UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION. Southwest Power Pool, Inc. ) Docket No. ER

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1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Southwest Power Pool, Inc. ) Docket No. ER PETITION OF SOUTHWEST POWER POOL, INC. FOR TARIFF WAIVER Pursuant to Rule 207(a)(5) of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission ( Commission ), 1 Southwest Power Pool, Inc. ( SPP ) respectfully requests that the Commission waive certain provisions of SPP s Open Access Transmission Tariff ( Tariff ) 2 necessary for the implementation of the revenue crediting process in Attachment Z2 for the historical period due to SPP s delayed development of the necessary software. I. CORRESPONDENCE AND COMMUNICATION Correspondence and communications with respect to this filing should be sent to: Tessie Kentner Attorney Southwest Power Pool, Inc. 201 Worthen Drive Little Rock, AR Telephone: (501) tkentner@spp.org Nicole Wagner Manager - Regulatory Policy Southwest Power Pool, Inc. 201 Worthen Drive Little Rock, AR Telephone: (501) jwagner@spp.org C.F.R (a)(5). Southwest Power Pool, Inc., Open Access Transmission Tariff, Sixth Revised Volume No. 1.

2 II. BACKGROUND A. SPP SPP is a Commission-approved Regional Transmission Organization ( RTO ). 3 SPP is an Arkansas non-profit corporation with its principal place of business in Little Rock, Arkansas. SPP has 94 Members, including 16 investor-owned utilities, 14 municipal systems, 20 generation and transmission cooperatives, 8 state agencies, 13 independent power producers, 12 power marketers, 10 independent transmission companies, and 1 federal agency. As an RTO, SPP administers open access Transmission Service over approximately 60,000 miles of transmission lines covering portions of Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming, across the facilities of SPP s Transmission Owners, 4 and administers the Integrated Marketplace, a centralized day ahead and real-time energy and operating reserve market with locational marginal pricing and market-based congestion management. 5 B. Overview of Attachment Z2 of the Tariff Attachment Z2 of the Tariff contains the provisions for revenue credits which are designed to compensate entities that pay for Network Upgrades that are subsequently used to provide transmission service. Specifically, Attachment Z2 provides that any Sw. Power Pool, Inc., 109 FERC 61,009 (2004), order on reh g, 110 FERC 61,137 (2005). See Sw. Power Pool, Inc., 89 FERC 61,084 (1999); Sw. Power Pool, Inc., 86 FERC 61,090 (1999); Sw. Power Pool, Inc., 82 FERC 61,267, order on reh g, 85 FERC 61,031 (1998). Sw. Power Pool, Inc., 146 FERC 61,130 (2014) (order approving the start-up and operation of the Integrated Marketplace effective March 1, 2014). 2

3 Network Upgrade which was paid for, in whole or part, through revenues collected from a Transmission Customer, Network Customer, or Generator Interconnection Customer through Directly Assigned Upgrade Costs shall be considered a Creditable Upgrade. 6 Attachment Z2 further provides that a Sponsored Upgrade may become a Creditable Upgrade if SPP determines that the Sponsored Upgrade is needed as part of the Transmission System. 7 The Directly Assigned Upgrade Costs are recoverable, with interest, 8 from new transmission service that could not have been provided but for the Creditable Upgrade, until the amount owed to the Upgrade Sponsor is zero. 9 C. History of the Revenue Crediting Process in SPP In 2005, SPP added the Aggregate Transmission Service Study ( ATSS ) process to the Tariff in a new Attachment Z. 10 This new attachment included provisions for revenue credits. The Attachment Z process for revenue credits provided that Transmission Customers paying for a directly assigned network upgrade shall receive credits for a portion of new transmission service using the facility. Specifically, credits were determined based upon the subsequent incremental use of the Network Upgrade. However, SPP and its stakeholders determined that the process in Attachment Z lacked Tariff at Attachment Z2, Section I.A. Tariff at Attachment Z2, Section I.B. Tariff at Attachment Z2, Section II (interest calculated in accordance with 18 CFR 35.19a(a)(2)). Tariff at Attachment Z2, Section II. See generally Docket No. ER The Commission issued a final order on July 20, See Sw. Power Pool, Inc., Letter Order, Docket No. ER (July 20, 2006). 3

