPP to have failed to follow SPP’s dispatch

instructions, such failure to follow dispatch instruction determination in accordance with

the procedures set forth under Section 4.1(c) of this Attachment A, the Market Participant

owner of that Resource shall be subject to an URD Charge. Resources shall not be subject

to URD Charges for any URD Megawatts caused by: (1) OOME(s); (2) redeployment by

the Balancing Authority; (3) instances when a Resource trips or is derated after receiving

dispatch instructions from SPP; (4) Non-Dispatchable Resources during uncongested

intervals; or (5) the dispatch instructions issued to a Resource were beyond the reported

16

capabilities in the Resource Plan due to the application of a VRL. In order to receive an

URD Charge exemption for a Resource under (3) above, the Market Participant must

immediately report the change in its Resource Plan, in accordance with Section 1.2.7 (c)

of this Attachment A, specifying the Resource trip or deration and must submit an invoice

dispute utilizing the process described under Section 7.3 of this Attachment A prior to SPP

determination of the exemption under the Section 7.3 process.

(e) URD Charges shall be calculated by SPP in accordance with Section 5.3 of this Attachment

A.

(f) In the event of a system failure related to the WEIS Market systems or Market Participant

systems providing data to SPP that impact SPP’s ability to calculate dispatch instructions

for a Resource or Resources, SPP will suspend the calculation of dispatch instructions for

such Resources and treat them as self-dispatched Resources until the calculations of

dispatch instructions can be restored.

SouthwestPowerPool SPPorg southwest-power-poolHelping our members work together to keep

the lights on... today and in the future.

WEIS MARKETMARKET POWER STUDY FINDINGSIan Wren, Energy Economist

SPP Market Monitoring Unit

August, 19 2020

2MMU

GENERAL APPROACH USED IN THE STUDY

• Analytical framework

• FERC precedent in assessing structural market power for approval

of market-based rate authority (MBRA) applications

• Metrics used to measure structural market power

• Market share

• Supplier concentration

• Pivotal supplier analysis (PSA), including residual supply index (RSI)

• Barriers to entry and exit assessment

• MMU recommendations

3MMU

ANALYTICAL FRAMEWORK – FERC PRECEDENT

• In granting MBRA to sellers, FERC requires(*)

• Sellers to submit a market power analysis to show whether the seller lacks or have adequately mitigated horizontal and vertical market power

• FERC applies a rebuttable presumption that the seller lacks horizontal market power for (wholesale) sales of power products or services(**) if it passes two indicative market power screens

• An uncommitted pivotal supplier analysis based on annual peak demand of the relevant market, and

• An uncommitted (wholesale) market share analysis for the relevant market—with a 20 percent threshold—applied on a seasonal basis

(*) Under section 205 of the FPA, and through Order No. 697 (2007) and Order Nos. 816-817 (2015).

(**) Includes energy, capacity, energy imbalance service, generation imbalance service, and primary frequency response service.

4MMU

ANALYTICAL FRAMEWORK – FERC PRECEDENT (CONT’D)

• Applicants that fail either screen are rebuttably presumed to

have market power

• In order to demonstrate a lack of vertical market power, a

seller that own(s), operate(s) or control(s) transmission facilities,

must satisfy certain requirements including having a FERC

approved OATT on file or receiving waiver of the OATT

requirement

5MMU

MARKET POWER HAS BOTH STRUCTURALAND BEHAVIORAL ASPECTS

• Structural aspects create potential for the exercise of market power, and can be measured through:

• Horizontal market power:

• Market share, concentration of suppliers and being a pivotal supplier

• Vertical market power:

• Erecting barriers to entry through control over the transmission system, control of fuel supplies, essential facilities, or inputs to electric power production

• Behavioral aspects are the actual exercise of market power through actual market behavior

• Subjected to appropriate mitigation measures

• Physical withholding

• Economic withholding

• Uneconomic production

6MMU

STUDY SCOPE: STRUCTURAL ASPECTSOF MARKET POWER

• The market power study assessed the structural aspects of the proposed market

• System-level market power by measuring

• Market concentration: unconcentrated, moderately concentrated, highly concentrated

• Market share: 20 percent threshold

• System-level and locational market power by pivotal supplier analysis

• A supplier is pivotal when market demand cannot be met without some or all of its generation

7MMU

RELEVANT MARKET: RELEVANT GEOGRAPHIC MARKET AND RELEVANT PRODUCT MARKET

• The MMU took the WEIS footprint as one default relevant geographic market covering two Balancing Authority Areas(*)—WACM and WAUW—for SCED(**) of energy imbalance since we did not identify any limiting interface transmission constraints between the two to create two separate markets

• This was used in calculating market share, supplier concentration, and system-wide pivotal supplier analysis using RSI

• Given the sparsity of intra-market congestion observed from real-time operational data, the MMU did not designate any sub-markets within the larger footprint, and instead

• The dual-BA footprint was taken as a single constrained area

• For the relevant product(s), the MMU used both energy and imbalance energy products in calculating market share and supplier concentration metrics, but used only energy in conducting the RSI and PSA

(*) Western Area Colorado Missouri BAA (WACM) and Upper Great Plains West BAA (WAUW).

(**) Security constrained economic dispatch.

8MMU

STUDY FINDINGS – MARKET SHARE OF THE LARGEST SUPPLIER

• Energy (in hourly energy output, 2017-2019)

• Varied from 24 to 54 percent, significantly higher than the 20 percent benchmark in all of the (8,760) hours, annually

• On average, 35 percent

• In 2019, varied from 24 to 52 percent

• Imbalance energy (in hourly imbalance energy supplied, 2017-2019)

• Varied from 22 to 100 percent, exceeding the 20 percent threshold in all hours observed.

• The high market shares reflect a general pattern that raises concerns where it can create opportunities for the actual exercise of market power

9MMU

MARKET SHARE OF THE LARGEST SUPPLIER –WEIS AND SPP COMPARISON

WEIS SPP

10MMU

MARKET SHARE OF THE LARGEST SUPPLIER –WEIS MARKET IMBALANCE ENERGY

11MMU

STUDY FINDINGS – SUPPLIER CONCENTRATION

• The Herfindahl-Hirschman Index (HHI) is used for supplier concentration analysis

• HHI < 1,000 unconcentr.; 1,000 <HHI< 1,800 moderately concentr.; HHI > 1,800 highly concentr.

• Energy (in hourly energy output, 2017-2019)

• Min. 1,960 and max 3,566, with average level of 2,580

• In 2019, similar pattern, with min. 2,089 and max. 3,442

• In 2019, the HHI value for installed capacity was 2,470

• These values are well above the 1,800 benchmark accepted for a highly concentrated market

• Imbalance energy, (in hourly imbalance energy supplied, 2017-2019)

• The min. 1,742 and max. 10,000 with all but two hours considered highly concentrated

• In 2019, the average HHI value was approximately 4,854

• The market share and the HHI metrics both point to high levels of structural market power

12MMU

SUPPLIER CONCENTRATION (HHI) – ENERGY OUTPUT

𝐻𝐻𝐼 =

𝑖

𝑀𝑊𝑖

σ𝑖𝑀𝑊𝑖∗ 100

2

13MMU

SUPPLIER CONCENTRATION (HHI) – ENERGY OUTPUT WEIS AND SPP COMPARISON

WEIS SPP

14MMU

SUPPLIER CONCENTRATION (HHI) – WEIS MARKET IMBALANCE ENERGY

15MMU

STUDY FINDINGS – PIVOTAL SUPPLIER ANALYSIS AND RESIDUAL SUPPLY INDEX

• PSA and RSI are two closely related metrics that measure structural

competitiveness either at the system or at the local market level

• PSA: Binary (i.e., pivotal or not)

• RSI: Continuous, showing duration of pivotal hours

• The MMU used the energy data for the PSA and RSI studies

16MMU

STUDY FINDINGS – RESIDUAL SUPPLY INDEX

• The results of one, two, and three firm RSI duration curves at the

system level point to high levels of pivotal status by large suppliers

• In the absence of the largest supplier, the system is unable to meet

demand in nearly 50 percent of intervals

• When the second and third largest suppliers are also removed,

generation falls short of demand in all but a handful of hours over

the three-year period

• This further confirms significant system-level market power

17MMU

STUDY FINDINGS – RSI DURATION CURVES

18MMU

STUDY FINDINGS – PIVOTAL SUPPLIER ANALYSIS

• PSA removes the capacity of a supplier from the total available

supply to assess if demand can be met without that supply

• If not, this supplier is considered pivotal single supplier PSA

• The analysis can also be run for two or three suppliers

• The results determine the frequency with which the largest

supplier could become “pivotal” to the market

• The MMU pursued three major methodologies each with two

different assumptions made for hydroelectric resources, that

provided for a total of six scenarios

19MMU

PIVOTAL SUPPLIER FREQUENCY

20MMU

PIVOTAL SUPPLIER FREQUENCY – WEIS SPP COMPARISON

WEIS SPP

0%

20%

40%

60%

80%

100%

Iowa, Dakotas, Montana Nebraska New Mexico and West

Texas

Kan., Mo., Okla., Ark., East

Texas, La.

Western Kansas and

Panhandles

Perc

ent

of h

ours

21MMU

STUDY FINDINGS - PIVOTAL SUPPLIER ANALYSIS RESULTS

• With the exception of the two scenarios, all scenarios demonstrated that a pivotal supplier was present in almost every interval

• The two scenarios—employing the most aggressive assumptions (assumptions that may not hold in operational reality), still had approximately 40 percent of peak demand intervals possessing a pivotal supplier

• High-demand intervals provide generators a greater ability to exercise market power

• Most of the scenarios rapidly approach 100 percent pivotality, even at relatively low levels of demand

• The PSA results are consistent with high levels of structural market in a concentrated market, and are consistent with the results of market share, HHI, and RSI metrics, each of which similarly point to a concentrated market

22MMU

STUDY FINDINGS – PIVOTAL SUPPLIER ANALYSIS (CONT’D)

• Identification of Frequently Constrained Areas (FCAs) was not considered as part of the scope of this study, because of

• The sparsity of intra-market congestion observed from real-time operational data, and

• The unavailability of market-based data in the footprint prior to WEIS Market implementation

• Going forward the MMU will perform separate and ongoing FCA analyses per WEIS tariff

• Increased understanding of the region—coupled with changing dispatch patterns—may warrant a revision of the MMU’s outlook on network congestion

23MMU

STUDY FINDINGS – BARRIERS TO ENTRY AND EXIT

• From the vertical market power perspective, structural

competitiveness can be impacted by erecting barriers to entry or

exit through

• Control over the transmission system and control of fuel supplies,

essential facilities or inputs to electric power production

• In the context of vertical market power, and particularly transmission

market power, FERC deems having an OATT(*) on file sufficient to

mitigate a seller ’s transmission market power

(*) OATT-Open Access Transmission Tariff

24MMU

STUDY FINDINGS – BARRIERS TO ENTRY AND EXIT –OATT

• While the Western Joint Dispatch Agreement (WJDA) does not

amount to a requisite OATT, it is not clear if the individual

participant’s OATTs on file satisfy the minimum terms and

conditions of the FERC Orders Nos. 888 and 890 with regard to the

vertical market power concerns

• Therefore, the MMU concludes that a resolution of this point is

ultimately for FERC to determine

25MMU

STUDY FINDINGS – BARRIERS TO ENTRY AND EXIT –INPUTS TO ELECTRIC POWER PRODUCTION

• With respect to other barriers to entry, inputs to electric power

production were considered

• The Commission considers intrastate natural gas transportation,

storage or distribution facilities, sites for generation capacity

development, coal supplies and the transportation of coal supplies

as such inputs

• The MMU does not anticipate that the control of such inputs in the

WEIS Market will be used to restrict entry

26MMU

CONCLUDING REMARKS

• The existing pricing of energy and imbalance energy is set administratively through regulatory or federal/municipal pricing methods in the WEIS footprint.

• Under the WEIS Market design, pricing of imbalance energy will be (spot) market based, and hence, it represents an improvement over the existing market structure via optimized dispatch of imbalance energy for production cost savings.

• Furthermore, more open and transparent price formation will send signals that promote reliability and long-term investment both in generation and transmission assets.

• Having said that, the MMU analysis concludes that the WEIS Market represents significant structural market power issues at the system level for both energy and imbalance energy prior to actual market implementation.

27MMU

MMU RECOMMENDATIONS

• Given the high levels of structural market power in the WEIS Market, particularly at the system level, the MMU recommends that SPP and the WEIS Market Participants consider the following:

• Develop a mitigation measure for system-wide market power, similar to those implemented in other markets, including, for example, the mechanism used by ISO-New England (ISO-NE)

• ISO-NE uses a system-wide pivotal supplier test that identifies system market power

• This approach is likely to be instructive in developing a similar mechanism for the proposed WEIS Market

• Use cost based offers if a system market power mitigation measure cannot be implemented for go live

• WEIS Market participants to offer in cost-based offers until such time that the structural market power approach can be implemented

28MMU

APPENDIX

29MMU

HISTORIC OUTPUT INFORMATION

• MWh Generation and Load for all hours 2017-2019

• “Internal Load Obligation” = proxy for “Native Load”

• 37 intervals removed out of 26,280 hours due to data quality

issues (0.14%)

30MMU

NAMEPLATE COMPOSITION BY PARTICIPANT

Total: 7,242 MW (with PPRs)

BEPM

16%

CRSP

25%

LAPM

13%

MEAN

1%

PPR

19%

TRIS

24%

UGPM

1%

WMPA

1%

BEPM

20%

CRSP

30%

LAPM

16%

MEAN

1%

TRIS

30%

UGPM

2%

WMPA

1%

Total: 5,830 (no PPRs)

31MMU

GENERATION BY DIRECT PARTICIPANT(MWh)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Jan-17 Jan-18 Jan-19

MW

h P

rod

uced

(M

on

thly

)

BEPM CRSP LAPM MEAN TRIS UGPM WMPA

32MMU

GENERATION BY TECHNOLOGY TYPE (MWh)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000


MW

h P

rod

uced

(M

on

thly

)

COAL DFO NG WAT WND

33MMU

GENERATION BY ENTITY TYPE

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Jan 17 Jan 18 Jan 19

MW

h P

rod

uce

d (

Mo

nth

ly)

Electric Cooperative Federally or Municipally Owned

34MMU

NET MONTHLY SALES (MWh)

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000


Net

Mo

nth

ly S

ale

s (M

Wh

)

BEPM CRSP DSRT LAPM MEAN TRIS UGPM WMPA

35MMU

IMBALANCE ENERGY BY PARTICIPANT(MWh)

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000


Mo

nth

ly E

I M

Wh

Sett

led

BASIN CRSP DESERET TSGT MEAN WMPA LAP

RESIDUAL SUPPLY INDEX

• Market generates more than load in most intervals

• RSI = σ𝑆𝑢𝑝𝑝𝑙𝑦 −σ𝑆𝑢𝑝𝑝𝑙𝑦𝑖

σ𝐷𝑒𝑚𝑎𝑛𝑑

• RSI usually calculated for 1-3 top suppliers within an interval

• Demand is sum of MP-submitted “Internal Load Obligations”

• Key Thresholds:

• RSI above 1 indicates market is generating more than demand

• RSI in “N minus” scenarios indicates supply index without N-

largest supplier

36MMU

37MMU

STUDY FINDINGS – PIVOTAL SUPPLIER ANALYSIS METHODOLOGY

• The MMU pursued three major methodologies :

• A “generation only” method, a “DC ties” method, and a “schedule cut” method.

• Within each major methodology, the analysis was conducted with two subsets of assumptions made for hydroelectric resources, due to the high penetration of hydroelectric generation in the market

• Three major methodologies, each with two different assumptions, provides for a total of six scenarios

• Results of the PSA:

• With the exception of the two “schedule cut” method scenarios, all scenarios demonstrated that a pivotal supplier was present in almost every interval

• The “schedule cut” scenarios—employed the most aggressive assumptions (assumptions that may not hold in operational reality), but still saw approximately 40 percent of peak demand intervals possess a pivotal supplier

• High-demand intervals provide generators a greater ability to exercise market power.

• Most of the scenarios rapidly approach 100 percent pivotality, even at relatively low levels of demand

38MMU

Ian WrenEnergy Economist


[email protected]

Esat Serhat GuneyLead Energy Economist


[email protected]

QUESTIONS?



WESTERN ENERGY

IMBALANCE SERVICE (WEIS)

MARKET

MARKET POWER STUDY

Published

August 3, 2020


Market Monitoring Unit

Market power study i

Western Energy Imbalance Service Market

TABLE OF CONTENTS

Table of contents.............................................................................................................................................................. i

List of figures .................................................................................................................................................................... ii

1 Executive summary ................................................................................................................................................ 1

2 Introduction ............................................................................................................................................................. 7

2.1 SPP contract services and the WEIS Market ....................................................................................... 7

2.2 Overall market view .................................................................................................................................. 11

2.3 Scope of market monitoring ................................................................................................................. 13

2.4 Why assess structural market power? ................................................................................................ 15

2.5 Study approach .......................................................................................................................................... 15

3 Overview of the WEIS Market ........................................................................................................................ 19

3.1 WEIS Market area....................................................................................................................................... 19

3.2 Market participant profiles ..................................................................................................................... 20

3.3 Two WAPA balancing authority areas ................................................................................................ 21

3.4 Generation resources and load ............................................................................................................ 23

3.4.1 Energy ............................................................................................................................................... 24

3.4.2 Imbalance energy......................................................................................................................... 34

3.5 Available internal and external transfer capability ........................................................................ 37

4 Competitive assessment ................................................................................................................................... 41

4.1 Definition of relevant market: relevant geographic and product markets .......................... 41

4.2 Structural aspects....................................................................................................................................... 43

4.3 The market share analysis....................................................................................................................... 44

4.3.1 Energy ............................................................................................................................................... 44


4.4 The Herfindahl-Hirschman Index (HHI) for supplier concentration ........................................ 47

4.4.1 Energy ............................................................................................................................................... 48


4.5 Pivotal supplier analysis .......................................................................................................................... 53

4.5.1 Residual supply index ................................................................................................................. 53

4.5.2 Pivotal supplier analysis ............................................................................................................. 55

5 Barriers to entry and exit .................................................................................................................................. 62

6 Findings and proposed mitigation measures .......................................................................................... 65

7 Concluding remarks ........................................................................................................................................... 71



Market power study ii


LIST OF FIGURES

Figure 2-1 Main features of the WEIS Market ........................................................................................... 10

Figure 3-1 WEIS market footprint and adjacent areas ........................................................................... 19

Figure 3-2 WEIS Market direct participant entity types ........................................................................ 21

Figure 3-3 WAPA Balancing Authorities ...................................................................................................... 22

Figure 3-4 Generation nameplate capacity (MW) by technology type and share, 2019 .......... 24

Figure 3-5 Nameplate capacity (MW) by participant type, 2019 ....................................................... 25

Figure 3-6 Nameplate capacity and participant shares, 2019 ............................................................. 25

Figure 3-7 Generation by technology type (GWh), 2017-2019 .......................................................... 27

Figure 3-8 Generation by market participant type (MWh), 2017-2019 ........................................... 28

Figure 3-9 Generation by market participant (MWh), 2017-2019 ..................................................... 29

Figure 3-10 Capacity and generation shares by market participant, 2019 ....................................... 29

Figure 3-11 Net monthly sales .......................................................................................................................... 30

Figure 3-12 Load duration curves, 2017-2019 ............................................................................................ 31

Figure 3-13 Monthly peak system demand.................................................................................................. 32

Figure 3-14 Daily load profile, seasonal ......................................................................................................... 33

Figure 3-15 System energy usage (GWh) ...................................................................................................... 33

Figure 3-16 Cumulative monthly imbalance energy by market participant type, 2017-2019... 35

Figure 3-17 Imbalance energy by market participant, 2017-2019 ...................................................... 36

Figure 3-18 Absolute value of imbalance energy by market participant, 2019 .............................. 36

Figure 3-19 Absolute value of imbalance energy vs generation by market participant, 2019 . 37

Figure 3-20 Observed BA interchange, October 2019 - June 2020..................................................... 38

Figure 3-21 Observed BA interchange, October 2019 - June 2020..................................................... 38

Figure 4-1 Market share of largest supplier............................................................................................... 45

Figure 4-2 Market share of largest supplier, daily ................................................................................... 46

Figure 4-3 Market concentration by energy output, 2017-2019 ....................................................... 48

Figure 4-4 Market concentration by energy output, 2017-2019 ....................................................... 49

Figure 4-5 Hourly maximum share and HHI distribution, energy, 2017-2019 ............................. 50

Figure 4-6 Daily market concentration, imbalance energy, 2017-2019 .......................................... 50

Figure 4-7 Market concentration by imbalance output, 2017-2019 ................................................ 52

Figure 4-8 Hourly maximum share and HHI distribution, imbalance, 2017-2019 ....................... 52

Figure 4-9 Residual Supply Index, 2017-2019........................................................................................... 54

Figure 4-10 Available import capacity ............................................................................................................ 57

Figure 4-11 Hydroelectric utilization factors ................................................................................................ 59

Figure 4-12 Pivotal intervals by demand level and scenario ................................................................. 60

Figure 4-13 Percentage of pivotal hours at each demand percentile ................................................ 60



Market power study 1


1 EXECUTIVE SUMMARY

This report presents the results of a market power study conducted by the Southwest Power

Pool (SPP) Market Monitoring Unit (MMU) for the proposed Western Energy Imbalance Service

Market (WEIS Market). The study investigates whether, and to what extent, structural market

power exists in the proposed WEIS Market. The study report includes recommendations to

enhance the competitiveness and efficiency of the proposed WEIS Market prior to market

implementation.

