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SUMMARY OF MOTIONS AND ACTION ITEMS - SPP
Transcript of SUMMARY OF MOTIONS AND ACTION ITEMS - SPP
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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.
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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.
Motion: Mike Mason (TSGT) motioned to approve the consent agenda. Neil Lindgren (WAPA) provided the second. Motion carried unanimously.
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.
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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.
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 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
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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.
Motion: Mike Mason (TSGT) motioned to approve WRR4 (WEIS URD Tolerance Correction). Jeff Lindsay (MEAN) provided the second. Motion carried unanimously.
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)
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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.
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.
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.
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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
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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
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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]
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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
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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
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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
SUMMARY OF MOTIONS AND ACTION ITEMS
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.
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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
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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.
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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.
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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.
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Minutes No. 4
Respectfully Submitted – Kristen Darden on behalf of Daniel Harless, WMWG Staff Secretary
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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
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• 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
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• 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
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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
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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.
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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:
SUBMITTER INFORMATION
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.
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.
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
WEIS Market Protocols
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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.
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WESTERN ENERGY IMBALANCE SERVICE MARKET
Review of FERC Order in ER20-1059, ER20-1060
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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.
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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
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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
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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
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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.”
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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
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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
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9
FERC GUIDANCE: ISSUE 2
• “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?
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10
ISSUE 2 APPROACH TO ADDRESS
• 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
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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
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12
FERC GUIDANCE: ISSUE 3
• “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.”
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13
ISSUE 3 APPROACH TO ADDRESS
• 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
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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
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15
FERC GUIDANCE: ISSUE 4
• “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.”
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16
ISSUE 4 APPROACH TO ADDRESS
• 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
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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
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18
FERC GUIDANCE: ISSUE 5
• “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.”
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19
ISSUE 5 APPROACH TO ADDRESS
• 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
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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
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DRAFT
NON-PHYSICAL TRANSMISSION CONSTRAINTS WESTERN ENERGY IMBALANCE SERVICE MARKET
By AUTHOR/DEPARTMENT
Published on DATE
Version NUMBER
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Southwest Power Pool, Inc.
REVISION HISTORY
DATE OR VERSION NUMBER
AUTHOR CHANGE DESCRIPTION
COMMENTS
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Southwest Power Pool, Inc.
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
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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.
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Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 2
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.
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Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 3
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
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Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 4
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
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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).
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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.
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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.
12 Transmittal at 15.
13 Id.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
46 Platte River Protest at 22.
47 SPP Answer at 51.
48 Id. at 51-52.
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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)).
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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.
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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.
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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.
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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.
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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
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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).
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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
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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.
88 Transmittal at 8.
89 Id. at 11.
90 SPP Answer at 42.
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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.
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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).
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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.
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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.
102 Platte River Protest at 24.
103 SPP MMU Comments at 6.
104 MEAN Comments at 4.
105 SPP Answer at 64-65.
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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).
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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.
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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.
116 Transmittal at 43.
117 Id. at 14.
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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.
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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.
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Document Content(s)
ER20-1059-000.DOCX....................................................1-28
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WIUFMP
Zea FloresMITF Chair (WAPA)WMWG, 8/20/2020
1
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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WEIS CONGESTION MANAGEMENT
Description of Activation Modes and Options for Service Limits
04/28/2020
By Southwest Power Pool
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Southwest Power Pool, Inc.
1. REVISION HISTORY
DATE OR VERSION NUMBER AUTHOR CHANGE
DESCRIPTION COMMENTS
07/01/2020; v1 Gary Cate
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Southwest Power Pool, Inc.
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
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Southwest Power Pool, Inc.
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:
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Southwest Power Pool, Inc.
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.
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SPP WEIS Revision Request Form WRR Title: WEIS URD Tolerance Correction Date: 7/29/2020
SPP STAFF TO COMPLETE THIS SECTION
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:
SUBMITTER INFORMATION
Name: Daniel Harless Company: Southwest Power Pool
Email: [email protected] Phone: 501-688-8303 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):
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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
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: 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:
OBJECTIVE OF MODIFICATION
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Objectives of WEIS Revision Request: Describe the problem/issue this revision request will resolve.