4 the specificity necessary to calculate revenue credits. 11 As a result, SPP and its stakeholders developed Tariff revisions to clarify the process. 12 In 2008, SPP filed the Tariff revisions with the Commission. 13 The Commission accepted the 2008 Revisions on August 28, 2008 with a May 27, 2008 effective date. 14 In the 2008 Revisions, SPP separated Attachment Z into two attachments, Z1 and Z2, with the ATSS process in Attachment Z1 and the revenue crediting process in Attachment Z2. 15 The 2008 Revisions clarified the criteria for crediting purposes to provide that revenue credits be based on transmission service that could not be provided but for the existence of the Creditable Upgrade. The 2008 Revisions expanded revenue crediting procedures to Sponsored Upgrades and included provisions that had been approved to provide transmission revenue crediting for Generator Interconnection upgrades. 16 Additionally, the 2008 Revisions clarified the credits for Upgrade Sponsors of Sponsored Upgrades Beginning in September 2005, the Cost Allocation Working Group ( CAWG ) began reviewing SPP s ATSS and revenue crediting procedures in the Tariff. The CAWG developed recommendations which were adopted by the Regional State Committee ( RSC ). The Tariff modifications to effectuate these recommendations were then developed and reviewed by the Regional Tariff Working Group ( RTWG ), Markets and Operations Policy Committee ( MOPC ) and Board of Directors. See RTWG Meeting Minutes, dated August 30, 2007 and October 9, 2007, posted on SPP s website at: See Board of Directors Minutes, dated December 11, 2007, posted on SPP s website at: Submission of Proposed Tariff Revisions of Southwest Power Pool, Inc., Docket No. ER (March 28, 2008) ( 2008 Revisions ). Sw. Power Pool, Inc., Letter Order, Docket Nos. ER , et al. (August 28, 2008). See generally Docket No. ER See generally Docket No. ER

5 Although the 2008 Revisions provided clarification on some points, the changes did not simplify the process, which continued to involve substantial complexity. The complexity resulted from numerous elements such as the necessity of guidelines to rank subsequent transmission service credit obligations, assessment of multi-directional impacts on transmission facilities, calculation of impacts on both upgrades that have capacity limits and those that do not, determination of methodologies for calculating credit payment obligations for both Network Integration Transmission Service and Point- To-Point Transmission Service and for multiple upgrade types, distribution of credits from reservations of variable length to compensate upgrade sponsors with variable payment obligations, integration of long-term and short-term transmission service study procedures with the transmission service settlements system, and specification of partial credit funding through the region-wide and zonal charges under Schedule 11 of the Tariff. Due to this complexity, SPP and its stakeholders concluded that a more detailed process and a calculation methodology needed to be developed before SPP could effectively implement the revenue crediting process. As a result, in April 2009, SPP s RTWG created the Crediting Process Task Force ( CPTF ) to work with SPP and its stakeholders to develop and recommend specific processes and methods to be used to calculate revenue credits pursuant to Attachment Z2. The CPTF worked from April 2009 through June 2011 to create a white paper on certain aspects of the crediting process. In July 2011, the MOPC voted for SPP to move forward with developing the 5