In conducting this study, the MMU primarily relied upon Federal Energy Regulatory Commission

(“Commission”) precedent in assessing structural market power for approval of market-based

rate authority (MBRA) applications. The MMU analysis defined relevant product market(s) and a

relevant geographic market, as two components of the relevant market under consideration,

and then assessed structural market power with the help of market concentration, market share,

residual supply index (RSI) and pivotal supplier analysis (PSA) metrics within those defined

product and geographic markets.

Based on the calculated metrics using pre-market data for 2017 through 2019, the MMU

concludes that the proposed WEIS Market presents significant structural market power concerns

for both energy and imbalance energy that should be addressed prior to actual market

implementation. The market share, the supplier concentration, residual supply index, and

pivotal supplier analysis all indicate high potential structural market power in the WEIS Market.

A brief summary of those findings is presented below:

Market share

For energy, from 2017 to 2019 the market share of the largest supplier—in terms of

hourly energy output—varied from nearly 24 percent to 54 percent, exceeding the

generally accepted 20 percent threshold in all of the (8,760) hours. In 2019, the

maximum share ranged from 24 percent to 52 percent. The largest supplier’s market

share is significantly higher than the 20 percent benchmark throughout the period

studied, averaging 35 percent. The seasonal data for 2019 show that while shoulder





months typically possess relatively lower—but still high—levels of market share, much

higher rates are prevalent throughout the rest of the year.

For imbalance energy, in terms of hourly imbalance energy supplied, the market share of

the largest supplier—that varies from hour to hour—was between 22 percent and 100

percent, exceeding the 20 percent threshold in all hours observed.

The market share analysis shows the largest supplier’s market share for both products is

significantly higher than the 20 percent benchmark throughout the entire period studied.

The high market shares reflect a general pattern that raises concerns prior to

implementation of the WEIS Market where it can create opportunities for the exercise of

market power.

Supplier concentration

For energy, the Herfindahl-Hirschman Index (HHI) supplier concentration analysis—in

terms of both nameplate capacity and hourly energy output—shows that the WEIS

Market footprint was highly concentrated in all intervals from 2017 to 2019. The hourly

minimum and maximum HHI values in output were 1,960 and 3,566, respectively, with an

average level of 2,580, well above the 1,800 benchmark accepted as an indication of a

highly concentrated market. The most recent year (2019) figures show similar pattern,

with minimum and maximum values of 2,089 and 3,442, respectively. The nameplate

HHI in 2019 for installed capacity in the proposed WEIS market is 2,470.

For imbalance energy, HHI values in output varied between 1,742 and 10,000 from 2017

to 2019, with all but two hours considered highly concentrated in the three-year period.

In 2019, the average HHI value for energy imbalance supply was approximately 4,854

with a standard deviation of approximately 1,753.

In sum, for energy and imbalance energy, the market share and the HHI metrics both

point to high levels of structural market power. Accordingly, the assessment of structural

market power by pivotal supplier analysis (PSA) gains increased importance.





Pivotal supplier analysis and residual supply index

The MMU took the WEIS footprint as one default relevant geographic market covering

two Balancing Authority Areas (BAAs)—Western Area Colorado Missouri BAA (WACM)

and Upper Great Plains West BAA (WAUW)—for security constrained economic dispatch

of energy imbalance since there are no limiting interface transmission constraints

between the two to create two separate markets. This was used in calculating market

share, supplier concentration, and system-wide pivotal supplier analysis using RSI. Given

the sparsity of intra-market congestion observed from real-time operational data, the

MMU did not designate any sub-markets within the larger footprint for PSA analysis,

instead electing to treat the dual-BA footprint as a single constrained area.

PSA and RSI are closely related metrics that measure structural competitiveness either at

the system or at the local market level. For the reasons explained in the study, the MMU

used the energy data for the RSI and PSA studies. The results of one, two, and three firm

RSI analyses at the system (i.e., WEIS Market footprint) level point to high levels of

pivotal status by large suppliers that raise significant concern for structural

competitiveness. The RSI duration curves indicate that in the absence of the largest

supplier, supply conditions may leave the system unable to meet demand in nearly 50

percent of intervals. When the second and third largest suppliers are also removed,

generation falls short of demand in all but a handful of hours over the three-year period.

This further confirms significant system-level market power.

In conducting the PSA, the MMU pursued three major methodologies: a “generation

only” method, a “DC ties” method, and a “schedule cut” method. Within each major

methodology, the analysis was conducted with two subsets of assumptions concerning

the ability of hydroelectric resources, due to the high penetration of hydroelectric

generation in the market. Three major methodologies, each with two different

assumptions, provides for a total of six scenarios.

o With the exception of the last two scenarios (“schedule cut” method scenarios),

all scenarios demonstrated that a pivotal supplier was present in almost every

interval. The last two scenarios—the “schedule cut” scenarios—employed the

most aggressive assumptions (assumptions that may not hold in operational





reality), but still saw approximately 40 percent of peak demand intervals possess

a pivotal supplier.

o High-demand intervals provide generators a greater ability to exercise market

power. Most of the scenarios rapidly approach 100 percent pivotality, even at

relatively low levels of demand.

The results are consistent with high levels of structural market power—even in the

absence of transmission congestion—in a concentrated market, and are consistent with

the results of other inquiries (market share, HHI, and RSI), each of which similarly point to

a concentrated market.

Given the unavailability of market-based data in the footprint prior to WEIS Market

implementation, identification of Frequently Constrained Areas (FCAs) was not

considered as part of the scope of this study. Therefore, the MMU has not evaluated if

designating FCAs is warranted to supplement the automatic market power mitigation

measures prescribed by the proposed WEIS tariff. However, going forward the MMU will

perform separate and ongoing FCA analyses prior to and continuing after market

implementation, as required under the proposed WEIS tariff, and increased

understanding of the region—coupled with changing dispatch patterns—may warrant a

revision of the MMU’s outlook on network congestion.

Barriers to entry and exit

From the vertical market power perspective, structural competitiveness can be impacted

by erecting barriers to entry through control over the transmission system and control of

fuel supplies, essential facilities or inputs. In an MBRA process, in addition to evaluating

horizontal market power, the Commission also evaluates whether a seller has vertical

market power. In the context of vertical market power, and particularly transmission

market power, the Commission deems having an Open Access Transmission Tariff (OATT)

on file sufficient to mitigate a seller’s transmission market power.

For the WEIS Market, all of the eight direct market participants signed the Western Joint

Dispatch Agreement (WJDA) with SPP, and all of them own transmission assets in the

footprint. While the WJDA does not amount to a requisite OATT, it is not clear if the

individual participant’s OATTs on file with the Commission satisfy the minimum terms





and conditions of the FERC Orders Nos. 888 and 890 with regard to the vertical market

power concerns. A resolution of this point is ultimately for the Commission to

determine.

With respect to other barriers to entry, the Commission considers a seller’s ability to

erect other barriers to entry, including inputs to electric power production, as part of the

vertical market power analysis. In terms of ownership or control of inputs to electric

power production, areas such as intrastate natural gas transportation, storage or

distribution facilities, sites for generation capacity development, coal supplies and the

transportation of coal supplies, as required by the Commission, were considered by the

MMU.

o Because of the region’s relatively small amount of large-scale in-market gas

generation that is not located on major gas pipelines controlled or affiliated with

the gas plant owners, the MMU does not anticipate that intrastate natural gas

infrastructure facilities will be used to restrict entry.

o Although, much of the region’s coal supply is provided by a not-for-profit fuel

supply cooperative, the Western Fuels Association (WFA), the MMU does not

anticipate that market participants could collectively exercise their role as WFA

members to the detriment of the rest of the region. Specifically, this would be

challenging given the make-up of the WFA as well as access to alternative

sources of coal, particularly in this region.

o Regarding hydroelectric generation, given the multifunctional use of water

storage and management projects in the West, and given the complexity, scale,

cost, and overlapping jurisdictions governing large hydroelectric generation, with

the exception of the unique challenges posed by construction of new large-scale

hydroelectric generation, it is not anticipated that the control of hydro resources

will restrict entry.

Although not explicitly stated by the Commission, the balancing function can also be

interpreted as one essential input in the production of relevant product(s) in this market.





Because energy balancing will continue to be done by the two Western Area Power

Administration (WAPA) Balancing Authority (BA) entities, WAPA market participants, also

functioning as BAs, could create a potential for preferential treatment. This aspect of

vertical market power may be taken in the context of the OATT issue as well. The MMU

intends to monitor for this type of behavior and report any suspected abuses to the

Commission.

MMU recommendations

Structural market power can be assessed both at the system and at local market levels.

Given the results summarized above, the MMU has substantial concerns with structural

market power in the WEIS Market, particularly at the system level. Therefore, the MMU

recommends that SPP and the WEIS Market participants consider the following:

o Develop a system-wide mitigation measure. Unlike the market share or HHI

analysis, the RSI analysis shows that even with the largest supplier removed,

generation can still meet demand about 50 percent of the time. This result can

provide a basis for implementing mitigation measures for system-wide market

power, similar to those implemented in other markets, including, for example, the

mechanism used by ISO-New England (ISO-NE). ISO-NE uses a system-wide

pivotal supplier test that identifies system market power. This approach is likely

to be instructive in developing a similar mechanism for the proposed WEIS

Market and can act as a blue print for the WEIS Market.

o Use cost based offers if a system market power mitigation measure cannot be

implemented for go live. In the event that structural mitigation measures cannot

be implemented before market go live, the MMU recommends that WEIS Market

participants offer in cost-based offers until such time that the structural market

power approach can be implemented.

The MMU believes that the mitigation measures in the proposed tariff and in the

response to the Commission’s deficiency letter will provide sufficient protections for

participant conduct to exercise of market power with implementation of system wide

mitigation measure(s) as recommended in this study.





2 INTRODUCTION

2.1 SPP CONTRACT SERVICES AND THE WEIS MARKET

Starting in February 2021,1 SPP has proposed to provide market operator services for the WEIS

Market,2 as part of SPP’s portfolio of contract-based Western Energy Services.3 The WEIS Market

footprint is geographically located in the easternmost portion of the Western Interconnection,

bordering the SPP RTO which lies in the Eastern Interconnection to the east, and surrounded to

the west by several entities, including the PacifiCorp East, Northwestern Energy, Public Service

Company of Colorado, and Public Service Company of New Mexico Balancing Authority Areas.

The product in the WEIS Market will be five-minute imbalance energy, defined as the difference

between supply and load obligation for each market participant. Imbalance energy, or the

difference between the actual energy injections/withdrawals and the scheduled energy

injections/withdrawals for each market participant, is calculated and settled at its locational

1 Market go-live date, as of July 2020. 2 As distinct from the Regional Transmission Organization (RTO)/Independent System Operator (ISO”)

framework. SPP states that, “… in the context of this filing SPP is acting only in the capacity of

administrator for the WEIS Market. SPP is not taking on responsibilities for administering open access

transmission service, [Balancing Authority] BA operations, transmission planning, or any other function

that might normally require comprehensive agreements with neighboring entities performing similar

functions.” Submission of Western Energy Imbalance Service Market Tariff, Western Joint Dispatch

Agreements, and the Western Markets Executive Committee Charter (Part 1 of 2) of Southwest Power

Pool, Inc., Docket No. ER20-1059-000 (February 21, 2020) (“Tariff Filing”) at p.13. SPP lists obligations of a

market operator (or market administrator) that is implementing an energy imbalance market including

“…calculating LMP and Imbalance Energy, issuing dispatch instructions, billing, and invoicing.” Ibid., at 23.

See Section 1.3 of Attachment A of Submission of Western Energy Imbalance Service Market Tariff,

Western Joint Dispatch Agreements, and the Western Markets Executive Committee Charter (Part 2 of 2)

of Southwest Power Pool, Inc., Docket No. ER20-1060-000 (February 21, 2020) (“Rate Schedule Filing”) for

SPP’s obligations. (From herein, Tariff Filing and Rate Scheduling Filing are collectively, the “February 21

Filings”). 3 See “A Proposal for the Southwest Power Pool Western Energy Imbalance Service Market (WEIS),”

(released on June 17, 2019) (available at

https://spp.org/documents/60104/a%20proposal%20for%20spp's%20western%20energy%20imbalance%

20service%20market.pdf), (“Contract Proposal”), and the Tariff Filing, at pp. 1-51 for the scope of contract-

based services. SPP’s other contract-based services in Western Energy Services include administering the

Western Interconnection Unscheduled Flow Mitigation Plan and reliability coordination services for some

of the western utilities.

https://spp.org/documents/60104/a%20proposal%20for%20spp's%20western%20energy%20imbalance%20service%20market.pdf

https://spp.org/documents/60104/a%20proposal%20for%20spp's%20western%20energy%20imbalance%20service%20market.pdf





marginal price (LMP).4 Similar to other energy imbalance markets,5 the WEIS Market establishes

an intra-hour, centralized real-time dispatch of energy from participating resources with the aim

of more efficiently ensuring reliability while minimizing production costs of load serving entities’

resource obligations.6,7 The proposed WEIS design shares some similarities to SPP’s existing

Integrated Marketplace real-time market; however, the WEIS Market will be an independently

functioning market in the Western Interconnection separate from the SPP market.

Transmission service in the WEIS Market will be administered under the Western Joint Dispatch

Agreements (WJDAs) signed into between SPP and each of the applicable WEIS Market entities.8

SPP will use both non-firm, as-available intra-hour transmission service under the Western Joint

Dispatch Transmission Service (JDTS), and the existing transmission service arrangements within

the participating Balancing Authorities (BAs) to provide imbalance service across the

transmission facilities within the WEIS Market. SPP’s security-constrained economic dispatch

(SCED) optimization software will use unscheduled transmission capacity to redispatch

resources. JDTS will be used to make intra-hour use of otherwise-unsold transmission capacity

and the non-firm redirect of existing network and point-to-point transmission service that has

4 Tariff Filing, Exhibit No. SPP-0001 at 4, 8. (“Kelley Testimony”). SPP explains that “[e]nergy imbalance

service is provided to transmission customers when the amount of Energy actually delivered to/from a

load or generator differs from the amount of Energy scheduled to be delivered to/from the load or

generator.”, Tariff Filing, at 4. 5 For instance, California Independent System Operator’s (CAISO) Western Energy Imbalance Market

(WEIM) has been in operation since 2014, and SPP’s Energy Imbalance Service (EIS) market, which

operated from 2007 to 2014 prior to establishing SPP’s Integrated Marketplace in 2014. 6 Contract Proposal at 5. SPP states that “[a]n energy imbalance service market will provide a low cost,

low risk solution while stakeholders consider a move toward development of larger, wholesale energy

markets.”, Ibid.,, at 3. 7 In support of a market-based energy imbalance market, SPP states “[w]ithout a market-based approach,

BAs manage Imbalance Energy obligations within their metered boundaries using their own resources or

by purchasing energy through bilateral transactions and without automated processes to economically

redispatch generation owned by others or in other BA areas. In the WEIS Market, SCED will make use of all

available resources across the WEIS Market Footprint to help balance load and generation on a

continuous five-minute basis…Ultimately, the WEIS Market offers a more reliable and cost effective energy

imbalance management option than the traditional bilateral approach utilized by BAs.” Ibid, at 5. 8 WJDA defines the Joint Dispatch Transmission Service (JDTS) (to be) provided by the Joint Dispatch

Transmission Service Provider(s), and administered by SPP subject to the terms and conditions of the

(proposed) tariff. See Attachment D Joint Dispatch Transmission Service of the Rate Schedule Filing. JDTS

is provided in real-time on an intra-hour, non-firm, as available basis having the lowest curtailment

priority. The tariff rate for JDTS customers for receipt or delivery of energy dispatched will be $0.00/MWh

of reserved capacity for on-peak and off-peak hours. See Ibid., Schedule 2 for the tariff rate.





already been procured by JDTS customers.9,10 As part of the WEIS Market design, under the

WJDAs the transmission owners do not relinquish control of their assets to SPP, as is the case in

the RTO/ISO model.11

Participation in the WEIS Market is voluntary. Entities within the footprint with load and/or

generation who do not choose to participate in the market will be registered by their respective

BAs as Partially Participating Resources (PPRs). These resources will not be available for

economic dispatch by the WEIS Market.

Under the proposed market design, market participants are responsible for unit commitment to

meet their real-time obligations, and the participating BAs will continue to be responsible for

balancing load and generation within their respective areas.12

The following table summarizes the main design features of the WEIS Market:13

9 Kelley testimony at 4, 9-10. 10 JDTS is only allowed for receipt or delivery of energy dispatched within a balancing authority area on an

intra-hour, non-firm basis to serve wholesale or retail native load and excludes (i) off-system sales of

capacity or energy or (ii) direct or indirect provision of transmission service by the JDTS customer to any

third party. Ibid., at 9. 11 “Equally as important as understanding what is included in the scope of the WEIS Market is

understanding what is not included. In contrast to the Integrated Marketplace, the WEIS Market does not

include consolidation of BA operations, nor markets for day-ahead unit commitment and energy

deployment, operating reserves or transmission congestion rights. SPP, as the market administrator, does

not provide consolidation or administration of transmission tariffs for the WJDA signatories. Participating

utilities are not transferring functional control of their generation or transmission assets to SPP.” Tariff

Filing, at 8-9. 12 “… the WEIS Market does not contain provisions for unit commitment decisions by SPP, as the market

administrator, or the clearing of any operating reserve products (i.e. regulation up, regulation down,

spinning reserve, and supplemental reserve). BAs participating in the WEIS Market will continue to be

responsible for ensuring their compliance with applicable reliability standards for balancing load and

generation within their BA boundaries. “ Ibid, at 9. 13 Table reproduced and expanded from Table 1 in Contract Proposal at 6.





Figure 2-1 Main features of the WEIS Market

PRODUCTS, PRICING AND DISPATCH

Market product Imbalance energy (five-minute)

Supply adequacy Day-ahead and hour-ahead supply adequacy checks

performed14,15

Pricing mechanism Locational Marginal Pricing (LMP)

Dispatch Real-time security constrained dispatch (SCED) by the

market clearing engine

Unit commitment Each entity is responsible for commitment of generation

to meet its real-time obligation

SETTLEMENTS

Settlement responsibilities SPP provides market settlements

Settlement timeline/granularity Daily settlements on a five–minute basis

TRANSMISSION

Transmission service Regional JDTS used as non-firm, “as available” service

with lowest curtailment priority offered at zero cost

PARTICIPATION

Participation

Voluntary participation open to entities with

load/generation in or external pseudo-tied into a

participating balancing authority16,17,18

Registration Resource registration on a nodal basis at settlement

locations

14 “SPP will perform supply adequacy analysis to ensure that each BA participating in WEIS Market and the

Market Participants within those Balancing Authority Areas have sufficient generation in their operating

plan to meet the load and Ancillary Services obligations of both the Market Participant and BA. The

supply adequacy analysis will occur on both day-ahead and hour-ahead time horizons.” Ibid, at 26-27. 15 “Under Section 1.3.3 of Attachment A, SPP is required to evaluate Ancillary Service Plans submitted by

Market Participants to ensure that the Market Participant has either identified sufficient Resources or has

entered into bilateral transactions to meet its Ancillary Service Plan obligations for the next Operating

Day.” Ibid, at 24. 16 Entities within a participating balancing authority can participate in the WEIS Market in one of two

ways: They can directly register their generation or load by executing the WJDA, which establishes the

legal relationship between SPP and the WEIS Participant. Alternatively, the participating host balancing

authority in which the generation or load resides can register that generation and load.” A resource that

is registered by the latter method is not available for economic dispatch and designated as a Partial

Participation Resource. Kelley testimony at 5 and Tariff Filing, at 15. 17 Entities physically located within, or pseudo-tied into, a participating balancing authority are allowed to

participate in the WEIS market. Entities that are pseudo-tied out of a participating balancing authority are

not allowed to participate. Kelley testimony at 5. 18 Of the total of 24 entities with generation and/or load within the two participating BAs, initially seven of

them executed the WJDA in order to directly participate in the WEIS Market. Tariff Filing, at 10. Deseret

become a signatory to the WJDA subsequent to the Tariff Filing, becoming the eighth.