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.
Describe the benefits that will be realized from this revision.
This WRR corrects a calculation to prevent Resources from receiving a URD charge when they are operating in the intented operating tolerance band.
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
WEIS Market Protocols
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.
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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
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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 ,
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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
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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
per Settlement Location per Dispatch
Interval – The Resource Operating High
Tolerance associated with AO a’s Resource
at Settlement Location s in Dispatch
Interval i.
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Variable
Unit
Settlement
Interval
Definition
EISResOpLoTol5minQty a, s, i MW Dispatch
Interval
Resource Operating Low Tolerance per AO
per Settlement Location per Dispatch
Interval – The Resource Operating Low
Tolerance associated with AO a’s Resource
at Settlement Location s in Dispatch
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%.
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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.
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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)
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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)
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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.
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Variable
Unit
Settlement
Interval
Definition
EISRtURDAoAmt a, m, d $ Operating
Day
Real-Time Uninstructed Resource Deviation
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
Real-Time Uninstructed Resource Deviation
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.
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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
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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
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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.
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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
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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
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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.
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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
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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
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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
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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.
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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
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9MMU
MARKET SHARE OF THE LARGEST SUPPLIER –WEIS AND SPP COMPARISON
WEIS SPP
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10MMU
MARKET SHARE OF THE LARGEST SUPPLIER –WEIS MARKET IMBALANCE ENERGY
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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
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12MMU
SUPPLIER CONCENTRATION (HHI) – ENERGY OUTPUT
𝐻𝐻𝐼 =
𝑖
𝑀𝑊𝑖
σ𝑖𝑀𝑊𝑖∗ 100
2
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13MMU
SUPPLIER CONCENTRATION (HHI) – ENERGY OUTPUT WEIS AND SPP COMPARISON
WEIS SPP
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14MMU
SUPPLIER CONCENTRATION (HHI) – WEIS MARKET IMBALANCE ENERGY
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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
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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
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17MMU
STUDY FINDINGS – RSI DURATION CURVES
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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
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19MMU
PIVOTAL SUPPLIER FREQUENCY
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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
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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
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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
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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
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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
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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
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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.
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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
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28MMU
APPENDIX
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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%)
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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)
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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
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32MMU
GENERATION BY TECHNOLOGY TYPE (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
)
COAL DFO NG WAT WND
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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
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34MMU
NET MONTHLY SALES (MWh)
-600,000
-400,000
-200,000
0
200,000
400,000
600,000
800,000
Jan 17 Jan 18 Jan 19
Net
Mo
nth
ly S
ale
s (M
Wh
)
BEPM CRSP DSRT LAPM MEAN TRIS UGPM WMPA
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35MMU
IMBALANCE ENERGY BY PARTICIPANT(MWh)
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
Jan-17 Jan-18 Jan-19
Mo
nth
ly E
I M
Wh
Sett
led
BASIN CRSP DESERET TSGT MEAN WMPA LAP
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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
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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
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38MMU
Ian WrenEnergy Economist
SPP Market Monitoring Unit
Esat Serhat GuneyLead Energy Economist
SPP Market Monitoring Unit
QUESTIONS?
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WESTERN ENERGY
IMBALANCE SERVICE (WEIS)
MARKET
MARKET POWER STUDY
Published
August 3, 2020
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Southwest Power Pool, Inc.
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
4.3.2 Imbalance energy......................................................................................................................... 46
4.4 The Herfindahl-Hirschman Index (HHI) for supplier concentration ........................................ 47
4.4.1 Energy ............................................................................................................................................... 48
4.4.2 Imbalance energy......................................................................................................................... 50
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
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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
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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
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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-
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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
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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.
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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.
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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
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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.
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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.
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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
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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.
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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%
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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%
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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.
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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
Jan 17 Jan 18 Jan 19
MW
h P
rod
uce
d (M
on
thly
)
Coal Fuel oil Natural gas Water Wind
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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
Jan 17 Jan 18 Jan 19
MW
h P
rod
uce
d (M
on
thly
)
Electric Cooperative Federally or Municipally Owned
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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
Jan 17 Jan 18 Jan 19
MW
h P
rod
uce
d (M
on
thly
)
TRIS BEPM CRSP LAPM MEAN UGPM WMPA
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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
Jan 17 Jan 18 Jan 19
Net
Mo
nth
ly S
ale
s (M
Wh
)
BEPM CRSP DSRT LAPM MEAN TRIS UGPM WMPA
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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.