6 implementation of the revenue crediting process as described in the CPTF whitepaper. 17 In January 2012 meeting, the MOPC supported SPP moving forward immediately with software development. 18 The CPTF and RTWG continued to review the revenue crediting process and developed Tariff changes to further clarify the determination of credit payment obligations and distribution of revenue credits. In April 2013, the SPP Board of Directors approved the additional Tariff changes to further clarify the process. SPP filed the Tariff changes in Docket No. ER The changes were accepted by the Commission, after a compliance filing, with an effective date of September 8, In the 2013 Revisions, SPP added definitions to the Tariff for the revenue crediting process, modified Attachment H to account for revenue credits explicitly, modified Attachment L to incorporate revenue distribution procedures associated with revenue credits, and modified Attachment Z2 to clarify the description of a Creditable Upgrade and specify when a Sponsored Upgrade becomes a Creditable Upgrade See MOPC Meeting Minutes, dated July 12-13, 2011, at Agenda Item 9 and page 449 of the PDF posted on SPP s website at the following link: pdf. See MOPC Meeting Minutes dated January 17-18, 2012 at Agenda Item 6 and page 165 of the PDF posted on SPP s website at the following link: 20jan.% ,% pdf. Revisions to Clarify the Determination of Credits and Distribution of Credit Revenue for Creditable Upgrades of Southwest Power Pool, Inc., Docket No. ER (July 9, 2013) ( 2013 Revisions ). Sw. Power Pool, Inc., Letter Order, Docket No. ER (Feb. 12, 2014). 6

7 D. Delayed Implementation of the Revenue Crediting Process Due to the complexity of the calculations for the revenue crediting process in Attachment Z2 of the Tariff and the voluminous amounts of data necessary for the calculations, SPP s implementation of the revenue crediting process in Attachment Z2 of the Tariff has been a major endeavor. SPP and its stakeholders have spent years developing the processes, calculations, and methodologies necessary for implementation. In order to implement the process and methodology outlined in the CPTF whitepaper, specialized software is necessary to process the voluminous amounts of data required for the calculations. 21 In October 2012, SPP engaged a vendor to develop the necessary software with a target date to provide the software to SPP by October 2013 with full implementation of the crediting process in May In late 2014, after numerous delays and problems with the software, SPP determined that the revenue crediting process implementation was in jeopardy. SPP worked with the vendor to rewrite the system requirements; however, in early 2015, SPP determined that it was necessary to engage a new vendor. SPP terminated its work with the previous vendor and contracted with a new vendor in May 2015 with a goal of implementation in SPP has worked closely with its vendor on the development of the necessary software and is currently testing pieces of the system. Currently, SPP anticipates that the software necessary to implement the revenue crediting 21 The data that must be analyzed includes both long-term and short-term transmission service requests for the entire historical period. Short-term transmission service requests include monthly, weekly, daily and hourly reservations. Over the entirety of the historical period, these data points result in millions of reservations that must be analyzed for creditable impacts. 7

8 process will be fully operational in the second quarter of Once the software is ready for implementation, SPP will begin processing the historical data in order to calculate the credit payment obligations due to Upgrade Sponsors for all eligible Creditable Upgrades. SPP will then begin collecting those credit payments from the appropriate entities and processing payments to Upgrade Sponsors in accordance with Attachment Z2. 22 SPP expects that credit charges and payments will be invoiced in the fourth quarter of While SPP has been delayed in its implementation of revenue crediting, SPP is not currently holding any funds related to the revenue crediting process. SPP has not collected credit payment obligations from Transmission Customers, nor has SPP distributed credits payments to Upgrade Sponsors other than the very limited implementation of crediting for economic upgrades sponsored by Redbud Energy, LP and Kansas City Power & Light Company. 23 As part of the implementation of crediting under Attachment Z2, the intention of SPP and its stakeholders is to calculate the credit payment obligations dating back to 2008, the date of the first impact on a Creditable Upgrade for which credits needed to be determined under this process. SPP will then collect the credit payment obligations due from Transmission Customers and distribute those revenues to Upgrade Sponsors accordingly The amount of revenue credits due to an Upgrade Sponsor will include interest, as specified in Section II of Attachment Z2. See generally Docket No. ER