2.2 OVERALL MARKET VIEW

As of June 2020, eight market participants have announced their participation in the WEIS

Market.19 These announcements bring the WEIS Market’s total installed generation capacity to

7,242 MW, including the PPRs, along with peak load of nearly 3,600 MW. When PPRs are

excluded, total capacity is approximately 5,830 MW and the hourly peak load was 2,474 MW as

of end of 2019.20 These market participants exist within the two Western Area Power

Administration (WAPA) Balancing Authority Areas (BAAs), Western Area Colorado Missouri BAA

(WACM) and Upper Great Plains West BAA (WAUW) that are also participating in the WEIS

Market, and will function as the two BAs.21

The WEIS Market’s installed generation capacity is predominantly hydro based at 49 percent

share, followed by coal-fired resources at 39 percent, wind resources at 5 percent, and natural

gas resources at 5 percent. In terms of total annual generation output, coal accounts for

approximately 59 percent of power produced, with hydro resources at 36 percent, wind at 5

percent, and natural gas accounting for less than half a percent.22 Market footprint-wide load

data for the past three years follows a consistent load duration and twin peaking pattern, with

peaks occurring both in summer and winter seasons. During the period studied, while the

summer coincident instantaneous peak demand occurred in July at approximately 2,500 MW,

the winter peak occurred in January between 2,200 and 2,300 MW.23

The volume of imbalance energy24 settled by WACM was 585 GWh in 2019.25

19 These utilities are Basin Electric Power Cooperative, Deseret Power Electric Cooperative, Municipal

Energy Agency of Nebraska, Tri-State Generation and Transmission Association, Western Area Power

Administration, and Wyoming Municipal Power Agency. Western Area Power Administration has three

sub-regions as market participants namely Colorado River Storage Project, Rocky Mountain Region

registered as “LAP”, representing the Loveland Area Projects), and Upper Great Plains Region. See Section

3.2 for more on participant profiles. 20 Based on the data submitted by participants in response to the MMU’s request. 21 Among others, BA operators have the responsibility for providing energy imbalance service in their

BAAs to ensure that load and generation remain balanced in real-time. Ibid., at 4. See Rate Schedule Filing

Definitions section for complete list of responsibilities of BAs. 22 2019 figures with PPRs excluded. 23 The winter peak in 2017 was more pronounced in December occurring at 2,472 MW. See Section 3 for

more detail. 24 Including both supplied and demanded imbalance energy. 25 The MMU was not able to attain the WAUW data.





Entity types of market participants and ownership of assets

In 2019, total annual generation by direct market participants was 23,963 GWh in the market

footprint. Generation by electric cooperatives is a dominant feature of the WEIS Market, and in

2019, despite possessing nearly equal shares of installed capacity between federally and

municipally-owned entities and electric cooperatives, the share of generation output produced

by electric cooperatives neared 62 percent. This is consistent with output patterns observed in

the two prior study years, 2017 and 2018.

In 2019, with PPRs excluded, 57 percent of imbalance energy was provided by cooperatives and

43 percent by federally and municipally-owned owned entities. 26 In conclusion, 100 percent of

energy and 100 percent of imbalance energy is supplied by not-for-profit entities27 in the WEIS

footprint.

All eight direct market participants own transmission assets in the market footprint to some

extent.

Pricing of imbalance energy

The proposed market-based locational marginal pricing improves upon the existing pricing of

imbalance energy within the footprint. The MMU anticipates that this will increase efficiency, as

the existing pricing is based on administratively-determined static rates or formulas

implemented by each balancing authority, while the proposed design utilizes optimized dispatch

of imbalance energy from the large portfolio of available resources in the footprint through

cost-minimizing SCED.28 The nodal pricing of imbalance energy through SCED algorithm targets

dispatch of cost minimizing generation.29 In 2019, the average settlement price was $21/MWh

in WACM.

26 Including WACM data only. When WAUW is added where market participant UGMP is located, the

share by federally and municipally owned entities will be higher. 27 Electric cooperatives define themselves as not-for-profit entities. 28 See https://www.wapa.gov/regions/RM/rates/Documents/Rate%20Schedule%20L-AS4%20EI.pdf and

https://www.oasis.oati.com/WAPA/WAPAdocs/WAPA-UGP-Rate-Schedules--Rate-Order-No-WAPA-188-

DRAFT%28Clean%29.pdf for WACM and WAUW balancing area authorities’ rate schedules, respectively

for the energy imbalance service each entity provides. 29 Tariff Filing at 4-5.

https://www.wapa.gov/regions/RM/rates/Documents/Rate%20Schedule%20L-AS4%20EI.pdf

https://www.oasis.oati.com/WAPA/WAPAdocs/WAPA-UGP-Rate-Schedules--Rate-Order-No-WAPA-188-DRAFT%28Clean%29.pdf

https://www.oasis.oati.com/WAPA/WAPAdocs/WAPA-UGP-Rate-Schedules--Rate-Order-No-WAPA-188-DRAFT%28Clean%29.pdf





Market liquidity is an important indicator to assess degree of competitiveness. Although there

are no commonly set thresholds for it, volume and number of transactions along with number of

market participants are notable features of a market that shows liquidity. Compared to bilateral

trading, centralized spot electricity markets are generally accepted to improve liquidity however,

prices during times of low liquidity can swing rapidly and with great magnitude.

The proposed WEIS Market will most likely improve liquidity over the existing bilateral construct

at least by increasing number of transactions. The size of the WEIS Market with its 7,242 MW of

installed capacity and nearly 3,600 MW of peak load (with PPRs included), and 24 TWh of annual

generation output in 2019 allows for a liquid market.30 As the size of market grows with the

addition of new participants, market liquidity is expected to grow in step.

2.3 SCOPE OF MARKET MONITORING

Under the WEIS Market tariff filed with the Commission,31 the SPP MMU is tasked with

performing monitoring activities for the WEIS Market. The scope of monitoring activities is

similar to that in SPP’s Integrated Marketplace, and includes the following:

Market power mitigation plan

The Market Power Mitigation Plan32 constitutes a set of market mitigation measures intended to

mitigate the exercise of horizontal and vertical market power by market participants in specific

circumstances.33 The Market Power Mitigation plan specifies processes and conditions under

which the mitigation measures would be applicable, including determining local market power,

pivotal supplier test, establishing frequently constrained areas, mitigation of economic

withholding, the rules for the calculation and submission of mitigated energy offer curves by

30 Comparing the levels of liquidity in other (larger) markets does not weaken the argument here. 31 See Rate Schedule Filing. 32 Ibid., Attachment B. 33 See Ibid., Section 1. Similar to the SPP Integrated Marketplace, SPP will implement these mitigation

measures for the WEIS Market.





market participants—subject to ex-post verification by the market monitor34—and mitigation

measures for physical resource offer parameters.35

Market monitoring plan

The Market Monitoring Plan36 establishes the independence of SPP’s Market Monitoring Unit in

monitoring the WEIS Market. The plan also establishes the mission, objectives and

responsibilities of the MMU. The mission of the MMU is to monitor and report on possible

abuses of horizontal and vertical market power and gaming in the WEIS Market by any market

participant, identify market design flaws, recommend any improving design changes for the

benefit of consumers and market participants, and monitor market participants’ compliance with

market rules.37 The objective of the MMU includes that “[T]he Market Monitor will work to

ensure that its functions and activities are implemented fairly and consistently, and that it

protects and fosters competition while minimizing interference with open and competitive

markets. Making recommendations to improve the operation of markets and preventing the

exercise of market power in advance rather than punishing offenders afterward shall be the

preferred approach.”38

Further, the Market Monitoring Plan provides for the MMU’s responsibilities for plan

implementation, including continuous monitoring of the market, recommending compliance

and corrective actions, collecting and retaining the data and information necessary for the

performance of the monitoring plan, recommending updates to the monitoring plan, and

periodically reporting on the WEIS Market.39 Finally, the plan tasks the MMU with monitoring

for potential abuse associated with economic withholding, uneconomic production, and physical

withholding as the categories of prohibited market participant behavior.40

34 Note that Partially Participating Resources will not be available for economic dispatch, and hence are

not obligated to submit mitigated Energy Offer Curves. 35 Tariff Filing, at 43-44 and Attachment B of the Rate Schedule Filing. 36 Rate Schedule Filing, Attachment C. 37 Ibid., Section 1.3.1. 38 Ibid., Section 1.3.2. 39 Tariff Filing, at 44-46 and Rate Schedule Filing, Section 1.2 of Attachment C. 40 Tariff Filing, at 45 and Rate Schedule Filing, Section 4.6 of Attachment C.





2.4 WHY ASSESS STRUCTURAL MARKET POWER?

Within the scope of its monitoring activities, the MMU is specifically tasked with monitoring

structural and behavioral aspects of market power in the WEIS Market. Structural aspects are

conditions that point to market power without regard to the actual exercise of market power.

Behavioral aspects, on the other hand, relate to the exercise of market power, which is observed

through the actual offer or bid behavior of market participants, and evaluated by the impact of

that behavior on market prices. Conceptually, structural market power can be assessed both at

the system and at local levels. Therefore, while structural aspects are assessed both at the

footprint level and at the locational (transmission-constraint) level, the behavioral trends are

commonly analyzed at the locational level. This approach to behavioral issues is appropriate, as

the auction-based wholesale markets are nodally-cleared.

Going forward, the MMU will perform periodic reviews for structural market power to ensure

that structural issues are sufficiently reported and addressed, and this study represents the first

of such reviews. The assessment of structural market power is important to ensure that, if such

conditions exist, appropriate remedial measures will be in place both at the system and local

market level to prevent the actual exercise of market power. Sustaining a competitive structural

base is also essential to maintaining a robust and effective mitigation practice for the exercise of

market power. Hence, the results from this study will inform the WEIS marketplace, and provide

a basis for additional measures for system-wide and local market power mitigation, should they

be warranted.

2.5 STUDY APPROACH

In conducting this study, the MMU primarily relied upon Federal Energy Regulatory Commission

(“Commission”) precedent in assessing structural market power for the approval of market-





based rate authority (MBRA) applications.41,42,43 The MMU analysis defined the relevant market

by defining its relevant product market(s) and relevant geographic market(s) components, and

then assessed structural market power with the help of market concentration, market share, and

pivotal supplier analyses within those defined product and geographic markets.44,45 While the

41 The MMU followed the Commission precedent in general terms, and to the extent applicable or

feasible. This approach is also consistent with other market power studies undertaken. For instance, see

“Assessment of Market Power in SPP’s Proposed Ancillary Services Markets, Potomac Economics, Ltd.,

December 2011” in Submission of Tariff Revisions to Implement SPP Integrated Marketplace of Southwest

Power Pool, Inc., Docket No. ER12-1179-000 (February 29, 2012), Exhibit No. SPP-6. 42 The Commission acts under section 205 of the Federal Power Act in granting MBRA to sellers that can

demonstrate that they and their affiliates lack or have adequately mitigated horizontal and vertical market

power. The final rule in Order No. 697 issued in 2007—and Orders through 697-D—codifies the

Commission’s currently effective policies applicable to MBRA (See Market-Based Rates for Wholesale Sales

of Electric Energy, Capacity, and Ancillary Services by Public Utilities, 121 FERC ¶ 61,260, a-d, or “FERC

Order No. 697”). Subsequent rulings in Order Nos. 816 and 816-A issued in 2015 clarify and streamline

certain requirements for MBRA (See Refinements to Policies and Procedures for Market-Based Rates for

Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities, 153 FERC ¶ 61,065, or

“FERC Order No. 816”). 43 In MBRA application to the Commission, a seller must submit a market power analysis that address

whether the applicant (seller) has horizontal and vertical market power. In evaluating applications, the

Commission applies a rebuttable presumption that the seller lacks horizontal market power with respect to

sales of energy, capacity, energy imbalance service, generation imbalance service, and primary frequency

response service if it passes two indicative market power screens: an uncommitted pivotal supplier analysis

based on annual peak demand of the relevant market, and an uncommitted (wholesale) market share

analysis conducted for the relevant market—with a 20 percent threshold—applied on a seasonal basis.

Applicants that fail either screen are rebuttably presumed to have market power. By presenting evidence

through the submission of a Delivered Price Test analysis, applicants can demonstrate that, despite a

screen failure, they do not have market power. In that, the Commission weighs both available economic

capacity and economic capacity when analyzing market shares and Herfindahl-Hirschman Indices). In

order to demonstrate a lack of vertical market power, a seller (or its affiliates) that own(s), operate(s) or

control(s) transmission facilities, must satisfy certain requirements including having a Commission

approved Open Access Transmission Tariff (OATT) on file or receiving Commission waiver of the OATT

requirement (See https://www.ferc.gov/industries-data/electric/power-sales-and-markets/electric-market-

based-rates), and FERC Order No. 697 at 8. 44 See Section 4 for this analysis. 45 In FERC Order 697, the Commission defines (three) major aspects of its market-based rate regulatory

regime one of which refers to sellers that operate in RTO/ISO markets, and the relevance of their

individual OATTs in satisfying MBRA requirements. Specifically, the Commission states “…for wholesale

sellers that have market-based rate authority and sell into day ahead or real-time organized markets

administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs),

they do so subject to specific RTO/ISO market rules approved by the Commission and applicable to all

market participants. These rules are designed to help ensure that market power cannot be exercised in

those organized markets and include additional protections (e.g., mitigation measures) where appropriate

to ensure that prices in those markets are just and reasonable. Thus, a seller in such markets not only

must have an authorization based on an analysis of that individual seller’s market power, but it must also

https://www.ferc.gov/industries-data/electric/power-sales-and-markets/electric-market-based-rates






first two indicators are exclusively market-wide measurements that ignore demand conditions,

the pivotal supplier analysis considers demand conditions. Pivotal supplier analysis can be

conducted both at the system and the local levels while the latter will use local transmission

constraints in the analysis.

Because of the nature of wholesale electricity markets—where demand and transmission

constraints continuously and dynamically alter operating parameters of the market—static

metrics such as supplier concentration and market share may not sufficiently capture actual

market conditions. Accordingly, the MMU ran pivotal supplier analyses where demand and

transmission constraints as well as supply conditions were taken into account in making market

power assessments both at the system and at the local market levels. In addition, the MMU

conducted analysis for system level structural market power by employing a residual supply

index so that overall market power could be assessed. Based on the results, appropriate

remedial measures are recommended for system-wide market power concerns. Finally, barriers

to entry in the WEIS Market were assessed.

Importantly for this study, the MMU considered energy imbalance as a byproduct of the

provision of energy, and therefore analyzed market power for both the imbalance energy as well

as the energy product. It is reasonable to expect that the level of structural competitiveness in

the energy segment of the WEIS Market will affect the energy imbalance segment, and any

(un)competitive conditions in the former will inevitably be transmitted into the latter, particularly

given the settlements mechanisms proposed for the WEIS Market.

Analyses in this study are based on three years of historical data, encompassing the period from

2017 to 2019 for the proposed WEIS Market footprint. Energy, load, and resource capability

data was submitted by prospective market participants, while imbalance data was obtained from

the WACM Balancing Authority. The data was validated for internal consistency and compared

with publicly-available information from the Energy Information Administration, Bureau of

abide by additional rules contained in the RTO/ISO tariffs.” (See FERC Order No. 697 at 3). The MMU

notes that the WEIS Market design does not propose a RTO/ISO construct nor the MBRAs obtained, or

OATTs on file by individual participants will have the standard meaning or effect in assessing structural

market power for the WEIS Market. In other words, having MBRAs and OATT on file by individual

participants would alleviate many of the MMU’s structural market power concerns had the WEIS Market

be a Commission approved RTO/ISO market.





Reclamation, and prospective participant websites and filings. It was further compared against

private datasets on power system entities and relationships. Although behavior under the future

WEIS Market construct will be different than behavior today in the (bilateral market) footprint,

historical data still represents the best available information.

The study is organized as follows: In Section 2, SPP’s contract services and main features of the

WEIS Market are briefly described. Next, the scope of market monitoring responsibilities are

outlined based on the proposed WEIS tariff filed with the Commission. Section 2 also provides a

rationale for conducting a market power assessment prior to market launch. Section 3 provides

an overview of the WEIS Market by its market participant profiles, including its two Balancing

Authority Areas, and market components with respect to generation, load, and (internal and

external) transmission capabilities. Generation and load are analyzed both from energy and

imbalance energy perspectives emphasizing the latter as the relevant WEIS Market product. It

should be noted throughout the analysis that the MMU considers energy imbalance as a

byproduct of energy, and the imbalance energy amounts are observed subsequent to (real-time)

actual energy flows, and during the settlements process. Consequently, energy will still have a

determinative role in conclusions drawn for the imbalance energy product in the analyses

throughout this report. Section 4 contains a market power assessment first by defining relevant

product and geographic markets and then, measuring structural market power using market

share, supplier concentration, and pivotal supplier metrics. In Section 5, barriers to entry in the

WEIS Market as potential impediments to competitive market implementation are discussed.

Findings and proposed mitigation measures are described in Section 6. Finally, Section 7

concludes the study by reemphasizing the study’s findings and recommendations to ensure and

maintain competitive outcomes in the upcoming WEIS market.





3 OVERVIEW OF THE WEIS MARKET

3.1 WEIS MARKET AREA

The WEIS Market footprint is comprised of entities within the Western Area Power

Administration – Western Area Colorado Missouri (WACM) BAA and the Western Area Power

Administration – Upper Great Plains West BAA (WAUW). Geographically, it is located in the

easternmost portion of the Western Interconnection, bordering the SPP RTO which lies in the

Eastern Interconnection to the east, and surrounded to the west by several entities, including the

PacifiCorp East, Northwestern Energy, Public Service Company of Colorado, and Public Service

Company of New Mexico Balancing Authority Areas. Figure 3-1 shows the proposed WEIS

Market footprint and surrounding entities.46

Figure 3-1 WEIS market footprint and adjacent areas

46 Geographic bounds were collected from Homeland Infrastructure Foundation-Level Data found here:

https://hifld-geoplatform.opendata.arcgis.com/datasets/02602aecc68d4e0a90bf65e818155f60_0. The

map and boundaries are depicted solely for illustrative purposes, and may differ from other depictions.

WACM

WAUW

SPP RTO

PSCO

PNM

PACE

NWMT

https://hifld-geoplatform.opendata.arcgis.com/datasets/02602aecc68d4e0a90bf65e818155f60_0





3.2 MARKET PARTICIPANT PROFILES

As of July 2020, eight market participants have announced their participation in the WEIS

Market. The Western Area Power Administration (WAPA), has three sub-regions as market

participants: the Colorado River Storage Project (CRSP), Rocky Mountain Region (registered as

“LAP”, representing the Loveland Area Projects), and Upper Great Plains Region (UGPM). All

market participants of the WEIS Market are already within the two WAPA BAAs: Western Area

Colorado Missouri BAA (WACM) and the Western Area Power Administration, Upper Great

Plains West BAA (WAUW). These two BAAs are also participating in the WEIS Market, and as

balancing authorities they are responsible for ensuring that load and generation remain

balanced in real-time in their respective balancing areas.47 Market participants, their entity type,

and their BAs are as follows:48

47 Balancing Authority is defined as “[T]he responsible entity within the WEIS Market that integrates

resource plans ahead of time, maintains load-interchange-generation balance within a Balancing

Authority Area, and supports Interconnection frequency in real time in order to: (1) Match, at all times, the

power output of the generators within the electric power system(s) and capacity and energy purchased

from entities outside the electric power system(s), with the load within the electric power system(s); (2)

Maintain scheduled interchange with other Balancing Authority Areas, within the limits of Good Utility

Practice; (3) Maintain the frequency of the electric power system(s) within reasonable limits in accordance

with Good Utility Practice; and (4) Provide for sufficient generating capacity to maintain operating reserves

in accordance with Good Utility Practice.” Balancing Authority Area is defined as “[T]he collection of

generation, transmission, and loads within the metered boundaries of the Balancing Authority. The

Balancing Authority maintains load-resource balance within this area. See Rate Schedule Filing,

Definitions at 7. 48 Short names or acronyms in parenthesis will be used to identify market participants for the remainder

of the report.





Figure 3-2 WEIS Market direct participant entity types

WEIS MARKET DIRECT PARTICIPANTS

Participant Entity type Assets49 BA

Basin Electric Power Cooperative (BEPM) Electric

cooperative

Generation-

Transmission-

Load

WACM

Municipal Energy Agency of Nebraska (MEAN) Municipally

owned

Generation-

Transmission-

Load

WACM

Deseret Power Electric Cooperative (DSRT) Electric

cooperative

Transmission-

Load WACM

Tri-State Generation and Transmission Association

(TRIS)

Electric

cooperative

Generation-

Transmission-

Load

WACM

Wyoming Municipal Power Agency (WMPA) Municipally

owned

Generation-

Transmission-

Load

WACM

Western Area Power Administration (WAPA) –

Upper Great Plains (UGPM)

Federally

owned

Generation-

Transmission-

Load

WAUW

WAPA – Colorado River Storage Project (CRSP) Federally

owned

Generation-

Transmission-

Load

WACM

WAPA – Rocky Mountain Region (LAPM) Federally

owned

Generation-

Transmission-

Load

WACM

Figure 3-2 shows that all of the direct participants in the WEIS Market are not-for-profit entities.

