On October 19, 2017, FERC ordered Southwest Power Pool, Inc. (“SPP”) to revise its Open Access Transmission Tariff (“OATT”) to provide that network customers with service subject to redispatch can only obtain Auction Revenue Rights (“ARRs”) and Long-Term Congestion Rights (“LTCRs”) for those times and in the amounts that service can be provided without redispatch.

Under SPP’s OATT, when a firm transmission service request requires transmission upgrades, SPP commences service prior to completion of the transmission upgrades if SPP can address the constraint identified in the system impact studies through “redispatch” until the transmission upgrades are placed into service. In March 2016, SPP proposed revisions to its OATT that would permit customers with network service subject to redispatch to obtain ARRs and LTCRs associated with that service. By contrast, under SPP’s OATT, customers with firm point-to-point transmission service subject to redispatch are ineligible to receive ARRs and LTCRs.

On September 16, 2016, FERC rejected SPP’s proposed tariff revisions. FERC found that SPP’s OATT may be unjust and unreasonable and unduly discriminatory or preferential to the extent it currently permits customers with network service subject to redispatch to obtain ARRs and LTCRs prior to the transmission upgrades being placed into service. FERC initiated a paper hearing proceeding pursuant to section 206 of the Federal Power Act to examine SPP’s OATT.

In its October 19 order on the paper hearing, FERC found that SPP’s OATT is unjust and unreasonable and unduly discriminatory and preferential. FERC concluded it was inappropriate for SPP to provide ARRs and LTCRs to network customers subject to redispatch while transmission upgrades are being constructed on the same basis it provides ARRs and LTCRs to firm transmission customers not subject to redispatch. FERC reasoned that network service subject to redispatch is a service conditioned on the transmission upgrades being constructed. Thus, FERC reasoned that network customers subject to redispatch are only similarly situated to network customers not subject to redispatch—which are eligible for ARRs and LTCRs—only for those times and in the amount that the service can be provided without redispatch. In addition, FERC found that transmission customers with service not subject to redispatch could be allocated fewer ARRs or LTCRs due to such rights being allocated to network customers subject to redispatch. Accordingly, FERC directed SPP to revise its OATT to limit eligibility for ARRs and LTCRs of network customers subject to redispatch to only those times of the year and in those amounts that service can be provided without redispatch, similar to firm point-to-point customers subject to redispatch. However, FERC did not require SPP to reallocate ARRs and LTCRs to network customers with service subject to redispatch that had already obtained ARRs and LTCRs.

FERC directed SPP to submit a compliance filing containing revisions to its OATT to address FERC’s order within 30 days, with those tariff changes to be effective as of the date of FERC’s order.

The order can be found in Docket No. EL16-110. A copy of the order is available here.