9 III. REQUEST FOR WAIVER A. Need for Requested Waiver SPP is making significant progress in its implementation of the revenue crediting process and is expected to begin processing credit payment obligations in the fourth quarter of In order to account for the historical period in which SPP has been unable to calculate, collect and distribute credit payment obligations due to delays in SPP s implementation of the revenue crediting process, SPP seeks a waiver of Tariff provisions in order to implement the revenue crediting process for the historical period commencing with the first impacts in 2008 that require credit calculation with the crediting software. I. Clarifying Revisions to Revenue Crediting Process As described above, the revenue crediting process was initially added to the Tariff in 2005 and was modified with the 2008 Revisions and the 2013 Revisions. The modifications made in the subsequent revisions were intended to add more specificity and clarity to the process. Due to the clarifying nature of these changes, SPP is applying these clarifications in its implementation of crediting for the historical period. For example, in the 2008 Revisions, SPP added a but for criterion to be used when determining whether a transmission service request has an impact on a Creditable Upgrade. Prior to 2008, Attachment Z included limited provisions for determining creditable impacts. The but for criterion was added as a clarification of the original process. Utilizing this methodology, the first creditable impacts to a Creditable Upgrade which would result in credit payment obligations was in Additionally, in the 2013 Revisions, changes were made to Attachment H, Section I to add a column for Base Plan Zonal ATRR to pay Upgrade Sponsors. This column was added to clarify the funding of credit 9

10 obligations by separately setting forth the Zonal Annual Transmission Revenue Requirement ( ATRR ) associated with Attachment Z2 credits. Additionally, Section I was revised to clarify that Region-wide charges under Schedule 11 include the Base-Plan Region-wide ATRR to pay Upgrade Sponsors as determined under Attachment Z2. As a result, SPP seeks waiver to implement the revenue crediting process as it has been clarified since being added to the Tariff in 2005 with filings in 2008 and 2013, to permit SPP to calculate, collect and pay revenue credits in accordance with Attachment Z2. Additionally, as described in more detail below, SPP seeks a waiver of the limitation on billing adjustments in Section 7.1 of the Tariff, re-calculation of previously reallocated Balanced Portfolio transfers in Section IV.A of Attachment J of the Tariff, and the posting deadline requirement associated with waiver of the Safe Harbor Cost Limit in Attachment Z1, Section III.C. 1. Section 7.1 of the Tariff SPP has not been collecting credit payment obligations from Transmission Customers or paying credits to Upgrade Sponsors other than the limited cases noted above. 24 The credit payment obligations of Point-To-Point Transmission Service reservations that are dependent on Creditable Upgrades will be determined based on Attachment Z2, Sections II.A and II.C.2. Such obligations are partially or completely funded through revenue generated by the standard transmission service demand charges under Schedules 7, 8, and 11 of the Tariff. Because the revenue crediting settlement system has not yet been implemented, these revenues have not been paid to compensate 24 See supra n

11 Upgrade Sponsors. Instead, they have been distributed to Transmission Owners under the revenue distribution provisions of Attachment L, Sections II.C and III. To the extent such revenues previously distributed to Transmission Owners are associated with credit payment obligations of Point-To-Point Transmission Service reservations, SPP will claw back the revenues to pay Upgrade Sponsors the amounts due. Once SPP calculates the historical credit information, SPP will invoice Transmission Customers for previously uncollected credit payment obligations and SPP will have to claw back revenues previously distributed to Transmission Owners that should have been paid to Upgrade Sponsors. Section 7.1 of the Tariff provides that [b]illing adjustments for reasons other than (a) the replacement of estimated data with actual data for service provided, or (b) provable meter error, shall be limited to those corrections and adjustments found to be appropriate for such service within one year after rendition of the bill reflecting the actual data for such service. 25 Although the settlement of the credit amounts under Attachment Z2 can reasonably be construed as an initial settlement because SPP has not yet attempted to collect these amounts from Transmission Customers, out of an abundance of caution, SPP seeks waiver of this provision to allow SPP to collect credit payment obligations from Transmission Customers that may be beyond the one-year limitation on billing adjustments in Section 7.1 of the Tariff. Additionally, waiver of the one-year limitation on billing adjustments is necessary for SPP to claw back revenues previously distributed to Transmission Owners that should have been distributed to Upgrade Sponsors. 25 Tariff at Part I, Section