In 2019, nearly 62 percent of energy was provided by cooperatives and the remaining by

federally-or municipally owned entities. As such, 100 percent of energy and 100 percent of

imbalance energy will be supplied by not-for-profit entities in the proposed WEIS Market.

3.3 TWO WAPA BALANCING AUTHORITY AREAS

At the end of 2019, the total installed generation capacity in both BAAs was approximately 7,242

MW. Out of 24 generation and/or load entities that operate within the two participating BAs,

49 In the WEIS Market footprint.





eight of them executed the WJDA, and will be directly participating in the WEIS Market.50 These

entities represent approximately 5,830 MW of generation (nameplate) capacity or approximately

80.5 percent of the total capacity. The remaining entities, the PPRs, will be registered by the

market participant representing the host balancing authority, and represent approximately 1,412

MW of nameplate capacity.

Figure 3-3 WAPA Balancing Authorities

The Western Area Colorado Missouri BAA (WACM) is by far the larger balancing entity in the

footprint in relation to the Upper Great Plains West BAA (WAUW). The figure above compares

the two BAs with respect to installed capacity, and shows the estimated transfer limit—of 600

MW—between the two BAAs.51 In the WACM BAA, the two WAPA entities, CRSP and LAPM

control 2,735 MW, or 47 percent of the total WEIS Market capacity of nearly 5,830 MW with

PPRs excluded. On the other hand, nearly 34 percent of the total output is generated by these

50 Note that Deseret Power Electric Cooperative is a load serving entity only participant, and has no

installed capacity. 51 The MMU estimated the transfer limit by calculating changes in historical flows on paths when replacing

generation with imports. This approach is similar to available transfer capability estimation methods by

moving generation between areas except the flow change was applied to historical flows rather than

forecasted values.

WACM, 98%

5,720 MW

WAUW, 2%

110 MW





two WAPA entities with PPRs excluded. Meanwhile, the WAPA entities have significant off-

system sales outside the WEIS Market footprint.

In this study, the MMU will present calculated market indicators by considering WAPA entities as

individual participants. While the MMU recognizes a general interest in treating these entities as

a single participant, we have considered them separately to get a sense of the level of

concentration at the disaggregated level. Any further aggregation of the WAPA entities would

result in higher levels of market concentration and structural market power.52

3.4 GENERATION RESOURCES AND LOAD

In this section, the MMU first reviews generation resources and load assets with respect to

energy, and subsequently discusses imbalance energy as the (relevant) WEIS Market product.

Notwithstanding, the MMU considers energy imbalance as a byproduct of energy, and the

imbalance energy amounts are observed subsequent to (real-time) actual energy flows, and

during the settlements process. Therefore, energy still has a determinative role in analyzing the

imbalance energy product.

Throughout the study, the MMU analyzed the most recent three-year’s data from 2017 through

2019 to explore if a pattern or characteristic can be seen in the footprint prior to the

implementation of the WEIS Market. These features may relate to behavior or performance of

generation or load that reflects pre-market conditions. For this, the MMU considered the

specific generation and load assets within the market footprint that registered to directly

participate in the market. The data includes capacity or output of the same resources and the

obligation of the same load serving entities that existed in the currently defined WEIS Market

footprint prior to 2019.

52 There are cases in the calculation of imbalance energy metrics where aggregated market participants

may actually offset one another, lowering perceived market concentration. Given this possibility, the

MMU performed a subset of aggregated calculations, which confirmed our assumption that aggregation

leads to higher levels of measured concentration. Although 25 percent of imbalance energy intervals saw

a decrease in concentration, the remaining increase more than offset those intervals, significantly raising

the average HHI when WAPA entities were treated as one.





3.4.1 Energy

Total installed generation capacity was approximately 7,242 MW at the end of 2019. When PPRs

were excluded, total capacity was approximately 5,830 MW. Hydro resources53 have the largest

share with over 49 percent followed by coal-fired capacity at 39 percent, together nearing 90

percent of the total generating capacity. The remaining capacity portfolio has the following

composition: wind resources with 5 percent, natural gas with 5 percent,54 and fuel oil with 2

percent.55 Figure 3-4 depicts the WEIS footprint installed capacity by technology type owned by

direct market participants.

Figure 3-4 Generation nameplate capacity (MW) by technology type and share, 2019

Figure 3-5 depicts generation nameplate capacity owned by the type of direct market

participant in 2019.

53 Among hydro resources, reservoir generation is the dominant technology, representing over 85% of

nameplate hydro capacity. 54 Three of the four participating natural gas resources serve as peaking units. 55 No direct participants in the proposed WEIS Market possess registered solar capacity. To the extent

that utility-scale solar capacity exists within the WACM and WAUW BAAs, it is entirely owned by partially

participating entities.

Coal, 2253, 39%

Fuel oil, 100, 2%

Natural Gas, 287,

5%Water, 2859, 49%

Wind, 322, 5%





Figure 3-5 Nameplate capacity (MW) by participant type, 2019

In 2019, electric cooperatives and federally and municipally owned utilities nearly have (50

percent) equal shares in the WEIS market when PPRs are removed. When PPRs are included,

federally and municipally owned utilities, cooperatives, and PPRs have approximately 41 percent,

40 percent, and 19 percent shares, respectively.

Figure 3-6 shows installed capacity by all market participants with and without PPRs, and their

shares in 2019.

Figure 3-6 Nameplate capacity and participant shares, 2019

2,870

2,960

Electric Cooperative

Federally or Municipally

Owned

BEPM

16%

CRSP

25%

LAPM

13%

MEAN

1%

PPR

19%

TRIS

24%

UGPM

1.5%

WMPA

1%

BEPM

20%

CRSP

31%LAPM

16%

MEAN

1%

TRIS

30%

UGPM

2%

WMPA

1%





Market participant Capacity Percentage Capacity Percentage

with PPR without PPR

CRSP 1,783 24.6% 1,783 30.6%

TRIS 1,726 23.8% 1,726 29.6%

PPR 1,412 19.4% — —

BEPM 1,144 15.8% 1,144 19.6%

LAPM 952 13.1% 952 16.3%

UGPM 110 1.5% 110 1.9%

WMPA 51 0.7% 51 0.9%

MEAN 64 0.9% 64 1.1%

Total 7,242 5,830

Figure 3-656 shows that the largest participant in the WEIS Market is WAPA’s Colorado River

Storage Project with nearly 25 percent when nameplate capacity owned by PPRs is included, and

31 percent when PPRs are removed. The next largest participant is Tri-State with slightly under

one quarter (24 percent) with PPRs included. Tri-State’s share rises to nearly 30 percent if only

direct participants are considered. Among direct participants, the largest three market

participants—namely CRSP, Tri-State, and BEPM—owned 80 percent of the total nameplate

capacity in 2019.

Figure 3-7 shows annual generation by direct participants by technology during 2017, 2018, and

2019.

56 Total percentages may not sum to100 percent due to rounding.





Figure 3-7 Generation by technology type (GWh), 2017-2019

Fuel type 2017

(GWh)

2018

(GWh)

2019

(GWh)

Percent as of

year-end 2019

Coal 14,743 13,964 14,035 58.6%

Hydro 9,029 8,703 8,612 35.9%

Wind 1,181 1,267 1,231 5.1%

Natural gas 43 43 80 0.3%

Oil 2 4 3 <0.1%

Total 24,998 23,981 23,963 100%

By generating technology, coal and hydro resources together generate nearly 95 percent of the

total energy in the footprint with coal at 59 percent and hydro generation at 36 percent. In

2019, the WEIS Market footprint total annual generation was 23.9 TWh.

Figure 3-8 below shows the WEIS footprint output for 2017 to 2019 by electric cooperatives and

federally and municipally owned entities.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000


MW

h P

rod

uce

d (M

on

thly

)

Coal Fuel oil Natural gas Water Wind





Figure 3-8 Generation by market participant type (MWh), 2017-2019

Similar to nameplate capacity, generation output by participant type provides valuable context

for potential market behavior. On an annual basis, generation output by market participant type

shows almost identical patterns over the last three years with approximately 62 percent

produced by cooperatives and 38 percent by federally- and municipally owned entities.

Generation output by individual participants reveals their relative positions in the market. Figure

3-9 shows generation output by direct market participant since 2017, and Figure 3-10 compares

participants’ nameplate capacity to their generation output in 2019.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000


MW

h P

rod

uce

d (M

on

thly

)

Electric Cooperative Federally or Municipally Owned





Figure 3-9 Generation by market participant (MWh), 2017-2019

Figure 3-10 Capacity and generation shares by market participant, 2019

Market

participant

Capacity

share with

PPRs

Capacity

share without

PPRs

Output share

without PPRs

CRSP 24.6% 22.2% 22.1%

TRIS 23.8% 36.4% 36.1%

PPR 19.5% N/A —

BEPM 15.8% 25.6% 25.4%

LAPM 13.1% 11.8% 11.7%

UGPM 1.5% 2.0% 2.0%

WMPA 0.7% 1.4% 1.4%

MEAN 0.9% 0.7% 1.3%

Total 100% 100% 100%

Figure 3-1057 shows that in 2019, and among direct participants, nearly 84 percent of the total

generation was realized by the largest three market participants (TRIS, CRSP, and BEPM), who

combined own almost equal (84) percent of the total nameplate capacity. While most

participants of the WEIS Market own generation assets and have load obligations at the same

time, one participant (Deseret) functions as a load-serving entity only within the market.

57 Total percentages may not sum to100 percent due to rounding.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000


MW

h P

rod

uce

d (M

on

thly

)

TRIS BEPM CRSP LAPM MEAN UGPM WMPA





Market participants’ injection and withdrawal amounts in the footprint determine whether they

are net suppliers or buyers of energy. Figure 3-11 below shows market participants by their net

seller/buyer position considering each participant’s cumulative monthly generation output and

load obligation during 2017 to 2019.

Figure 3-11 Net monthly sales

During the past three years CRSP, BEPM, and LAPM have been net sellers of energy in the

footprint with CRSP being the largest. Tri-State, on the other hand, has been a net buyer for

most of the period studied while the remaining three participants—namely UGPM, WMPA, and

MEAN—are nearly self-sufficient. Supply of imbalance energy in excess of demand is exported

from the WEIS Market.58 In general, market participants’ relative positions of net seller/buyer in

the energy segment is likely to carry over into the energy imbalance segment in the market.

Section 4 provides a competitive assessment of the market for both energy and imbalance

energy.

The load duration curves in Figure 3-12 below display WEIS footprint hourly loads from the

highest to the lowest hour for each year from 2017 to 2019.59

58 See Section 3.5 for observed BA interchange. 59 This includes load by direct participants only. Comparable historic load information was not available

for PPRs.

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000


Net

Mo

nth

ly S

ale

s (M

Wh

)

BEPM CRSP DSRT LAPM MEAN TRIS UGPM WMPA





Figure 3-12 Load duration curves, 2017-2019

The most recent three-year data exhibits a consistent and stable load duration pattern in the

footprint. The data also indicates that total load exceeds 1,978 MW at less than 5 percent of the

hours in 2019. In 2019, the maximum and minimum hourly loads were 2,474 MW, and 1,423

MW respectively.

System load can also be evaluated by analyzing timing of its peak as well as its magnitude. The

system peak demand can be affected by factors such as weather patterns—and associated

cooling and heating needs—and economic activity on a daily, monthly or seasonal basis. Figure

3-13 shows coincident peak demands for the WEIS footprint based on a month-by-month

comparison of peak-hour demand for the last three years.





Figure 3-13 Monthly peak system demand

The footprint data for the last three years reveals a twin peaking pattern with summer and

winter peaks. During the period covered, while the summer coincident instantaneous peak

demand occurred in July approximately at 2,500 MW, the winter peak was in January

approximately at 2,200 to 2,300 MW levels.60

The following figure provides a more detailed load data focusing on the daily pattern of the

load.

60 The winter peak in 2017 was more pronounced in December occurring at 2,472 MW.

0

500

1,000

1,500

2,000

2,500

3,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 18 19

MW





Figure 3-14 Daily load profile, seasonal

Summer daily loads follow a clear single-peaking pattern, with the peak aligning with the hottest

hours of the day. Winter loads follow a double-peaking pattern, with the highest loads seen

around 7 A.M. and 7 P.M., respectively.

So far delineating supply side features of the WEIS Market, both nameplate capacity and

generation output, have been discussed. On the demand side, net seller/buyer position

considering each participant’s cumulative monthly generation output and load obligation

followed by system-wide load profile and system peak demand were shown. Additionally, the

total system energy usage in the footprint reveals valuable demand side information. Figure

3-15 lists system energy use by participant.

Figure 3-15 System energy usage (GWh)

2017 2018 2019 System % System % System %

BEPM 2,945 18.5% 2,862 17.7% 2,813 17.5%

CRSP 22 0.1% 26 0.2% 23 0.1%

DSRT 154 0.1% 167 1% 174 1.1%

LAPM 429 2.7% 457 2.8% 375 2.3%

MEAN 848 5.3% 858 5.3% 843 5.2%

TRIS 10,461 65.6% 10,718 66.1% 10,763 66.9%

UGPM 826 5.2% 844 5.2% 824 5.1%

WMPA 271 1.7% 282 1.7% 276 1.7%

Total 15,954 100.0% 16,214 100.0% 16,091 100.0%





The figure above61 shows that Tri-State and BEPM were the two largest load-serving entities in

2019, using 84 percent of energy. A similar trend can be found in 2017 and 2018 data. The last

three year’s data indicate that two of the largest suppliers in the market also use the majority of

the energy produced.

Supply margin in the WEIS market

One of the prerequisites of a competitive market is sufficient supply margin to satisfy (peak)

demand. Under tight supply conditions, a market could be subject to frequent and sustained

anti-completive behavior. When the nameplate capacity of 5,830 MW (excluding PPRs) is used,

a peak demand of 2,474 MW in 2019 translates into a 136 percent supply (or reserve) margin in

the WEIS Market. However, considering the hydro resources’ 49 percent share in total

nameplate capacity, supply margin calculations need to include derating of hydro resources to

account for their availability.62 Further, there are, on average, about 1,000 MW of exports out of

the WACM BA. Considering this reduces the margin to about 95 percent. Even considering

these prior obligations, the market still enjoys a relatively high supply margin, which contributes

to system reliability and can diminish the potential to exercise market power.

3.4.2 Imbalance energy

Figure 3-16 below depicts the cumulative monthly quantity of settled imbalance energy. As can

be seen, the federally- and municipally-owned utilities’ imbalance quantities generally net out

on a monthly basis to near zero MWh levels, while large swings in energy imbalance transaction

volumes are driven by electric cooperative behavior. These results may be consistent with a

resource mix that sees electric cooperatives providing relatively more variable energy (which

generally drive a need for much higher energy imbalance quantities), and also federal utilities

self-balancing or acting in close coordination with the BA(s).

61 Total percentages may not sum to100 percent due to rounding. 62 Wind resources should be approached the same way however, wind constitutes 5 percent of the total

WEIS Market capacity therefore, the study focused on hydro resources only.





Figure 3-16 Cumulative monthly imbalance energy by market participant type, 2017-2019

Figure 3-17 depicts monthly cumulative energy imbalance quantities by participant, and largely

mirrors the results of Figure 3-11. Of note is the strong negative correlation between LAP and

CRSP imbalance quantities. Based on conversations with market participants, this is believed to

be a function of operational coordination within WAPA, as well as an artifact of the process used

to “disaggregate” LAP and CRSP imbalance energy quantities, which had previously been

recorded as a single account under the WACM BA. Also of note is the large swing in volume of

energy imbalance transaction from Tri-State, which explains the majority of the positive

cumulative imbalance energy settlements that persisted throughout 2019.

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000


Cu

mu

lati

ve M

on

thly

EI Sett

led

(MW

h)

Federally or Municipally Owned Electric Cooperative





Figure 3-17 Imbalance energy by market participant, 2017-2019

Figure 3-18 below tabulates absolute value of imbalance energy transacted by direct

participants in 2019.

Figure 3-18 Absolute value of imbalance energy by market participant, 2019

Market

participant

Total imbalance

energy (absolute)

MWh

Percent

of total

TRIS 202,638 34.7%

CRSP 109,805 18.8%

LAPM 96,894 16.6%

BEPM 82,233 14.1%

MEAN

60,469 10.3%

DSRT 17,272 3.0%

WMPA 15,471 2.7%

Total 584,782 100.0%

The absolute value of energy imbalance quantities closely tracks the capacity and output metrics

for each participant, with the possible exception of MEAN. Although MEAN possesses less than

two percent of market capacity, and accounts for slightly over five percent of system load, it

represents 10 percent of the imbalance energy transacted in 2019. Again, this may point to

MEAN’s buildout of a large wind facility, the only variable energy resource to come online

during the study period.

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000


Mo

nth

ly E

I M

Wh

Sett

led

BEPM CRSP DSRT TRIS MEAN WMPA LAPM





As can be seen in Figure 3-19, MEAN’s (red line) imbalance energy requirements as a fraction of

its generation increased sharply with the installation of the Kimball Wind Farm.63

Figure 3-19 Absolute value of imbalance energy vs generation by market participant, 2019

3.5 AVAILABLE INTERNAL AND EXTERNAL TRANSFER

CAPABILITY

In the transmission segment of the WEIS Market, all eight direct participants own transmission

assets in the market footprint.

Internal and external transmission interface capabilities can play a significant role as a check on

market power by generators. Figure 3-20 and Figure 3-21 below depict observed BA

interchange values using real-time operational observations of the Western interconnect

obtained from the SPP Reliability Coordinator. Both figures point to average flows of

approximately 1,000 MW out of WACM, and an average net interchange much closer to zero

MWh for WAUW.

63 The Kimball Wind Farm is contracted to MEAN under a power purchase agreement. Given the scope of

rights granted under the agreement, imbalance energy attributed to the wind farm was assigned to

MEAN.





Figure 3-20 Observed BA interchange, October 2019 - June 2020

Figure 3-21 Observed BA interchange, October 2019 - June 2020

Given the nameplate capacity of 5,720 MW in WACM and 110 MW in WAUW along with an

estimated transfer limit of at least 600 MW between the two BAAs, the existing internal interface

capability does not pose concerns for potential structural market power. As such, the MMU

does not see any further need to consider any potential inter-BAA market power concerns.64

64 A market power assessment conducted by CAISO’s Department of Market Monitoring (DMM) for the

CAISO Energy Imbalance Market concluded that “…based on currently available information it [DMM]

cannot conclude that the two PacifiCorp BAAs will be structurally competitive and therefore recommends

that market power mitigation procedures be applied when scheduling constraints into either of these





Examination of data from the SPP Reliability Coordinator did not reveal significant intra-market

congestion, and local congestion effects are further discussed in Section 4.5.

Congestion management in the proposed WEIS65 will differ from SPP RTO operations in the

Eastern interconnect in several significant ways. The proposed WEIS Market footprint contains

several phase-shifting transformers, and the Western interconnect has a significantly higher

amount of remedial action schemes (RASs) for post-contingency recovery processes relative to

the SPP RTO.

Importantly, the market will not rely on economic redispatch as the primary approach to

congestion management. Redispatch under the current congestion management methodology

will not consider costs, and is one of the last steps before declaring emergency conditions.66

Instead, the congestion management methodology calls for the adjustment of flows by the

operation of the phase-shifting transformers and other transmission element reconfigurations,

in order to honor the Western Interconnection Unscheduled Flow Mitigation Plan (WIUFMP).

The inclusion of a marginal congestion component (MCC) in prices, in the absence of an

economically-informed congestion relief process, and given a high degree of reliance on manual

congestion relief, may result in unforeseen pricing and congestion effects.

Finally, the Western interconnection is characterized by large flows of power from resource-rich,

sparsely populated areas to dense population centers. Much of this power is transmitted from

large facilities in the Pacific Northwest to serve load to large cities along the Western coast.