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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
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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%
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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.
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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
Jan 17 Jan 18 Jan 19
Cu
mu
lati
ve M
on
thly
EI Sett
led
(MW
h)
Federally or Municipally Owned Electric Cooperative
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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
Jan 17 Jan 18 Jan 19
Mo
nth
ly E
I M
Wh
Sett
led
BEPM CRSP DSRT TRIS MEAN WMPA LAPM
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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.
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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
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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.
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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.
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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.
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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).
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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,
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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.
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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.
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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.
4.3.2 Imbalance energy
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
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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
percent, exceeding the 20 percent threshold in all hours observed.
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).
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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.
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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.
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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.
4.4.2 Imbalance energy
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
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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.
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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.
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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.
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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-
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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.
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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
perform separate and ongoing FCA analyses prior to and continuing after market
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
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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
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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.
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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.
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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).
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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.
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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.
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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.
For the WEIS Market, all of the eight direct market participants signed the Western Joint
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
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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.
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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
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.
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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
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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
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
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
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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.
For the WEIS Market, all of the eight direct market participants signed the Western Joint
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
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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
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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).
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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.
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SPP WEIS Revision Request Form
WRR Title: Pivotal Supplier Mitigation Date: 8/17/2020
SPP STAFF TO COMPLETE THIS SECTION
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
SUBMITTER INFORMATION
Name: Daniel Harless Company: Southwest Power Pool
Email: [email protected] Phone: 501-688-8303 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: 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.
Type of WEIS Revision Request (select all that apply):
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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
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: 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:
OBJECTIVE OF MODIFICATION
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Objectives of WEIS Revision Request: Describe the problem/issue this revision request will resolve.
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.
Describe the benefits that will be realized from this revision.
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.
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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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
$25/MWh.
4) The mMitigated Energy Offer Curve shall be the Resource’s short-run marginal cost of producing energy as
determined by the unit’s heat rate, fuel costs and the costs related to fuel usage, such as transportation and
emissions costs (“total fuel related costs”), and variable operation and maintenance costs (VOM) as detailed
in the Mitigated Offer Development Guidelines. The formula for mMitigated Energy Offer Curves can be
found in Appendix D.
5) Opportunity costs, as proposed by the Market Participant, shall be evaluated and approved by the Market
Monitor. After approval by the Market Monitor, opportunity costs may be included in the Market Participants
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mitigated Energy Offer Curve. Opportunity costs may be reflected in the total fuel related costs and/or the
VOM under the following circumstances:
a) Externally imposed environmental run-hour restrictions; or
b) Physical equipment limitations on the number of starts or run-hours; or
Fuel supply limitations.
The following formula shall apply to all mitigated Energy Offer Curves, where HeatRate = 1 for Resources
for which heat rate is not applicable:
Mitigated Energy Offer ($/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.
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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.
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MARKET DESIGN EDUCATION SESSION: JOINTLY OWNED UNITS (JOU) IN THE WEISWMWGAUGUST 20, 2020DANIEL [email protected]
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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
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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
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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
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JOU REGISTERED UNDER SINGLE AO - WITH TAG• Example:
• Resource A and Load A are registered under AO A
• 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
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JOU REGISTERED UNDER SINGLE AO - WITH TAG• Example:
• Resource A and Load A are registered under AO A
• 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
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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
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JOU REGISTERED UNDER MULTIPLE AOS• Example:
• Resource A and Load A are registered under AO A
• 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
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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
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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
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QUESTIONS?
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READINESS AND OUTREACH
READINESS UPDATE
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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
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UPCOMING ACTIONS
• Registration modifications due by September 15th for November model
• Structured/unstructured market trials with specific scenarios added
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QUESTIONS?
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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
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SOUTHWEST POWER POOL Western Markets Working Group Meeting
August 20th, 2020 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.
FUTURE MEETINGS AND TOPICS:
WMWG Meeting
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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