12 2. Balanced Portfolio Reallocations Attachment J, Section IV.A of the Tariff includes the provisions for reallocation of Zonal Revenue Requirements for Deficient Zones associated with an approved Balanced Portfolio. 26 SPP has been reallocating Zonal Revenue Requirements in accordance with these provisions since October 1, In order to completely account for the historical period related to the revenue crediting process, SPP would be required to recalculate previous adjustments for deficient Zones to account for the additional Schedule 11 charges necessary to fund credit payment obligations. In accordance with Section IV.A.1 of Attachment J, such recalculation would be needed because the Balanced Portfolio reallocations are taken from the Base Plan Zonal Annual Transmission Revenue Requirement of the deficient Zone(s) first, then, if necessary, from the Zonal Annual Transmission Revenue Requirement of the deficient Zone(s). Under this provision, when the Base Plan Zonal ATRR to pay Upgrade Sponsors is added to zones where the Balanced Portfolio reallocation exceeds the previous level of total Base Plan Zonal ATRR, the amount of Balanced Portfolio reallocation from the Zonal ATRR will be reduced. The result will be an increase in Schedule 9 charges in certain zones and an equal offset of Schedule 11 Network charges to Transmission Customers in the very same zones. As a result, any impacts of these reallocations would be minimal because the Balanced Portfolio zonal reallocations would be applied to the same zones, and in the same magnitude for each zone. Therefore, any impacts on Transmission Customers, if any, would be very small. These recalculations would be time consuming because they would 26 Attachment H, Section I of the Tariff specifies that such reallocations will be reflected in Column 6 of Table 1 in the Revenue Requirements and Rates (RRR) file that is available on SPP s website. 12

13 involve resettling Schedule 9 and Schedule 11 Network charges and Point-To-Point charges extending back to This would be burdensome to administer, particularly at a time when SPP is focused on implementing the Attachment Z2 revenue crediting process. Accordingly, SPP seeks a waiver of the Tariff provisions for Balanced Portfolios reallocations to leave previous reallocations extending back to October 1, 2012 in place. Once SPP begins invoicing credit payment obligations on a monthly basis, which is currently expected to begin in the fourth quarter of 2016, the invoices will include the impact of the Balanced Portfolio reallocations. 3. Safe Harbor Cost Limit Section 1 of Attachment H of the Tariff provides for Base Plan Zonal ATRR and Base Plan Region-wide ATRR to pay Upgrade Sponsors and Section II.B of Attachment Z2 provides that this inclusion of network credit payment obligations in rates will be determined under the Base Plan and Balanced Portfolio funding formulas of Attachment J. The Base Plan funding formula in Attachment J includes the provisions for the Safe Harbor Cost Limit which provides that Base Plan Upgrades meeting certain criteria are eligible for cost allocation. 27 The Safe Harbor Cost Limit is $180,000 / MW times the requested capacity. 28 Any costs exceeding the Safe Harbor Cost Limit are directly assigned to the Transmission Customer unless a waiver of the Safe Harbor Cost Limit is granted pursuant to Section III.C of Attachment J of the Tariff Tariff at Attachment J, Section III.B. Tariff at Attachment J, Section III.B(d)(i). Tariff at Attachment J, Section III.B(d)(ii). 13

14 Accordingly, when SPP calculates the credit payment obligations of Transmission Customers, many of the amounts due will be covered by the Safe Harbor Cost Limit in accordance with Attachment J, Section III of the Tariff. Any costs that exceed the Safe Harbor Cost Limit are to be directly assigned to the Transmission Customer. 30 As noted above, Attachment J, Section III.C provides that a Transmission Customer may request a waiver regarding costs in excess of the Safe Harbor Cost Limit by following the process in Attachment Z1, Section III.C. 31 In accordance with this process, SPP is required to post the results of the Aggregate Facilities Study on the Transmission Provider s Open Access Same-Time Information System (OASIS) and notify all Transmission Customers in the study. 32 This posting identifies any Directly Assigned Upgrade Costs allocated to the Transmission Customers. The Transmission Customer is then provided 15 days from the posting of the cost information from the Aggregate Facilities Study to request a waiver of the Safe Harbor Cost Limit. 33 The waiver requests are reviewed by SPP and reviewed at the following MOPC and SPP Board of Directors meetings Tariff at Attachment J, Section III.B.1.d.ii. Before June 1, 2015, the 15 day window for submission of waiver requests was in Attachment J, Section III.C.1 of the Tariff. The Commission approved a revision to the Tariff to move the provisions in Attachment Z1 in Docket No. ER See Sw. Power Pool, Inc., Letter Order, Docket No. ER (May 19, 2015). Tariff at Attachment Z1, Section III.C(2). Tariff at Attachment Z1, Section III.C(2). SPP makes an annual filing at the Commission regarding the disposition of all requests for waiver of the Safe Harbor Cost Limit in Docket No. ER See Informational Report of Southwest Power Pool, Inc., Docket No. ER (February 16, 2016). 14