However, much of this power also loops through the easterly BAs within the Western

BAAs becomes binding.” See California Independent System Operator Corporation ISO Tariff

Amendments to the Energy Imbalance Market Docket No. ER14-2484-000, (July 23, 2014), Attachment C –

Assessment of Potential Market Power in Energy Imbalance Market at 12,

http://www.caiso.com/Documents/Jul23_2014_TariffAmendment_EnergyImbalanceMarketEnhancements_E

R14-2484.pdf. Given the relatively large estimated transfer capacity, the MMU does not share the same

concerns for the WACM-WAUW combined area. 65See Congestion Management Methodology at

https://www.spp.org/documents/60289/spp%20west%20congestion%20management%20methodology%

20v1.0.pdf 66 There is currently a proposal before relevant organizational groups to modify the last-step dispatch

process to allow the Reliability Coordinator to designate constraints for “market-optimized” relief through

SCED. This proposal has not been approved, but is anticipated to receive approval prior to the projected

market go-live date. While this represents an incremental improvement to this particular step of the

methodology, the step itself remains nearly last-priority within the methodology.

http://www.caiso.com/Documents/Jul23_2014_TariffAmendment_EnergyImbalanceMarketEnhancements_ER14-2484.pdf

http://www.caiso.com/Documents/Jul23_2014_TariffAmendment_EnergyImbalanceMarketEnhancements_ER14-2484.pdf

https://www.spp.org/documents/60289/spp%20west%20congestion%20management%20methodology%20v1.0.pdf

https://www.spp.org/documents/60289/spp%20west%20congestion%20management%20methodology%20v1.0.pdf





interconnect on its way to those same population centers. This “donut effect,” combined with

intra-market needs to transport power to southern areas of the market footprint, results in

predominately north-to-south, east-to-west flows coming into and leaving the market footprint.

Operation of the proposed WEIS Market is not anticipated to change this dynamic, especially

given the relatively small quantities of imbalance energy transacted relative to overall flows. If

anything, external flows may determine market outcomes more than market outcomes may

determine external flows. The WIUFMP, for example, along with SPP’s Congestion Management

Methodology, will dictate topological reconfigurations of the network in ways that will alter

computed LMPs.





4 COMPETITIVE ASSESSMENT

4.1 DEFINITION OF RELEVANT MARKET: RELEVANT

GEOGRAPHIC AND PRODUCT MARKETS

Antitrust and competition economics use the concept of the relevant market in identifying

products or services, or the geographic market in the context of a merger, or, most generally,

wherever competition occurs. The relevant market has two components: a relevant product

market, and a relevant geographic market. In principle, both are determined based on the

concept of degree of substitutability. The degree of substitutability among group of products

determines the relevant product market designation by confirming if the products can serve the

same purpose from the consumer’s perspective. Similarly, the relevant geographic market is

determined based on the locational substitutability, or whether suppliers in one location can

reach and substitute for suppliers in another location to meet consumer demand for the

relevant product.

As stated earlier, the MMU primarily followed Commission precedent in assessing structural

market power for applications of MBRA for sales of various services including wholesale sales of

electric energy, capacity and ancillary services by public utilities.67 In assessing horizontal market

power through indicative market share and pivotal supplier screens, the Commission uses the

“default relevant geographic market” concept. For that purpose, a seller’s BAA or the RTO/ISO

market, as applicable, would be the default relevant geographic market.68

In non-RTO/ISO markets, the default relevant geographic market is first, the BAA where the

seller is physically located, and second, the markets directly interconnected to the seller’s BAA

(first-tier balancing authority area markets).69 In that regard, if a transmission-owning Federal

power marketing agency is the home or first-tier market to the seller, then that Federal power

67 See Section 2.5. 68 In cases where the Commission makes a specific finding that there is a submarket within an RTO/ISO,

that submarket is taken as the default relevant geographic market for sellers located within the

submarket. See FERC Order 697 at 127-128. 69 “Where a generator is interconnecting to a non-affiliate owned or controlled transmission system, there

is only one relevant market (i.e., the balancing authority area in which the generator is located.).” Ibid., at

128.





marketing agency’s BAA would be the relevant geographic market. For indicative screens, the

Commission considers only those supplies that are located in the market being considered

(relevant market) and those in first-tier markets to the relevant market. For non-RTO sellers, the

Commission makes a rebuttable presumption that the seller’s BAA and each of its neighboring

first-tier BAAs are each relevant geographic markets.70

Accordingly, the MMU took the WEIS footprint as one default relevant geographic market

covering two BAAs—WACM and WAUW—for security constrained economic dispatch of energy

imbalance since there are no limiting interface transmission constraints between the two to

create two separate markets. This will be used in calculating market share, supplier

concentration, and system-wide pivotal supplier analysis using RSI. Submarkets within the WEIS

Market were postulated where supply is limited due to transmission constraints. These would

be used for the pivotal supplier analysis. Given the sparsity of intra-market congestion observed

from real-time operational data, however, the MMU did not designate any sub-markets within

the larger footprint for PSA analysis, instead electing to treat the dual-BA footprint as a single

constrained area.

In case of the relevant product market,71 the main criterion is whether a group of power supply

products can be substituted or interchanged for the same use. Because of the inherent nature

of energy and imbalance energy products, distinguishing the two is not readily apparent: while

the energy product is interchangeable for the purpose of imbalance energy, the other way

around is not possible. In other words, they are not fully substitutable to be considered in the

70 Ibid., at 128-129 71 The Commission defines relevant product in the context of transactions under section 203 of the

Federal Power Act (FPA) under the delivered price test, as “[t]he horizontal Competitive Analysis Screen

must be completed using the following steps: (1) Define relevant products. Identify and define all

wholesale electricity products sold by the merging entities during the two years prior to the date of the

application, including, but not limited to, non-firm energy, short-term capacity (or firm energy), long-term

capacity (a contractual commitment of more than one year), and ancillary services (specifically spinning

reserves, non-spinning reserves, and imbalance energy, identified and defined separately). See CFR

33.3.c(1). The Commission notes that “…the delivered price tests analyses filed with the Commission often

focus on only the short-term energy market, with far less detail and attention given to the other relevant

products.” See Modifications to Commission Requirements for Review of Transactions under Section 203

of the Federal Power Act and Market-Based Rate Applications under Section 205 of the Federal Power Act,

156 FERC ¶ 61,214, at 5 (September 22, 2016).





same category of power supply products. Therefore, energy imbalance can be considered as a

separate product from energy.

From the practical point of view, however, and in the context of calculations performed for this

study, the MMU used the energy data for both the RSI and PSA.72 Theoretically, even though

imbalance energy is the relevant product for the proposed WEIS Market, energy has a

determinative role in energy imbalance outcome. Moreover, market participants do not make

offer decisions with energy imbalance market in mind; rather imbalance energy occurs as a

residual. For this reason, the MMU considered energy imbalance as a byproduct of energy, as

the imbalance energy amounts are observed subsequent to (real-time) actual energy flows, only

during the settlements process.

Consequently, the MMU analyzed market power considering both energy and imbalance energy

products in calculating market share and supplier concentration metrics, but used only energy in

conducting the RSI and PSA.

4.2 STRUCTURAL ASPECTS

As explained in Section 2.5, this study examines the structural aspects of market power concerns

in the proposed WEIS Market through market share analysis, supplier concentration index, and

pivotal supplier analysis.73, 74 The structural aspects—both at the aggregate and at local market

72 See Sections 4.5.1 and 4.5.2. 73 As discussed earlier, in evaluating MBRA applications for horizontal market power, the Commission,

applies two indicative market power screens: pivotal supplier and (wholesale) market share analyses of

which both based on uncommitted, not total capacity. Uncommitted capacity is calculated as total

capacity minus the capacity dedicated to long-term sales contracts, operating reserves, planned outages,

and native load as measured by the appropriate native load* proxy. (See FERC Order 697 at 51). The MMU

was not able to obtain such data particularly for participant capacity dedicated to long-term contracts.

Therefore, to the extent such contracts exists, the estimated market share results may overstate the actual

market shares by not counting such capacity. On the same token, the MMU’s pivotal supplier analysis

represent conservative outcomes. (*Native load commitments are commitments to serve wholesale and

retail power customers on whose behalf the potential supplier, by statute, franchise, regulatory

requirement, or contract, has undertaken an obligation to construct and operate its system to meet their

reliable electricity needs.” Ibid., at 82). 74 In Order 697, the Commission declines to substitute the HHI for the market share indicative screen or to

supplement the indicative screens with the HHI “…because the indicative screens are sufficiently

conservative to identify those sellers that have a rebuttable presumption of market power, without having

to add an additional layer of review at the initial stage.” See FERC Order No. 697 at 42-43. However,





levels—are conditions that create potential for market power without regard to the actual

exercise of market power. It is necessary to assess these conditions in order to ensure that when

the market goes live, appropriate mitigation measures are in place. A structurally competitive

market will limit the potential for the exercise of market power through market participant offer

and bid behavior.75

In this section, market share and supplier concentration indicators are used to assess structural

competitiveness. Next, the residual supply index and the pivotal supplier analysis are used to

assess structural competitiveness utilizing transmission constraints and changing demand

conditions.76

4.3 THE MARKET SHARE ANALYSIS

4.3.1 Energy

Market share is a static indicator for potential market power and measures suppliers’ relative

position in total market supply. It provides important—nonetheless limited—information for

market power, as it does not account for the role of demand. For this analysis, the MMU

calculated the maximum market share (in energy output) held by any supplier within an hour in

the WEIS Market footprint by hour from 2017 through 2019. This calculation includes output of

when sellers fail two indicative screens, the Commission provides “…full opportunity to present evidence

(through the submission of a Delivered Price Test (DPT) analysis) demonstrating that, despite a screen

failure, they do not have market power, and the Commission will continue to weigh both available

economic capacity and economic capacity when analyzing market shares and Hirschman-Herfindahl [sic]

Indices (HHIs).” Ibid., at 8. The MMU uses the supplier concentration index (HHI) to illuminate the

potential for coordinated behavior among suppliers. 75 Mitigation measures addressing the actual exercise of local market power is provided in Tariff Filing,

Attachment B Market Power Mitigation Plan. Behavioral indicators used to detect actual exercise of local

market power include offer price markup (or price cost markup), economic withholding analysis,

uneconomic production, and physical withholding. 76 While the WEIS Market’s (only) product will be imbalance energy to be dispatched in 5-minute intervals,

and priced nodally by the locational marginal pricing (LMP) method, the market power analysis used

historical data sets for the footprint submitted by market participants to the MMU, which are for hourly

dispatched energy, and imbalance energy, pricing of which used administrative methods. Balancing

Authorities have been using the Commission approved rates or formulas for the pricing of the imbalance

energy within their respective footprints.





the same resources that have decided to participate directly in the WEIS Market in 201977 and

indicates pre-market conditions of the actual WEIS Market.

Figure 4-1 displays the largest supplier’s energy output by hour for 2017-2019.

Figure 4-1 Market share of largest supplier

The results show that the market share of the largest supplier of energy varied from 24 percent

to 54 percent, exceeding the 20 percent threshold78 in all (8,760) hours annually throughout the

2017 to 2019 period.79 The largest supplier of energy has an average market share of 35 percent

77 Excluding PPRs. 78 The 20 percent threshold is a benchmark used for identifying system-wide structural market power for

various industries, and generally used in pre-mergers analysis conducted by governmental agencies

including the Department of Justice. The Commission uses this benchmark as well particularly in

concluding market-based pricing applications. “The market share analysis adopts an initial threshold of

20 percent. …a seller who has less than a 20 percent market share in the relevant market for all seasons

will be considered to satisfy the market share analysis. A seller with a market share of 20 percent or more

in the relevant market for any season will have a rebuttable presumption of market power but can present

historical evidence to show that the seller satisfies our generation market power concerns.” FERC Order

697 at 23, It is however, not considered a sufficient or conclusive indicator for local market power

assessment in wholesale spot power markets primarily because such markets clear on a nodal basis, and

thus requires consideration of load pockets formed by transmission congestion. In the presence of such

constraints, even smaller than 20 percent market shares may lead to local market power. The same issue

is valid for the market wide supplier concentration values measured by the HHI index. 79 Market participants self-reported their output of jointly-owned units (JOUs), and the MMU verified the

data against public and private information on the ownership and operation of various JOUs throughout

the market footprint.





in the same period. Most recently in 2019, the market shares varied from 26 percent to 57

percent, averaging 37 percent for the largest supplier. The largest supplier’s market share is

significantly higher than the 20 percent benchmark throughout the period studied. The

seasonal data for 2019 show that while shoulder months typically reveal relatively lower levels of

market share, higher rates are prevalent throughout the rest of the year.

The high market shares reflect a general pattern that raises concerns for market implementation.

It is not solely determinative, though, and other indicators such as supplier concentration and

particularly the pivotal supplier analysis will aid in understanding market composition and

market power.


Data on imbalance energy was provided for the same period (2017-2019) but was only available

for the WACM BA. While more complete information would be preferred, the WACM BA

constitutes the overwhelming majority of market capacity, generation, and withdrawal, and can

be viewed as a reasonable proxy for whole-market concentration.

Figure 4-2 below shows the largest supplier’s imbalance energy output by day for 2017-2019.

Figure 4-2 Market share of largest supplier, daily





The figure above shows that, in terms of hourly imbalance energy supplied, the market share of

the largest supplier—which can vary from hour to hour—was between 22 percent and 100


4.4 THE HERFINDAHL-HIRSCHMAN INDEX (HHI) FOR

SUPPLIER CONCENTRATION

The Herfindahl-Hirschman Index (HHI) is another commonly used metric to measure structural

market power, analyzing overall supplier concentration in the market. High levels of supplier

concentration can indicate the possibility of coordinated actions among suppliers. It is a static

metric in the sense that it takes a snapshot of the market data without considering dynamic

supply and demand conditions in a relevant market. It is calculated as the sum of the squares of

the market shares of all suppliers in a market as follows:

𝐻𝐻𝐼 =∑(𝑀𝑊𝑖

∑ 𝑀𝑊𝑖𝑖∗ 100)

2

𝑖

According to FERC’s “Merger Policy Statement,”80 which is similar to the Department of Justice’s

merger guidelines, an HHI below 1,000 is an indication of an “unconcentrated” market, an HHI of

1,000 to 1,800 indicates a “moderately concentrated” market, and an HHI above 1,800 indicates

a “highly concentrated” market.

80 Inquiry Concerning the Commission’s Merger Policy Under the Federal Power Act: Policy Statement,

Order No. 592, Issued December 18, 1996 (Docket No. RM96-6-000).





4.4.1 Energy

The SPP MMU conducted the HHI analysis at the market participant level. Figure 4-3 and Figure

4-4 show the number of hours for each concentration category in terms of actual energy

output81,82 over the 2017 to 2019 period, respectively.83

The HHI in 2019 for installed capacity in the proposed WEIS market is 2,470.

Figure 4-3 Market concentration by energy output, 2017-2019

Concentration HHI

Level

2017 2018

2017

2019

Hours Percent of

hours Hours

Percent of

hours Hours

Percent of

hours

Unconcentrated Below

1,000 0 0% 0 0% 0 0%

Moderately

concentrated

1,000 to

1,800 0 0% 0 0% 0 0%

Highly

concentrated

Above

1,800 8,734 100% 8,751 100% 8,758 100%

Figure 4-4 shows a graphical breakdown of the HHI for all hours in 2017, 2018, and 2019.

81 The FERC merger guidelines uses capacity owned. However, considering the nature of the electric

power industry, and the purpose of this study—not being a merger analysis—the MMU analyzed supplier

concentration primarily in actual energy output terms. The MMU also calculated HHI in nameplate

capacity for 2019. 82 The SPP MMU calculated HHI by hourly generation. Some years may reflect hour counts that, when

totaled, do not constitute a full 8,760 hours. 37 hourly intervals (less than 0.15 percent) were excluded

from a total of 26,280 hours in the study period. 83 In this calculation, the MMU assumed that the participants and the resources they owned were the

same ones since 2017 when a decision was made to participate and form the WEIS Market in 2019. The

only exception, as noted earlier, is the assignment of the output of the Kimball Wind Farm to MEAN.





Figure 4-4 Market concentration by energy output, 2017-2019

As the chart indicates, the market footprint was “highly concentrated” in all hours for the entire

three-year period. Hourly minimum and maximum HHI values for the three-year period were

1,960 and 3,566, respectively with an average level of 2,580 and a standard deviation of 200.

The most recent year 2019 figures show similar pattern indicating minimum and maximum

values as 2,089 and 3,442, respectively.

High concentration results, when weighed in conjunction with elevated market shares, raise

substantial structural market power concerns prior to market implementation. These results

highlight the importance of the pivotal supplier analysis.

Figure 4-5 below depicts the distribution of hourly maximum share and HHI values for the

provision of in-market energy.





Figure 4-5 Hourly maximum share and HHI distribution, energy, 2017-2019

No intervals could be considered “unconcentrated” or “moderately concentrated,” although the

distribution of values is adjacent to the 20 percent and 1,800 thresholds for maximum share and

HHI, respectively. Additionally, the maximum share values and HHI values are tightly

concentrated in ranges slightly outside of the threshold, but do not meaningfully extend more

than halfway to the extreme in either axis. The shape and slope of the distribution provide

confidence that the underlying calculations are performing as expected.


The following figures depict the same metrics as above, but are calculated for imbalance energy.

Figure 4-6 Daily market concentration, imbalance energy, 2017-2019





Figure 4-6 depicts daily HHI values for the provision of imbalance energy. As can be seen, very

few—if any—intervals can be considered not “highly concentrated.”

HHI values in output varied between 1,742 and 10,000 from 2017 to 2019, with all but two hours

considered highly concentrated in the three-year period. In 2019, the average HHI value for

energy imbalance supply was approximately 4,854 with a standard deviation of approximately

1,753.

It is important to note that the set of possible “suppliers” is exceptionally limited in this analysis,

as it is first restricted to in-market entities, and then to those entities that are net suppliers

within an interval. Because the MMU cannot retroactively infer the latent supply of imbalance

energy, this ex-post analysis will necessarily demonstrate higher levels of concentration than

would be seen in an ex-ante analysis of market offers in a competitive environment.

Nonetheless, the results demonstrate high levels of market concentration.





Figure 4-7 Market concentration by imbalance output, 2017-2019

Concentration HHI

Level

2017 2018

2017

2019

Hours Percent of

hours Hours

Percent of

hours Hours

Percent of

hours

Unconcentrated Below

1,000 0 0% 0 0% 0 0%

Moderately

concentrated

1,000 to

1,800 0 0% 1 0.01% 1 0.01%

Highly concentrated Above

1,800 8,710 100% 8,716 100% 8,753 100%

Figure 4-8 Hourly maximum share and HHI distribution, imbalance, 2017-2019

Figure 4-8, like Figure 4-5, plots pairs of HHI and maximum share values for each hour in the

three-year study period and depicts a structurally concentrated market.

While the figure does point to high levels of market concentration, it most likely overstates the

level of concentration for the reasons provided in the analysis of Figure 4-6—namely that the set

of suppliers is limited within an interval, and that the data represents ex-post analysis of output

data, as opposed to ex-ante analysis of offered supply, which would provide a more accurate

sense of the quantity of latent and offerable imbalance energy. Given that the imbalance energy

quantities are not known until they are settled, the energy concentration metrics may more

closely resemble the levels of actionable market power.





4.5 PIVOTAL SUPPLIER ANALYSIS

PSA and RSI are two closely related metrics that measure structural competiveness in power

markets. PSA, or pivotal supplier analysis, removes the capacity of a supplier from the total

available supply to assess if demand can be met without that supply. If not, this supplier is

considered pivotal. Thus, PSA is a binary metric. PSA can also be run for two or three suppliers.

The RSI, on the other hand, is the ratio of residual supply (or total supply minus supply of ith

supplier) to demand, hence it measures pivotal status in a continuous scale.84 RSI can also be

calculated by removing two or three suppliers, and the RSI value less than 1.0 indicates an

uncompetitive structure.85

We will present our PSA results in the form of pivotal supplier frequency charts, and RSI results

in the form of duration curves. PSA results display frequency with which at least one supplier

was pivotal in the relevant geographic market in a timeframe. The frequency with which a

supplier is pivotal indicates a potential to raise prices above competitive levels. Higher demand

levels have a greater potential to exercise market power by suppliers that are frequently pivotal.

Hence, the MMU analyzed pivotal supply frequency at different levels of demand in the market.

The RSI results sorts hourly RSI values from the highest to the lowest to show hours of duration

for uncompetitive conditions within a year.

4.5.1 Residual supply index

For the reasons discussed in Section 4.1, the MMU used the energy data for RSI and PSA

analyses. Even though imbalance energy is theoretically the relevant product for the proposed

WEIS Market, energy has a determinative role in energy imbalance outcome, as the imbalance

84 A supplier may exercise market power when it is nearly, but not actually pivotal based on the pivotal

supplier test. RSI, being a continuous measure, addresses that criticism. See Newbery, David., Richard

Green, Karsten Neuhoff, and Paul Twomey. November 2004. A Review of the Monitoring of Market Power

The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems, report

prepared at the request of European Electricity Transmission System Operators, at 27. 85 In principle, RSIi = (Total supply – Supply by resourcei ) / Total demand, where total supply is total

available supply in the market including net imports and supply by resource i is resource capacity minus

contract obligations. In calculations, supply by resourcei was taken as total observed output by

participant i. Adjustments for net imports or contract obligations were not made.





energy amounts are observed subsequent to (real-time) actual energy flows, and during the

settlements process.

RSI duration curves are calculated to analyze system-level market power. Figure 4-9 depicts RSI

duration curves for each year in the study period under four scenarios: one with the base data,

and three further sets of curves with the first (N-1), second (N-2), and third (N-3) largest supplier

within each interval removed.

Figure 4-9 Residual Supply Index, 2017-2019

As is shown, when the largest supplier is removed (N-1), the remaining generation may be

unable to meet demand in nearly 50 percent of intervals. When the second (N-2) and third (N-





3) suppliers are removed, generation falls short of demand in all but a handful of hours over the

three-year period. This further confirms significant system-level market power. However, unlike

the market share or HHI analysis, the RSI analysis shows that with the largest supplier removed,

the remaining generation can still meet demand about 50 percent of the time. This can provide

a basis for successful mitigation of system-level market power.

4.5.2 Pivotal supplier analysis

In addition to evaluating the RSI based on prospective participants’ submitted historical data,

the MMU conducted a more granular examination of structural market power in the proposed

market in the form of a PSA. The purpose of the PSA is to introduce a topological dimension to

the assessment of market power. The results of the PSA determine the frequency with which the

largest supplier could become “pivotal” to the market (i.e., without a supplier’s generation within

a certain, constrained area, the market would not be able to meet demand with the remaining

competitive dispatchable supply).

As with the RSI calculations, the MMU used information on the provision and demand for

energy for the reasons outlined in Section 4.1 of this report. Unlike the RSI metrics, however,

the PSA used real-time data collected and provided by the SPP Western Reliability Coordinator

(RC-West).86,87 As noted above, the RC-West data is more granular and topologically-informed,

which is necessary in evaluating congestion characteristics and constrained areas for pivotality.

Examination of the data generally supports the interpretation that the network is presently

operated in a manner that produces relatively little congestion, compared with both prior MMU

experiences analyzing the SPP RTO network and the thresholds and metrics conventionally

employed by the MMU to characterize transmission congestion. Conversations with SPP

reliability and operations personnel indicate that this is in fact a prevailing characteristic of the

86 The data provided by RC-West was referenced against the market participant-submitted data, and

examination of overlapping intervals reveals consistent accuracy with what prospective participants self-

reported as their historic injections and withdrawals. 87 RC-West did not commence reliability coordinator functions until early October of 2019. As such, the

data collected spans a continuous period of approximately 270 days—nearly 6,500 hours—from early

October 2019 to late June 2020. While the data collected does not cover the full summer peak, it does

capture the other “twin peak” of winter demand, and inferences may be extended to the summer peak

based on the pivotal frequencies observed in high-demand intervals in the available data.





BAs under consideration, at least as they exist in a pre-market, pre-centralized-dispatch state.

Accordingly, some interpretive caution is warranted, as the transmission network will operate

differently under central dispatch.

Due to the relative sparsity of observed congestion, both within and between BAs, the MMU

considered both BAs—WACM and WAUW—as a single constrained area encompassing the

entire market footprint for the purpose of the PSA. As a result, the study is essentially a test of

system-wide pivotality. Again, it is important to note that pre-market behavior and congestion

patterns will change with market implementation, and the MMU is committed and obligated to

continual re-assessment of the market footprint in order to identify substantial changes in

congestion patterns. Absent further market entry or an increase in the resource portfolios of

smaller market participants, however, it is anticipated that any sub-regions identified within the

market will demonstrate similar or higher rates of pivotality.

This analysis was not intended to establish the Frequently Constrained Areas (FCAs) that the

MMU has a distinct obligation to identify under the proposed WEIS tariff. The MMU will


implementation, and increased understanding of the region—coupled with changing dispatch

patterns—may warrant a revision of the MMU’s outlook on network congestion.

Methodology

In conducting the PSA, the MMU pursued three major methodologies: a “generation only”

method, a “DC ties” method, and a “schedule cut” method. Within each major methodology, the

analysis was conducted with two subsets of assumptions concerning the ability of hydroelectric

resources, due to the high penetration of hydroelectric generation in the market. Three major

methodologies, each with two different assumptions, provides for a total of six scenarios.

In the “generation only” method, only online, dispatchable capacity possessed by prospective

market participants88 was considered in attempting to balance the loss of the largest

88 PPRs, wind resources, and resources generating zero MW or otherwise offline were not considered as

online dispatchable capacity. PPRs are not subject to economic dispatch, as they are not members of the

proposed WEIS. Wind resources, even if dispatchable, are assumed to be operating at full output within

each interval, and as such do not provide any additional upwards capacity to meet the loss of the largest





participant’s supply. In the “DC ties” method, observed latent import capacity at the two DC ties

located in Sidney and Stegall Nebraska was added to the pool of remaining competitive supply.

Figure 4-10 below depicts the amount of import capacity available at each tie during the

observed period.89

Figure 4-10 Available import capacity

Finally, the “schedule cut” method employed an aggressive set of assumptions that the market

could both curtail the export of power to adjacent areas, and begin importing at or near the

historically observed maximum hourly import value.

As noted above, across all three methods, after removing the supply and capacity of the largest

participant, the MMU employed two different assumptions about the capability of hydroelectric

resources to meet market demand.

supplier. Finally, resources outputting zero MW, or resources with open breakers during an interval, were

considered offline. 89 While the PSA observation period covered nearly 6,500 hours, approximately 11 percent of sub-hourly

intervals were excluded from the DC Tie analysis when RC-West data indicated that the tie was not

operational or the individual measurement may be suspect. Analysis of outage data indicates that the

Stegall tie was out of service frequently throughout the period. Those intervals were included in the

analysis, but at zero MW of assumed import capacity. Notably, market participants Basin and Tri-State

have publicly committed to refurbish the Stegall tie, with an anticipated completion in 2022. See

https://www.basinelectric.com/news-center/news-briefs/basin-electric-board-votes-refurbish-stegall-dc-

tie

https://www.basinelectric.com/news-center/news-briefs/basin-electric-board-votes-refurbish-stegall-dc-tie

https://www.basinelectric.com/news-center/news-briefs/basin-electric-board-votes-refurbish-stegall-dc-tie





The first assumption modelled hydroelectric generating resources as capable of providing up to

the maximum of their presently observed value, or the maximum output of the resource

observed within an interval in the two weeks preceding the interval of interest. This method was

developed to reflect the unique dynamics of hydroelectric generation, the output of which can

be seasonally bounded over time, but still capable of providing large amounts of power if

necessary within a single interval. While these resources obviously cannot run at maximum

output indefinitely, the study is explicitly designed to observe single-interval capacity. A total

and prolonged withdrawal of the largest supplier, with demand levels remaining constant, is an

equally unlikely assumption90 as a hydroelectric generator running at full nameplate capacity for

the entire year.

The second assumption is based on literature concerning the Effective Load Carrying Capacity

(ELCC) of different resource technologies in the Pacific Northwest.91 ELCC is an accreditation

mechanism for variable energy resources (VERs) that attempts to account for the non-coincident

profiles of electrical demand and VER output, as well as the decreasing marginal returns to

system capacity as more VERs are added at network locations with non-coincident generation

profiles. The literature provided an ELCC accreditation factor of 0.53 for hydroelectric resources.

Latent hydroelectric generation capacity was thus determined as the greater of either the

presently observed output or the nameplate capacity, de-rated by the ELCC accreditation

factor.92 Figure 4-11 below depicts the ten largest hydroelectric resources’ output divided by

nameplate capacity (utilization factor) within each interval, with a horizontal line drawn at the

0.53 accreditation factor, and a vertical line drawn at the median observed interval.

90 In many intervals the largest supplier of energy was also a net purchaser, which removes the incentive

to manipulate prices higher. Additionally, 100 percent of market participants are not-for-profit entities,

and remain subject to the supply adequacy obligations outlined in the tariff, and the load obligations of

their customers. 91 See Resource Adequacy in the Pacific Northwest, Energy Environmental Economics, March 2019 at

https://www.ethree.com/wp-content/uploads/2019/03/E3_Resource_Adequacy_in_the_Pacific-

Northwest_March_2019.pdf 92 This effectively establishes a “floor” of 0.53 of nameplate capacity while still allowing observations

greater than 0.53 * Nameplate. As such, the imputed data under this assumption results in a higher

capacity factor than 0.53, but as discussed above, this analysis is focused on the ability of the market to

meet short-term withdrawals of generation and capacity.

https://www.ethree.com/wp-content/uploads/2019/03/E3_Resource_Adequacy_in_the_Pacific-Northwest_March_2019.pdf

https://www.ethree.com/wp-content/uploads/2019/03/E3_Resource_Adequacy_in_the_Pacific-Northwest_March_2019.pdf





Figure 4-11 Hydroelectric utilization factors

Results

With the exception of the last two scenarios (“schedule cut” method scenarios), all scenarios

demonstrated that a pivotal supplier was present in almost every interval. Figure 4-12 below

depicts the frequency with which at least one supplier was pivotal in each scenario’s intervals, by

demand level. High-demand intervals provide generators a greater ability to exercise market

power.

The last two scenarios—the “schedule cut” scenarios—employed the most aggressive

assumptions (assumptions that may not hold in operational reality), but still saw approximately

40 percent of peak demand intervals possess a pivotal supplier.





Figure 4-12 Pivotal intervals by demand level and scenario

Plotted against a continuous demand axis in Figure 4-13 below, it is clear that most of the

scenarios rapidly approach 100 percent pivotality, even at relatively low levels of demand.

Figure 4-13 Percentage of pivotal hours at each demand percentile

While the first assumption regarding hydroelectric resources (maximum of last fourteen days)

consistently demonstrated less pivotal intervals, the difference is minor relative to the high levels

of pivotality in the first four scenarios, and minor relative to the difference between the first four

scenarios and the last two (the “schedule cut” method scenarios).





The results are consistent with high levels of structural market power—even in the absence of

transmission congestion—in a concentrated market, and are consistent with the results of other

inquiries (market share, HHI, and RSI), each of which similarly point to a concentrated market.





5 BARRIERS TO ENTRY AND EXIT

Consistent with the MBRA approval process, and in addition to evaluating horizontal market

power,93 the Commission also evaluates whether a seller has vertical market power.94 In the

context of vertical market power, and particularly transmission market power, the Commission

deems having Open Access Transmission Tariff (OATT) on file sufficient to mitigate a seller’s

transmission market power.95 With respect to other barriers to entry, the Commission considers

a seller’s ability to erect other barriers to entry, including inputs to electric power production,96

as part of the vertical market power analysis.97

From the vertical market power perspective, structural competitiveness can be impacted by

erecting barriers to entry through control over the transmission system, control of fuel supplies,

93 Through market share and pivotal supplier screens. 94 In Order No. 697, the Commission consolidated the transmission market power analysis and other

barriers to entry analysis into one vertical market power analysis. See FERC Order No. 697 at 228. 95 See Order No. 697 at 11 and 233. This refers to the minimum terms and conditions in pro forma OATT

adopted by the Commission in Order No. 888—later revised in Order 890 in addressing and remedying

issues for undue discrimination under the pro forma OATT adopted in Order No. 888. Alternatively, sellers

may satisfy the requirements by receiving Commission waiver of the OATT requirement, or satisfying the

requirements for a blanket waiver (See https://www.ferc.gov/industries-data/electric/power-sales-and-

markets/electric-market-based-rates). 96 The Commission defined two categories of input to electric power production: “…one consisting of

natural gas supply, interstate natural gas transportation (which includes interstate natural gas storage), oil

supply, and oil transportation, and another consisting of intrastate natural gas transportation, intrastate

natural gas storage or distribution facilities; sites for generation capacity development; and sources of

coal supplies and the transportation of coal supplies such as barges and rail cars.” FERC Order No. 697 at

252. 97 Ibid., at 11. For the first category input to electric power production stated above, “…the Commission

will not require a description or affirmative statement with regard to ownership or control of, or affiliation

with an entity that owns or controls, natural gas and oil supply, including interstate [emphasis added]

natural gas transportation and oil transportation. Ibid., at 252. For the second category however, the

Commission’s rebuttable presumption provides that “…ownership or control of, or affiliation with an entity

that owns or controls, intrastate [emphasis added] natural gas transportation, intrastate natural gas

storage or distribution facilities; sites for generation capacity development; and sources of coal supplies

and the transportation of coal supplies such as barges and rail cars do not allow a seller to raise entry

barriers, but intervenors are allowed to demonstrate otherwise.” Ibid., 254-255. In addition, the

Commission requires a seller to provide a description of its ownership or control of, or affiliation with an

entity that owns or controls such assets; sellers to make an affirmative statement that they have not

erected barriers to entry into the relevant market and will not erect barriers to entry into the relevant

market. Ibid., at 255. Finally, the Commission rules that this obligation applies both to the seller and its

affiliates, but is limited to the geographic market(s) in which the seller is located. Ibid.







essential facilities, or inputs. In an RTO/ISO market, the transmission owners agree to relinquish

control of their transmission assets to the RTO/ISO to ensure generation entities’ open access to

transmission assets via an RTO/ISO OATT. In an MBRA process, the Commission approved OATT

satisfies the vertical market power concerns associated with control of transmission.


Dispatch Agreement (WJDA) with SPP, and all entities own transmission assets in the footprint.98

While the WJDA does not amount to a requisite OATT, it is not clear if the individual

participant’s OATTs on file with the Commission satisfy the minimum terms and conditions of

FERC Orders Nos. 888 and 890 with regard to the vertical market power concerns. A resolution

of this point is ultimately for the Commission to determine.

In terms of ownership or control of inputs to electric power production, areas such as intrastate

natural gas transportation, storage or distribution facilities, sites for generation capacity

development, coal supplies and the transportation of coal supplies were considered by the

MMU. The region’s relatively small amount of large-scale in-market gas generation99 is not

located on major gas pipelines controlled or affiliated with the gas plant owners, to the MMU’s

knowledge. Therefore, the MMU does not anticipate that intrastate natural gas infrastructure

facilities will be used to restrict entry.

Much of the market’s coal supply, however, is provided by the Western Fuels Association (WFA),

a cooperative which counts the coal-fired market participants as members.100 WFA holds itself

out as a not-for-profit fuel supply cooperative, and it owns and operates the Dry Fork Mine,

which itself feeds the Dry Fork Generating Station via a one-mile conveyor belt,101 as well as

supplying the large Laramie River Station.102 The MMU does not anticipate that market

participants could collectively exercise their role as WFA members to the detriment of the rest of

98 WJDA defines the Joint Dispatch Transmission Service (JDTS) (to be) provided by transmission service

providers in real-time on an intra-hour, non-firm, as available basis. See Section 2.1 for more on this. 99 In 2019, natural gas resources had 5 percent and less than half a percent share in nameplate capacity

and generation output, respectively. 100 Basin, Tri-state, and the Wyoming Municipal Power Agency represent three out of the 20 members. See

https://www.westernfuels.org/who-we-are/current-members for more information. 101 See https://www.basinelectric.com/Facilities/Dry-Fork 102 See https://www.westernfuels.org/member-services/mining-operations

https://www.westernfuels.org/who-we-are/current-members

https://www.basinelectric.com/Facilities/Dry-Fork

https://www.westernfuels.org/member-services/mining-operations





the region. Specifically, this would be challenging given the composition of the WFA as well as

rail access to alternative sources of coal, particularly in this region. Annually, less than two

percent of coal mined in the Powder River Basin is mined by the WFA.

Regarding hydroelectric generation, there is a non-insignificant number of privately owned and

operated facilities within the market footprint, although few, if any, are registered under direct

participants, and none match the scale of the federally-owned and operated dams that

dominate the market portfolio. Given the multifunctional use of water storage and

management projects in the West, and given the complexity, scale, cost, and overlapping

jurisdictions governing large hydroelectric generation, with the exception of the unique

challenges posed by construction of new large-scale hydroelectric generation, it is not

anticipated that the control of hydro resources will restrict entry.

Additionally, although it is not explicitly stated by the Commission, the balancing function can

also be interpreted as one essential input in the production of relevant product(s) in this market.

Because balancing of energy will continue to be done by the two WAPA BA entities,103 WAPA

market participants, also functioning as BAs, could create a potential for preferential treatment.

This aspect of vertical market power may be taken in the context of OATT issue discussed above.

The MMU intends to monitor for this type of behavior and report any suspected abuses to the

Commission.

One point of discussion could be the exit fee proposed by the WEIS Market tariff that requires

reimbursement of startup and administrative fees by exiting participants should they decide to

leave the market. While this may seem as a deterrent serving as an entry barrier, CAISO EIM

requires such payments upfront in the beginning of participation. Therefore, such payments

regardless of their forms—either upfront or in case of exit—should essentially amount to equal

effect in terms of constituting a barrier to exit, and thus interpretation. The MMU does not

consider the exit fee in the proposed WEIS Market design as a significant barrier to exit.

103 The SPP Regional Coordinator only intervenes if congestion issues arise.





6 FINDINGS AND PROPOSED MITIGATION

MEASURES

The MMU analyzed structural competitiveness for both energy and imbalance energy products

in the WEIS Market. Based on the calculated metrics using the most recent three years’ market

footprint data from 2017 to 2019, the MMU concludes that the WEIS Market represents

significant system-level structural market power issues for both products prior to actual market

implementation. The market share, the supplier concentration, residual supply index and pivotal

supplier analysis metrics all indicate high potential structural market power in the WEIS Market

such that:

Market share

For energy, from 2017 to 2019 the market share of the largest supplier—in terms of

hourly energy output—varied from nearly 24 percent to 54 percent, exceeding the

generally accepted 20 percent threshold in all of the (8,760) hours. Most recently in

2019, this trend was similar varying from 24 percent to 52 percent. The seasonal data for

2019 show that while shoulder months relatively lower—but still high—levels of market

share, much higher rates are prevalent throughout the rest of the year.

For imbalance energy, in terms of hourly imbalance energy supplied, the market share of

the largest supplier—that varies from hour to hour—was between 22 percent and 100


The market share analysis shows the largest supplier’s market share for both products is

significantly higher than the 20 percent benchmark throughout the entire period studied.

The high market shares reflect a general pattern that raises concerns prior to

implementation of the WEIS Market where it can create opportunities for the exercise of

market power.





Supplier concentration

For energy, the HHI supplier concentration analysis—in terms of both nameplate capacity

and hourly energy output—shows that the WEIS Market footprint was highly

concentrated in all intervals from 2017 to 2019. The hourly minimum and maximum HHI

values were 1,960 and 3,566, respectively, with an average level of 2,580, well above the

1,800 benchmark accepted for a highly concentrated market. The most recent year 2019

figures show similar pattern indicating minimum and maximum values as 2,089 and

3,442, respectively. The nameplate HHI in 2019 for installed capacity in the proposed

WEIS market is 2,470.

For imbalance energy, the HHI varied between 1,742 and 10,000 from 2017 to 2019, with

all but two hours considered highly concentrated in the three-year period. In 2019, the

average HHI for energy imbalance supply was approximately 4,854 with a standard

deviation of approximately 1,753.

For energy and imbalance energy products, the market share and the HHI metrics both

point to high levels of structural market power. Accordingly, the assessment of structural

market power by pivotal supplier analysis (PSA) gains increased importance.

Pivotal Supplier Analysis

PSA and residual supply index (RSI) are closely related metrics that measure structural

competitiveness either at the system or at the local market level.

For the reasons explained in the study, the MMU used the energy data for RSI and PSA.

The results of one, two and three firm RSI analyses at the system—WEIS Market—level

point to high levels of pivotal status by large suppliers that raise significant concern for

structural competitiveness. The RSI duration curves indicate that the absence of just one

supplier may leave the system unable to meet demand in nearly 50 percent of intervals.

When the second and third largest suppliers are removed, generation falls short of

demand in all but a handful of hours over the three-year period. This further confirms

significant system-level market power.

In conducting the PSA, the MMU pursued three major methodologies: a “generation

only” method, a “DC ties” method, and a “schedule cut” method. Within each major





methodology, the analysis was conducted with two subsets of assumptions concerning

the ability of hydroelectric resources, due to the high penetration of hydroelectric

generation in the market. Three major methodologies, each with two different

assumptions, provides for a total of six scenarios.

o With the exception of the last two scenarios (“schedule cut” method scenarios),

all scenarios demonstrated that a pivotal supplier was present in almost every

interval. The last two scenarios—the “schedule cut” scenarios—employed the

most aggressive assumptions (assumptions that may not hold in operational

reality), but still saw up to 40 percent of peak demand intervals possess a pivotal

supplier

o High-demand intervals provide generators a greater ability to exercise market

power. Most of the scenarios rapidly approach 100 percent pivotality, even at

relatively low levels of demand.

The results are consistent with high levels of structural market power—even in the

absence of transmission congestion—in a concentrated market, and are consistent with

the results of other inquiries (market share, HHI, and RSI), each of which similarly point to

a concentrated market.