15 Since SPP has not yet implemented the Attachment Z2 crediting process, any posting made for previous Aggregate Facilities Studies has not included any Directly Assigned Upgrade Costs associated with the credit payment obligations. Consequently, Transmission Customers have not yet had an opportunity to request a waiver, as provided in Attachments J and Z1 of the Tariff, of the estimated costs in excess of the Safe Harbor Cost Limit that would result from the credit payment obligations. In order to provide Transmission Customers with an opportunity to request a waiver of the Safe Harbor Cost Limit that should have been available to them if SPP was not delayed in its implementation of the revenue crediting process, SPP seeks a waiver of the timing of the posting requirement in Attachment Z1, Section III.C of the Tariff to permit SPP to make a posting outside the normal ATSS schedule upon the determination of the Directly Assigned Upgrade Costs resulting from any credit payment obligation associated with a transmission service request. 35 Upon the posting of these costs, Transmission Customers that are eligible to request a waiver in accordance with Attachment J, Section III will then have 15 days to review the Directly Assigned Upgrade Costs from credit payment obligations and submit a request for a waiver of the Safe Harbor Cost Limit for the costs. The review of any waiver requests submitted following the posting of the Directly Assigned Upgrade Costs associated with the revenue crediting process will follow the 35 SPP s waiver request is limited to the timing of the posting that triggers the 15 days to request a waiver of the Safe Harbor Cost Limit and does not make any changes to the criteria for or calculation of the Safe Harbor Cost Limit. 15

16 steps outlined in Section III.C of Attachment J of the Tariff which will be reviewed by the MOPC, RSC and Board of Directors. 36 B. Requested Waiver Satisfies the Commission s Standards for Waiver As described above, in order to implement the revenue crediting process in Attachment Z2 of the Tariff for the historical period, SPP seeks a waiver of the limitation on billing adjustments in Section 7.1 of the Tariff, re-calculation of previously reallocated Balanced Portfolio transfers in Section IV.A of Attachment J of the Tariff, and the posting deadline requirement associated with waiver of the Safe Harbor Cost Limit in Attachment Z1, Section III.C. In the past, the Commission has granted waivers where (1) the underlying error was made in good faith; (2) the waiver was of limited scope; (3) a concrete problem needed to be remedied; and (4) the waiver did not have undesirable consequences, such as harming third parties. 37 As next discussed, SPP s request satisfies the standards for waiver and should be granted. 1. The underlying error was made in good faith. The underlying error was in good faith. As described above, SPP has worked continuously to implement the revenue crediting process; however, SPP has faced The disposition of any waivers requested will also be noted in SPP s next annual waiver filing. See supra n. 34. ISO New England Inc., 117 FERC 61,171, at P 21 (2006); see also Sw. Power Pool, Inc., 138 FERC 61,200, at P 5 (2012) ( The Commission has granted such waivers where good cause for a waiver of limited scope exists, there are no undesirable consequences, and the resultant benefits to the customers are evident. ); PJM Interconnection, L.L.C., 128 FERC 61,162, at P 8 (2009) ( [W]e find that PJM s requested waivers are of limited scope, address a concrete problem that needs to be remedied, and will not have undesirable consequences, such as harming third parties. ). 16