Given the unavailability of market-based data in the footprint prior to WEIS Market

implementation, identification of Frequently Constrained Areas (FCAs) was not

considered as part of the scope of this study. Therefore, the MMU has not evaluated if

designating FCAs is warranted to supplement the automatic market power mitigation

measures prescribed by the proposed WEIS tariff. However, going forward the MMU will


implementation, as required under the proposed WEIS tariff, and increased

understanding of the region—coupled with changing dispatch patterns—may warrant a

revision of the MMU’s outlook on network congestion.

Barriers to entry

From the vertical market power perspective, structural competitiveness can be impacted

by erecting barriers to entry through control over transmission system and control of

fuel supplies, essential facilities or inputs. In an MBRA process, in addition to evaluating





horizontal market power, the Commission also evaluates whether a seller has vertical

market power. In the context of vertical market power, and particularly transmission

market power, the Commission deems having OATT on file sufficient to mitigate a

seller’s transmission market power.


Dispatch Agreement with SPP, and all of them own transmission assets in the footprint.

While the WJDA does not amount to a requisite OATT, it is not clear if the individual

participant’s OATTs on file with the Commission satisfy the minimum terms and

conditions of the FERC Orders Nos. 888 and 890 with regard to the vertical market power

concerns. A resolution of this point is ultimately for the Commission to determine.

In terms of ownership or control of inputs to electric power production, areas such as

intrastate natural gas transportation, storage or distribution facilities, sites for generation

capacity development, coal supplies and the transportation of coal supplies were

considered by the MMU.

o Because of the region’s relatively small amount of large-scale in-market gas

generation that is not located on major gas pipelines controlled or affiliated with

the gas plant owners, the MMU does not anticipate that intrastate natural gas

infrastructure facilities will be used to restrict entry.

o Although, much of the region’s coal supply is provided by a not-for-profit fuel

supply cooperative, the Western Fuels Association (WFA), the MMU does not

anticipate that market participants could collectively exercise their role as WFA

members to the detriment of the rest of the region. Specifically, this would be

challenging given the make-up of the WFA as well as access to alternative

sources of coal, particularly in this region.

o Regarding hydroelectric generation, given the multifunctional use of water

storage and management projects in the West, and given the complexity, scale,

cost, and overlapping jurisdictions governing large hydroelectric generation, with

the exception of the unique challenges posed by construction of new large-scale





hydroelectric generation, it is not anticipated that the control of hydro resources

will restrict entry.

Although not explicitly stated by the Commission, the balancing function can also be

interpreted as one essential input in the production of relevant product(s) in this market.

Because balancing of energy will continue to be done by the two WAPA BA entities,

WAPA market participants, also functioning as BAs, could create a potential for

preferential treatment of scheduling. This aspect of vertical market power may be taken

in the context of OATT issue as well. The MMU intends to monitor for this type of

behavior and report any suspected abuses to the Commission.

One point of discussion could be the exit fee proposed by the WEIS Market tariff that

requires reimbursement of startup and administrative fees by exiting participants should

they decide to leave the market. While this may seem as a deterrent serving as an entry

barrier, CAISO EIM requires such payments upfront in the beginning of participation.

Therefore, such payments regardless of their forms—either upfront or in case of exit—

should essentially amount to equal effect in terms of constituting a barrier to exit, and

thus interpretation. The MMU does not consider the exit fee in the proposed WEIS

Market design as a significant barrier to exit.

MMU Recommendations

Structural market power can be assessed both at the system and at local markets levels.

Given the results summarized above, the MMU has substantial concerns with structural

market power in the WEIS Market, particularly at the system level. Therefore, the MMU

recommends that SPP and the WEIS Market participants consider the following:

o Develop a system-wide mitigation measure. Unlike the market share or HHI

analysis, the RSI analysis shows that even with the largest supplier removed,

generation can still meet demand about 50 percent of the time. This result can

provide a basis for implementing mitigation measures for system-wide market

power, similar to those implemented in other markets, including, for example, the

mechanism used by ISO-New England (ISO-NE). ISO-NE uses a system-wide





pivotal supplier test that identifies system market power.104 This approach is

likely to be instructive in developing a similar mechanism for the proposed WEIS

Market and can act as a blue print for the WEIS Market.

o Use cost based offers if a system market power mitigation measure cannot be

implemented for go live. In the event that structural mitigation measures cannot

be implemented before market go live, the MMU recommends that WEIS Market

participants offer in cost-based offers until such time that the structural market

power approach can be implemented.

The MMU believes that the mitigation measures in the proposed tariff and in the response to

the Commission’s deficiency letter105 will provide sufficient protections for participant conduct to

exercise of market power with implementation of system wide mitigation measure(s) as

recommended in this study.

104 See related parts of Section III (known as Market Rule 1), Appendix A “Market Monitoring, Reporting

and Market Power Mitigation” of ISO New England Inc. Transmission, Markets, and Services Tariff, including

Sections III.A.5.2. Structural Tests and III.A.5.5. Mitigation Type (available at https://www.iso-ne.com/static-

assets/documents/regulatory/tariff/sect_3/mr1_append_a.pdf). Section III.A.5.2 explains that there are two

structural tests with respective mitigation thresholds applicable to a supply offer. The first one determines

if a supplier is pivotal according to a system wide pivotal supplier test, and mitigation thresholds for

“General Threshold Energy Mitigation” and “General Threshold Commitment Mitigation” apply. (A Market

Participant whose aggregate energy supply offers exceed the supply margin in the real-time energy

market is deemed a pivotal supplier. The supply margin for an interval is the total energy supply offers

from available resources minus total system load). The second one determines if a Resource is in a

constrained area according to a constrained area test, and mitigation thresholds for “Constrained Area

Energy Mitigation” and “Constrained Area Commitment Mitigation” apply. 105 See Deficiency Letter issued on April 20, 2020, (Docket Nos. ER20-1059-000 ER20-1060-000).

https://www.iso-ne.com/participate/rules-procedures/tariff





7 CONCLUDING REMARKS

Currently, while the existing pricing of energy and imbalance energy is set administratively

through regulatory or federal/municipal pricing methods in the WEIS footprint, under the WEIS

Market design, pricing of imbalance energy will be (spot) market based. Hence, the proposed

WEIS Market represents an improvement over the existing market structure via optimized

dispatch of imbalance energy for production cost savings. Furthermore, more open and

transparent price formation will send signals that promote reliability and long-term investment

both in generation and transmission assets. Having said that, the MMU analysis concludes that

the WEIS Market represents significant structural market power issues at the system level for

both energy and imbalance energy prior to actual market implementation. The market share, the

supplier concentration, residual supply index, and pivotal supplier analysis all indicate high

potential for structural market power in the WEIS Market.

Two of the structural market power metrics—market share and concentration indices—initially

used in the study point to market power concerns. The residual supply index and pivotal

supplier analysis that were conducted subsequently reinforce and confirm these concerns.

Therefore, high market concentration and market share levels combined with observed high

pivotal supplier duration and high pivotal supplier frequency at the at the system level raise

substantial competitive concerns. These competitive concerns must be addressed by instituting

appropriate mitigation measures that address system-wide structural market power issues as

implemented in other markets, including by ISO-New England.

The MMU believes that the mitigation measures in the proposed tariff and in the response to

the Commission’s deficiency letter will provide sufficient protections for participant conduct to

exercise of market power with implementation of system wide mitigation measure(s) as

recommended in this study.

SPP WEIS Revision Request Form

WRR Title: Pivotal Supplier Mitigation Date: 8/17/2020


WRR #: 5

Impact Analysis Required? No Yes | If no, but system or process changes are needed please explain why an Impact Assessment will not be performed: No IA is needed, because SPP is currently still in the development phase of the WEIS Market and this will be included in development. System Changes No Yes | If yes, summarize expected changes: MCE and possibly MDB would require changes to evaluate structural market power Process Changes? No Yes | If yes, summarize expected changes: Changes to MMU Processes


Name: Daniel Harless Company: Southwest Power Pool



Agreement

Any staff member of a governmental authority having jurisdiction over the SPP Western Market Services or any WEIS Market Participant



Any WEIS Market Participant

SPP Western Transmission Customers or other entities that are parties to transactions under the SPP WEIS Tariff;

SPP Market Monitor

SPP Staff


Reason for Expedited/Urgent Resolution: This WRR requires expedited timing for the approval of the WMWG and WMEC to ensure development and testing is completed prior to the WEIS Market implementation. Expedited timing would also ensure filing the Tariff with FERC in a timely manner.



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New Methodologies impacting SPP Western Markets (i.e, new language to accommodate new functionality or rules not existing today)





Yes No




Financial: The market mitigation design included in the WEIS Tariff was designed to protect against a Market Participant being able to exert local market powerBased on the results of the SPP MMU’s Market Power Study for the WEIS, it was determined there is the potential for a single resource supplier in the WEIS Market to exert structural market power and influence LMPs through their economic energy offers. This WRR will enhance the WEIS Market’s mitigation design to protect against this potential structural market power while maintaining the existing design that protects against local market power. This market design enhancement will limit the ability of Market Participants to exert structural market power by checking whether each MP is considered a “pivotal supplier” by enhancing the Structure Test. SPP WEIS Revision Request Documents Requiring Revisions: Please select your primary intended document(s) as well as all others known that could be impacted by the requested modification request

WEIS Market Protocols Section(s): 7.2.2.1, 7.2.2.2, 7.2.2.3, 7.2.2.4, 7.2.2.6, 7.2.5.1 Document Version: v1a

WEIS Tariff Section(s): Attachment B - 3.1, 3.2, 3.5 Attachment C - 4.6.2.1.2

Document Version:

WEIS Revision Request Process Section(s): Document Version: [NAME OF DOCUMENT] Section(s): Document Version:


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Based on the results of the SPP MMU’s Market Power Study for the WEIS, it was determined that there is the potential for a single resource supplier to possess structural market power at the system level and to potentially exert that structural market power to influence the LMPs through their Energy Offer Curve with or without the existence of local market power that is adressed in the WEIS market design.

This WRR expands the local market power test to include an assessment of structural market power at the system level and mitigates the Energy offers appropriately when a Resource has system level structural market power and has an Energy Offer Curve that exceeds the conduct test threshold and the impact test has failed for that market interval.

Also, in the Commission’s deficiency letter, question 3 asked SPP to explain why the use of the market power mitigation thresholds used in the SPP Integrated Marketplace are appropriate for use in the WEIS Market and to discuss the factors and rationale for use of the the thresholds. For the $25/MWh threshold below which an Energy Offer Curve will not be subject to mitigation measures for economic withholding, the $25/MWh should represent the appropriate value to reflect expected variation in prices. However, due to the lack of historical information for the WEIS Market, the Market Monitor proposed to phase in the thresholds by initially setting the threshold at $5/MWh and increasing that threshold by $10/MWh every six months until the $25/MWh threshold is reached. Phasing in the threshold would allow the Market Monitor to evaluate each threshold and make recommendations as needed to address any inefficiencies identified. In addition, the Market Monitor recommends to phase in the impact threshold of $25/MWh for those same reasons noted above. The recommended threshold would be $5/MWh, increasing by $10/MWh every six months until the $25/MWh threshold is met.

In Paragraph 66 of the WEIS Order, the Commission found that SPP had not provided justification for its proposal to automatically increase the threshold below which energy offer curves are not subject to mitigation and the LMP impact threshold. SPP and the MMU have determined, for purposes of the WEIS refiling, to remove the language regarding the automatic increase in the threshold level. After the WEIS Market is implemented, the MMU will evaluate the level of the threshold and when a change is required, SPP will make a filing with FERC to change the level with the justification provided by the MMU.


This WRR will protect the WEIS Market from scenarios where a single resource supplier holds system-level structural market power and attempts to unduly influence LMPs.

For changes addressing the Commissions deficiency letter, with the removal of the language for the automatic increase, the language in the Tariff regarding the level of the threshold should satisfy the findings in Paragraph 66 of the WEIS Order.


In the appropriate sections below, please provide the language from the document(s) for which you are requesting modification(s), with all edits redlined using Track Changes on from the Review tab above. These instructions can be applied to any WRR Process Document:

1. Open the forward looking version of the WEIS Market Protocols (.a) 2. Ensure Track Changes is turned off on both the forward looking protocols and this WRR Submission Form 3. While in the forward looking protocols, select and copy the language you would like to edit 4. Paste the language to this Submission form 5. Turn on Track Changes and make the edits you would like to propose

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WESI Market Protocols 7.2.2.1 Mitigate Only in the Presence of Local Market Power The electricity marketplace in the WEIS region is workably competitive, with an adequate supply of electricity and

diversity of suppliers, absent reliability conditions or congestion on the transmission system that create the

potential for abuse of local market power. The potential for market power in the WEIS region is present when 1)

a single Market Participant’s on-line Resource capacity up to the effective Maximum Economic Operating Limits,

excluding PPRs, is required to meet the WEIS Market adjusted obligation (i.e., forecasted obligation adjusted by

NSI and reduced by PPR output) in that Dispatch Interval (i.e., system-level structural market power as described

in Section 7.2.2.4) or 2) when a reliability condition or congestion on the transmission system creates the potential

for abuse of local market power. Therefore, mitigationMitigation will be applied (1) in instances of structural

market power and/or (2) at the time of, and in places with, a congested transmission element or facility that

results in local market power. , or a Local Reliability Issue not represented by a flowgate constraint.

7.2.2.2 Mitigation Measures The Energy Offer Curves are subject to mitigation measures in the WEIS Market. A determination of Resources

that have local market power is described in Section 7.2.2.4. A Resource with mitigation measures applied to its

Energy Offer Curve shall have an effective energy offer no higher than the Resource’s Mitigated Energy Offer

Curve. The effective Energy Offer Curves are used by the Market Operating System to determine prices and

Dispatch Instructions. Whenever a Market Participant has a Resource(s) where a mitigation measure has been

applied to the Market Participant’s offer(s), the SPP shall identify the market offer(s) that have been mitigated in

SCED. SPP will supply the Market Participant with the reason for mitigation, (local market power test failure test,

FCA failure test, or system-level structural market power test failureor other test failures) where a mitigation

measure has been applied. If the mitigation is associated with the Local Market Power Test, SPP shall also provide

the Market Participant, when applicable, with the binding transmission constraint and Resource-to-Load

Distribution factor.

7.2.2.3 Mitigation Measures for Energy Offer Curves At the start of the WEIS Market, an Energy Offer Curve below $5/MWh will not be subject to mitigation measures

for economic withholding. If, after the implementation of the WEIS Market, analysis performed by the Market

Monitor indicates it is determined that an increase in the threshold is appropriate, the proposed change will be

filed with the Commission along with justification for consideration of the change in the threshold. Below is a

description of how the mitigation measures will be applied for Energy Offer Curves in the WEIS Market.

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1) Mitigated Eenergy Ooffer Ccurves shall be submitted on a daily basis by the Market Participant in accordance

with the Mitigated Offer Development Guidelines. PPRs are not obligated to submit mitigated Energy Offer

Curves and are not subject to mitigation measures. The mitigated Energy Offer Curve may be updated by

the same schedule as the Rreal-Ttime Energy Offer Curve.

2) The Energy Offer Curve conduct thresholds are as follows:

a) For the local market power test of Resources located in a Frequently Constrained Area, the threshold is a 17.50% increase above the mMitigated Energy Offer Curve when the Frequently Constrained Area has a binding constraint.

b) For the local market power test of all other Resources and Resources in a Frequently Constrained Area

when the Frequently Constrained Area does not have a binding constraint, the threshold is a 2515%

increase above the mMitigated Energy Offer Curve.

b)c) For the system-level structural market power test of all Resources the threshold is a 15%

increase above the mitigated Energy Offer Curve.

3) SPP shall apply mitigation measures by replacing the Energy Offer Curve with the mMitigated Energy Offer

Curve if:

a) The Resource’s Energy Offer Curve exceeds the mMitigated Energy Offer Curve by the applicable conduct

threshold; and

b) The Resource has local market power as determined in Section 7.2.2.4; and

c) The Resource fails the Market Impact Test as described in Section 7.2.2.6.

An Energy Offer Curve below $25/MWh will not be subject to mitigation measures for economic withholding

At the start of the WEIS Market, an Energy Offer Curve below $5/MWh will not be subject to mitigation

measures for economic withholding. At the beginning of each six (6) month period after the market start,

this value will increase by $10/MWh unless the Market Monitor finds market behavior that warrants keeping

the value constant for the next six (6) months. This periodic increase will continue until the threshold is

$25/MWh.

4) The mMitigated Energy Offer Curve shall be the Resource’s short-run marginal cost of producing energy as

determined by the unit’s heat rate, fuel costs and the costs related to fuel usage, such as transportation and

emissions costs (“total fuel related costs”), and variable operation and maintenance costs (VOM) as detailed

in the Mitigated Offer Development Guidelines. The formula for mMitigated Energy Offer Curves can be

found in Appendix D.

5) Opportunity costs, as proposed by the Market Participant, shall be evaluated and approved by the Market

Monitor. After approval by the Market Monitor, opportunity costs may be included in the Market Participants

Commented [DMH1]: Awaiting FERC and Implementation



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mitigated Energy Offer Curve. Opportunity costs may be reflected in the total fuel related costs and/or the

VOM under the following circumstances:

a) Externally imposed environmental run-hour restrictions; or

b) Physical equipment limitations on the number of starts or run-hours; or

Fuel supply limitations.

The following formula shall apply to all mitigated Energy Offer Curves, where HeatRate = 1 for Resources

for which heat rate is not applicable:

Mitigated Energy Offer ($/MWh) = HeatRate (mmBtu/MWh) *

Performance Factor * Total Fuel Related Costs ($/mmBtu) + EOC VOM ($/MWh) + Opportunity

Costs ($/MWh)

6) The Market Participant shall submit heat rates and the methods for determining fuel costs, fuel related costs

including emissions costs, opportunity costs, and variable operation and maintenance costs to the Market

Monitoring Unit. The information will be sufficient for replication of the mMitigated Energy Offer Curve and

shall include, among other data, the following information:

a) For fuel costs, Market Participants shall provide the Market Monitoring Unit with an explanation of the

Market Participants’ fuel cost policy, indicating whether fuel purchases are subject to a fixed contract

price and/or spot pricing and specifying the contract price and/or referenced spot market prices. Any

included fuel transportation and handling costs must be short-run marginal costs only, exclusive of fixed

costs.

b) For emissions costs, Market Participants shall report the emissions rate of each of their units and indicate

the applicable emissions allowance cost.

c) For VOM costs, Market Participants shall submit VOM costs, calculated in adherence with the Appendix

D of the WEIS Market Protocols, reflecting short-run marginal costs, exclusive of fixed costs.

Further details associated with the development and validation of these costs are included in the Mitigated

Offer Development Guidelines.

7) For Demand Response Resources with Behind-The-Meter Generation the mMitigated Energy Offer Curve

shall be developed in the same manner, described above, as any other generating Resource. For load

response Demand Response Resources, the mitigated Energy Offer Curve shall reflect the quantifiable

opportunity costs associated with the reduction, net of related offsetting increases in usage.

Commented [WRR3.4]: Awaiting FERC and Implementation

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8) For Variable Energy Resources, the mitigated Energy Offer Curve may include, but shall not exceed, any

quantifiable costs that vary by MWh output, including short-run incremental VOM.

9) Intra-day changes to the mitigated Energy Offer Curve are allowed under the following conditions:

a) The Market Participant incurs higher fuel procurement costs due to a request by the Joint Dispatch

Transmission Service Provider(s), for a Resource to remain online past the scheduled commitment

provided in the Resource Plan; or

b) A Resource must switch fuels or pipelines due to unforeseen operating conditions;

Intra-day changes to the mitigated Energy Offer Curve must follow the Mitigated Offer Development

Guidelines and will be validated by the Market Monitor.

10) Market Participants that have Resources with short-run marginal costs greater than the Safety-Net Energy

Offer Cap specified in Section 7.2.4 may submit an Energy Offer Curve using the same guidelines for

development of the Resource’s mMitigated Energy Offer Curve established in Appendix D, Section D.2.5. The

Energy Offer Curve above $1,000/MWh must be equal to the mMitigated Energy Offer Curve, and may also

include an adder with a maximum of $100/MWh due to the uncertainty of expected costs. For purposes of

LMP calculation, the Energy Offer Curve will be limited to a maximum of $2,000/MWh and will have to be

verified by the Market Monitor prior to the start of the applicable market clearing process. If the Energy Offer

Curve cannot be verified prior to the start of the applicable market clearing process, then the Resource may

be eligible to receive Real-Time Out-of-Merit Energy payments for its actual costs after verification by the

Market Monitor. The default value is $1,000/MWh for any offer above $1,000/MWh until the offer can be

verified. If the verified Energy Offer Curve is greater than $2,000/MWh, the Energy Offer Curve will be capped

at $2,000/MWh in the applicable market clearing process, and the Resource may be eligible for Real-Time

Out-of-Merit Energy payments for actual costs exceeding $2,000/MWh. Market Participants must submit

evidence of actual costs to the Market Monitor. The Market Monitor shall verify the actual costs for use in

Real-Time Out-of-Merit Energy payments. In order to include the costs in the Real-Time Out-of-Merit Energy

payments of the final Settlement Statement, the submission must occur within 35 Calendar Days after the

Operating Day and the verification must be complete no later than noon on the Business Day prior to 45

Calendar Days after the Operating Day.

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11) In all cases under this Section 7.2.2.3, cost data submitted for the development of mitigated offers, including

opportunity cost data, shall be subject to the confidentiality provisions set forth in Section 8 of Attachment

A to the WEIS Tariff.

7.2.2.4 Local Market Power Test

A Resource satisfying at least one of the following conditions is determined to have local market power:

1) The Resource is located in a Frequently Constrained Area, as described in Section 7.2.2.4.1, and one or more

of the transmission constraints that define the Frequently Constrained Area is binding;

2) The Resource is not in a Frequently Constrained Area and has a Resource-to-Load-Distribution factor less

than or equal to negative five percent (-5%) relative to a binding transmission constraint;

3) A Resource is determined to have system-level structural market power when the Resource is registered

under a Market Participant and the sum of that Market Participant’s on-line Resource capacity up to the

effective Maximum Economic Operating Limits is required to meet the WEIS Market adjusted obligation in

that Dispatch Interval. This is represented by a residual supply index that is less than 1. The residual supply

index is calculated as follows:

𝑅𝑅𝑅𝑅𝑅𝑅𝑡𝑡 = 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑡𝑡𝑎𝑎𝑡𝑡𝑎𝑎𝑡𝑡𝑡𝑡𝑎𝑎𝑡𝑡𝑎𝑎 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑡𝑡𝑠𝑠𝑡𝑡 − 𝑀𝑀𝑡𝑡𝑀𝑀𝑀𝑀𝑎𝑎𝑡𝑡 𝑃𝑃𝑡𝑡𝑀𝑀𝑡𝑡𝑎𝑎𝑃𝑃𝑎𝑎𝑠𝑠𝑡𝑡𝑃𝑃𝑡𝑡′𝑠𝑠 𝑡𝑡𝑎𝑎𝑡𝑡𝑎𝑎𝑡𝑡𝑡𝑡𝑎𝑎𝑡𝑡𝑎𝑎 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑡𝑡𝑠𝑠𝑡𝑡

𝑊𝑊𝑊𝑊𝑅𝑅𝑅𝑅 𝑚𝑚𝑡𝑡𝑀𝑀𝑀𝑀𝑎𝑎𝑡𝑡 𝑡𝑡𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑡𝑡𝑎𝑎𝑎𝑎 𝑡𝑡𝑎𝑎𝑡𝑡𝑎𝑎𝑜𝑜𝑡𝑡𝑡𝑡𝑎𝑎𝑡𝑡𝑃𝑃𝑡𝑡

Where:

a) total available supply is the sum of the effective maximum limits for all on-line Resources,

excluding PPRs, for the Dispatch Interval.

b) Market Participant’s available supply is the sum of the effective maximum limits for all on-line

Resources, excluding PPRs, for the Dispatch Interval for the Market.

c) WEIS Market adjusted obligation is the load forecast adjusted by the NSI and reduced by PPR

output for the Dispatch Interval.

7.2.2.6 Market Impact Test SPP will apply a market impact test to all resources having failed the conduct and system-level or local market

structure tests to determine if offers should be mitigated. The following market impact test will be applied in

WRTBM:

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During times of congestionmarket power, a market solution with no mitigation in place is compared to a

market solution with the appropriate mitigation applied. If a Settlement Location LMP without mitigation

exceeds the corresponding price from the mitigated solution by at least the applicable impact test

threshold, then the mitigated solution is used for dispatch and settlement.

At market start, the impact threshold is $5/MWhfive dollars ($5) per megawatt hour. If, after the implementation

of the WEIS Market, analysis performed by the Market Monitor indicates that an increase in the threshold is

appropriate, the proposed change will be filed with the Commission along with justification for consideration of

the change in the threshold At the beginning of each six (6) month period after the market start, the impact

threshold will be increased $10/MWhten dollars ($10) per megawatt hour unless the Market Monitor finds market

behavior that warrants keeping the threshold constant for the next six (6) months. The periodic increase will

continue until the impact threshold is $25/MWhtwenty-five dollars ($25) per megawatt hour. The LMP impact

threshold is $25/MWh.

7.2.5.1 Thresholds for Identifying Physical Withholding of Resource Capacity

A Market Participant is deemed to be physically withholding capacity in a Frequently Constrained Area if the

following conditions hold:

1) One or more of the transmission constraints that define the Frequently Constrained Area are binding;

2) The Market Participant controls or owns a Resource that satisfies condition Sections 7.2.5(1), or 7.2.5(2) and

is located in the Frequently Constrained Area identified in 7.2.2.4.1;

A Market Participant is deemed to be physically withholding capacity in an area not designated as a Frequently

Constrained Area if the following conditions hold:

1) One or more transmission constraints are binding; and

2)1) The Market Participant owns or controls one or more Resources that haves local system-level structural

market power as defined in Section 7.2.2.4 or the Market Participant owns or controls one or more Resources

that have local market power as defined in Section 7.2.2.4 (2); and

3)2) Either of (a) or (b) hold;

a) The total capacity withheld, by Resources identified in (2) that satisfy condition 7.2.5(1), or 7.2.5(2) exceeds

the lower of 5 percent of the total capability owned or controlled by the Market Participant or 200 MW;




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b) The real-time output of a Resource identified in (2) is less than the Dispatch Instruction minus the

Resource’s Operating Tolerance defined in Section 4.4.2.4 and the Resource is not exempt from URD

under Section 4.4.2.4.1;

WEIS Tariff

Attachment B 3.1 Local Market Power Test

A Resource satisfying at least one of the following conditions is determined to have local market power:

(1) The Resource is located in a Frequently Constrained Area, as described in Section 3.1.1, and one

or more of the transmission constraints that define the Frequently Constrained Area is binding.

(2) The Resource is not in a Frequently Constrained Area has a Resource-to-Load-Distribution Factor

less than or equal to negative five percent (-5%) relative to a binding transmission constraint.

(3) The Resource is registered under a Market Participant and the sum of that Market Participant’s on-

line Resource capacity up to the effective Maximum Economic Operating Limits, excluding PPRs,

is required to meet the WEIS Market adjusted obligation in that Dispatch Interval. The WEIS

Market adjusted obligation is equal to the forecasted obligation adjusted by the NSI and reduced

by the PPR output.

3.2 Mitigation Measures for Energy Offer Curves

Mitigated Energy Offer Curves shall be submitted on a daily basis by the Market Participant in accordance

with the mitigated offer development guidelines in the WEIS Market Protocols. PPRs are not obligated to submit

mitigated Energy Offer Curves. The mitigated Energy Offer Curve may be updated by the same schedule as the

real-time Energy Offer.

A. The Energy Offer Curve conduct thresholds are as follows:

(1) For Resources located in a Frequently Constrained Area, the conduct threshold is a 0%

increase above the mitigated Energy Offer Curve;

(2) For all other Resources the conduct threshold is a 15% increase above the mitigated Energy

Offer Curve.

B. SPP shall apply mitigation measures by replacing the Energy Offer Curve with the mitigated

Energy Offer Curve if:

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(1) The Resource’s Energy Offer Curve exceeds the mitigated Energy Offer Curve by the

applicable conduct threshold; and

(2) The Resource has local market power as determined in Section 3.1; and

(3) The Resource fails the Market Impact Test as described in Section 3.7

At the start of the WEIS Market, an Energy Offer Curve below $5/MWh will not be subject to mitigation measures

for economic withholding. If, after the implementation of the WEIS Market, analysis performed by the Market

Monitor indicates that an increase in the threshold is appropriate, the proposed change will be filed with the

Commission along with justification for consideration of the change in the threshold. At the beginning of each

six (6) month period after the market start, this value will increase by $10/MWh unless the Market Monitor finds

market behavior that warrants keeping the value constant for the next six (6) months. This periodic increase will

continue until the threshold is $25/MWh.

C. The mitigated energy offer shall be the Resource’s short-run marginal cost of producing energy as

determined by the unit’s heat rate, where applicable; fuel costs and the costs related to fuel usage,

such as transportation and emissions costs (“total fuel related costs”); and Energy Offer Curve

(“EOC”) variable operations and maintenance costs (“VOM”) as detailed in the WEIS Market

Protocols.

D. Opportunity costs, as proposed by the Market Participant, shall be evaluated and approved by the

Market Monitor. After approval by the Market Monitor, opportunity costs may be included in the

Market Participants mitigated Energy Offer Curve.

The following formula shall apply to all mitigated Energy Offer Curves, where HeatRate = 1 for

Resources for which heat rate is not applicable:

Mitigated Energy Offer ($/MWh) = HeatRate (mmBtu/MWh) *

Performance Factor * Total Fuel Related Costs ($/mmBtu) + EOC VOM ($/MWh) + Opportunity

Costs ($/MWh)

E. The Market Participant shall submit heat rate curves, where applicable, descriptions of how spot

fuel prices and/or contract prices are used to calculate fuel costs, variable fuel transportation and

handling costs, emissions costs, and VOM to the Market Monitoring Unit. All cost data and cost

calculation descriptions are subject to the review and approval of the Market Monitoring Unit to

ensure reasonableness and consistency across Market Participants. The information will be

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sufficient for replication of the mitigated Energy Offer Curve and shall include, among other data,

the following information:

(1) For fuel costs, Market Participants shall provide the Market Monitoring Unit with an

explanation of the Market Participants’ fuel cost policy, indicating whether fuel purchases

are subject to a fixed contract price and/or spot pricing and specifying the contract price

and/or referenced spot market prices. Any included fuel transportation and handling costs

must be short-run marginal costs only, exclusive of fixed costs.

(2) For emissions costs, Market Participants shall report the emissions rate of each of their

units and indicate the applicable emissions allowance cost.

(3) For VOM costs, Market Participants shall submit VOM costs, calculated in adherence with

the Appendix E of the WEIS Market Protocols, reflecting short-run marginal costs,

exclusive of fixed costs.

Further details associated with the development, validation, and updating of these costs are

included in Appendix E of the WEIS Market Protocols.

F. For Demand Response Resources utilizing Behind-The-Meter Generation, the mitigated Energy

Offer Curve shall be developed in the same manner as any other generating Resource as described

above. For Demand Response Resources utilizing load reduction, the mitigated Energy Offer

Curve shall reflect the quantifiable opportunity costs associated with the reduction, net of related

offsetting increases in usage.

G. For Variable Energy Resources, the mitigated Energy Offer Curve may include, but shall not

exceed, any quantifiable costs that vary by MWh output, including short-run incremental VOM.

Foregone opportunity revenue, such as Production Tax Credits, grossed-up for current marginal

tax rates, and tradable emissions credits, may lead to a negative mitigated Energy Offer Curve.

H. A Market Participant that has a Resource with short-run marginal costs greater than the Safety-net

Energy Offer Cap specified in Section 4.1.1 of Attachment A to this Tariff may submit an Energy

Offer Curve using the same guidelines for development of the Resource’s Mitigated Energy Offer

Curve established in Appendix E of the WEIS Market Protocols. The Energy Offer Curve above

$1,000/MWh must be equal to the Mitigated Energy Offer Curve and may include an adder with

a maximum of $100/MWh due to the uncertainty of expected costs. For purposes of LMP

calculation, the Energy Offer Curve will be limited to a maximum of $2,000/MWh and will have

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to be verified by the Market Monitor prior to the start of the applicable market clearing process.

If the Energy Offer Curve cannot be verified prior to the start of the applicable market clearing

process, then the Resource may be eligible to receive Real-Time Out-of-Merit payments for its

actual costs after verification by the Market Monitor. The default value is $1,000/MWh for any

offer above $1,000/MWh until the offer can be verified. If the verified Energy Offer Curve is

greater than $2,000/MWh, the Energy Offer Curve will be capped at $2,000/MWh in the applicable

market clearing process, and the Resource may be eligible for Real-Time Out-of-Merit Energy

payments for actual costs exceeding $2,000/MWh. Market Participants must submit evidence of

actual costs to the Market Monitor. The Market Monitor shall verify the actual costs for use in

Real-Time Out-of-Merit Energy payments. In order to include the costs in the Real-Time Out-of-

Merit Energy payments of the S120 Scheduled Settlement Statement, the submission must occur

within 105 calendar days after the Operating Day and the verification must be complete no later

than noon on the business day prior to 115 calendar days after the Operating Day.

I. In all cases under this Section 3.2, cost data submitted for the development of mitigated offers,

including opportunity cost data, shall be subject to the confidentiality provisions set forth in

Section 8 of Attachment A to this Tariff.

3.5 Market Impact Test SPP will apply the following market impact test in the WEIS Market in the event the conditions

described in Section 3.1 or 3.4 are satisfied:

After an initial market solution is computed with no mitigation measures in place, a second market

solution, called the mitigated market solution, will be computed with the appropriate mitigation measures

applied. If an LMP at a Settlement Location from the initial market solution exceeds the corresponding

price from the mitigated market solution by the applicable impact test threshold then the mitigated market

solution will be used for dispatch, commitment, and settlement purposes.

At market start, the impact threshold is five dollars ($5) per megawatt hour. If, after the

implementation of the WEIS Market, analysis performed by the Market Monitor indicates that an increase

in the threshold is appropriate, the proposed change will be filed with the Commission along with

justification for consideration of the change in the threshold. At the beginning of each six (6) month period

after the market start, the impact threshold will be increased ten dollars ($10) per megawatt hour unless

the Market Monitor finds market behavior that warrants keeping the threshold constant for the next six

(6) months. The periodic increase will continue until the impact threshold is twenty-five dollars ($25) per

megawatt hour.

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Attachment C

4.6.2.1.2 A Market Participant is deemed to be physically withholding capacity in an area not designated as a Frequently Constrained Area if all of the following conditions exist:

(a) One or more transmission constraints are binding; and

(b) The Market Participant owns or controls one of more Resources that

have local market power as defined in Section 3.1 of Attachment B

to this Tariff; and

(c) One of the following conditions apply:

(1) Such Resource(s) satisfy one of the conditions in Sections

4.6.2(a), 4.6.2(b), or 4.6.2(f) of this Attachment C and the

total withheld capacity exceeds the lower of 5 percent of the

total capability owned or controlled by the Market

Participant or 200 MW; or

(2) Where the real-time output of each such Resource is less

than the Dispatch Instruction minus the Resource’s

Operating Tolerance defined in Attachment A, Section 4.1

of this Tariff and the Resource is not exempt from URD

under Attachment A, Section 4.1 of this Tariff.

SouthwestPowerPool SPPorg southwest-power-poolHelping our members work together to keep the lights on... today and in the future. 1

MARKET DESIGN EDUCATION SESSION: JOINTLY OWNED UNITS (JOU) IN THE WEISWMWGAUGUST 20, 2020DANIEL [email protected]

2

TOPICS• JOU Registered under single Asset Owner (AO)

• Native Load Hedging (NLH) with no Tags• NLH with Tags

• JOUs Registered under separate AOs• Multiple Resource considerations• NLH with no Tags• NLH with Tags

3

JOU IN THE WEIS• The WEIS Market does not recognize JOU Resources• Each Resource is registered under a single AO and used for NLH for that AO• A Resource is that owner by more than one party may be registered as multiple

Resources under different AOs representing the individual owners• The following slides walk through examples of single Resource registration and

multiple Resource registration

4

JOU REGISTERED UNDER SINGLE AO - NO TAG• Example:

• Resource A and Load A are registered under AO A

• Load B is registered under AO B• For NLH:

• Resource A supplies 100 MW to Load A and sells 75 MW to the Market

• Load B is not covered by any generation, therefore, purchases 75 MW from the Market

Load A100 MW

Load B75 MW

Resource A175 MW

5

JOU REGISTERED UNDER SINGLE AO - WITH TAG• Example:


• Load B is registered under AO B• There is a 75 MW Tag from Resource A to

Load B• For NLH:

• Resource A has a 75 MW obligation due to the Tag to Load B

• The remaining 100 MW supplies Load A• Load B is hedged by the 75 MW Tag and

does not have to purchase Imbalance Energy

Load A100 MW

Load B75 MW

Resource A175 MW

From Settlement Location of Resource A to Settlement Location of Load B75 MW

6

JOU REGISTERED UNDER SINGLE AO - WITH TAG• Example:


• Load B is registered under AO B• There is a 75 MW Tag from Resource A to

Load B• For NLH:

• Resource A has a 75 MW obligation due to the Tag to Load B

• There is only 75 MW remaining on the Resource, therefore the 25 MW left of Load A will be purchased from the Market

• Load B is hedged by the 75 MW Tag and does not have to purchase Imbalance Energy

Load A100 MW

Load B75 MW

Resource A150 MW

From Settlement Location of Resource A to Settlement Location of Load B75 MW

7

JOU REGISTERED UNDER MULTIPLE AOS• Resource A is registered under AO A• Resource B is registered under AO B• Resource A and B must have ICCP

connections for each Resource separately• Both Resource A and B must have valid offers

from their respective MP • Each Resource is scheduled in the Resource

Plan separately by the respective MP• Resource A and B will be dispatch separately

based on their own offer parameters.• Metered data for Settlements must be

submitted for each Resource

Resource A100 MW

Resource B75 MW

8

JOU REGISTERED UNDER MULTIPLE AOS• Example:


• Resource B and Load B are registered under AO B

• For NLH:• Resource A supplies 100 MW to Load A

so Load A is fully hedged• Resource B supplies 75 MW to Load B

so Load B is fully hedged

Load A100 MW

Load B75 MW

Resource A100 MW

Resource B75 MW

9

JOU REGISTERED UNDER MULTIPLE AOS – WITH TAG

• Since each Resource will have its own Settlement Location, Tags can be source from each Resource separately

• The Tag will become obligation for the Resource Settlement Location associated with the source

Load A100 MW

Load B75 MW

Resource A100 MW

Resource B75 MW

10

JOU REGISTERED UNDER MULTIPLE AOS• Example:

• For NLH:• Resource A has a 25 MW obligation due to

Tag• Resource A has 75 MW left to supply to

Load A• AO A purchases 25 MW of Imbalance

Energy at Load A• Resource B has a 25 MW obligation due to

Tag• Resource B has 50 MW left to supply to

Load B• AO B purchases 25 MW of Imbalance

Energy at Load B

Load A100 MW

Load B75 MW

Resource A100 MW

Resource B75 MW

Tag from Settlement Location of Resource B25 MW

Tag from Settlement Location of Resource A25 MW

11

QUESTIONS?

SouthwestPowerPool SPPorg southwest-power-poolHelping our members work together to keep the lights on... today and in the future.

1

READINESS AND OUTREACH

READINESS UPDATE

2

CURRENT STATUS

• External Readiness Activities in Progress or Completed• Market Monitoring Portal training delivered• Word to the WEIS training delivered – 604

completions to 144 individual learners• Registration changes for the October effective

model submitted• BA meetings have begun• NEL data requested

4

UPCOMING ACTIONS

• Registration modifications due by September 15th for November model

• Structured/unstructured market trials with specific scenarios added

5

QUESTIONS?

Action Item

Org Group

Origin Date

Action Item Update Summary Status(Not Started, In

Progress, Closure Pending, On Hold,

Closed)

Owner Comments Date Closed

3 WMWG 07/20/20 SPP to facilitate discussion between the Western Markets Working Group and applicable Western Reliability Working Groups on how the Unscheduled Flow Mitigation Plan (UFMP) works in correlation with the WEIS Market.

8/13/20: Zea Flores (WAPA) will provide an education session on the UFMP during the August 20th WMWG meeting. In Progress Daniel Harless

4 WMWG 07/20/20 SPP to facilitate discussion with Western Area Colorado Missouri (WACM) on how TOT 3 will work and coordinated in the market.

8/13/20: Zea Flores (WAPA) will provide an education session on the UFMP during the August 20th WMWG meeting. In Progress Daniel Harless

SOUTHWEST POWER POOL Western Markets Working Group Meeting

August 20th, 2020 Net-Conference


MOTIONS:

Agenda Item 3a – Consent Agenda: July WMWG Minutes


Agenda Item 6 – WRR2 WEIS Market and System Change Process Clarification WMWG Comments 072020


Agenda Item 9 – WRR4 WEIS URD Tolerance Correction


Agenda Item 11 – WRR5 Pivotal Supplier Mitigation



ACTION ITEMS:

No new action items were taken during this meeting.

FUTURE MEETINGS AND TOPICS:

WMWG Meeting


Tuesday, September 22nd, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference WMWG Meeting Thursday, October 29th, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference WMWG Meeting Thursday, November 12th, 2020 (9:00 a.m. – 6:00 p.m., CPT) Location: Net-Conference Respectfully Submitted – Kristen Darden on behalf of Daniel Harless, WMWG Staff Secretary



SUMMARY OF MOTIONS AND ACTION ITEMS - SPP

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