17 numerous delays and obstacles in implementation. Throughout the implementation, SPP has been transparent with its stakeholders on the status of the project. SPP s stakeholders have worked closely with SPP on the development of the processes and calculations necessary for implementation. 38 SPP has provided regular updates to the RTWG, MOPC and the SPP Board of Directors on the status of the project. 39 Additionally, the intention of SPP and its stakeholders has been to account for the delay by calculating the credit payment obligations back to the date the first credit payment obligations was due The requested waiver is limited in scope. The requested waiver is limited in scope. SPP is requesting a one-time waiver for the implementation of the revenue crediting process in order to calculate, collect, and distribute credit payment obligations for the historical period due to SPP s delay in implementing the revenue crediting process. SPP is finalizing the development of the software necessary to calculate the credit payment obligations. Once the historical period See infra n. 39. See also generally CPTF Meeting Materials posted on SPP s website at: See generally RTWG Minutes, dated January 2012 through present, posted on SPP s website at: see also general MOPC Minutes, dated January 2012 through January 2016, posted on SPP s website at: see also generally Board of Directors Minutes, dated January 2012 through January 2016, posted on SPP s website at: See RTWG Background Material, dated June 29, 2011, at 11 CPTF Report.zip, CPTF Presentation Report_ pptm posted on SPP s website at: See also MOPC Meeting Minutes, dated July 12-13, 2011, at page 493 of the PDF posted on SPP s website at: pdf. 17

18 is resolved, on a going-forward basis, SPP will calculate, collect and distribute credit payment obligations on a monthly basis in accordance with Attachment Z2. As a result, no additional waivers will be necessary for the calculation of future credit payment obligations. 3. There is a concrete problem to be remedied. As described above, due to the complexity of the revenue crediting process, SPP has not yet been able to fully implement the crediting process. The waiver will solve a concrete problem as it will allow SPP to fully implement the revenue crediting process to account for the delay in the implementation. The waiver will ensure that Upgrade Sponsors are properly compensated in accordance with the Commission-accepted revenue crediting process in Attachment Z2 of the Tariff. 4. The requested waiver will not result in any undesirable consequences. The requested waiver will not result in undesirable consequences because stakeholders have been on notice for a number of years that SPP has been working to develop the Attachment Z2 process and planned to implement the crediting process to account for the historical period back to when the first credit payment obligation was due. 41 Additionally, the revenue crediting provisions have been accepted by the Commission and are included in the Tariff. The waiver will provide benefits in that it will permit SPP to fully implement the revenue crediting process to account for the historical period, which permits SPP to provide credits to all Upgrade Sponsors on a consistent basis. 41 Id. 18

19 C. The Commission Should Grant SPP s Waiver Request. SPP s waiver request meets the criteria for granting a waiver. First, the error was in good faith. SPP has worked continuously to implement this process and has kept its stakeholders informed from the start on the status of the project. SPP has worked with stakeholders and software vendors to implement the process and planned to provide credits historically to account for the delay. Second, the waiver is limited in scope as it is a one-time waiver of Tariff provisions to permit SPP to account for the delay in implementation and provide Upgrade Sponsors with the past due credits. The waiver is limited to the historical period and will not be required for the future credits. Third, there are no undesirable consequences because stakeholders have been on notice that SPP has been working on the development of the Attachment Z2 process and planned to implement the revenue crediting process back to account for the delays in implementation. Additionally, the revenue crediting provisions were accepted by the Commission and are included in the Tariff. Fourth, there are benefits as the waiver will permit SPP to provide credits to all Upgrade Sponsors on a consistent basis in a manner. Finally, the waiver will solve a concrete problem as it will allow SPP to account for the delay in the implementation and treat all Transmission Customers and Upgrade Sponsors in an equivalent manner. IV. WAIVER AND TIMING OF IMPLEMENTATION SPP plans to begin collecting and distributing credit payment obligations by the fourth quarter of To meet this deadline, SPP has a detailed schedule for the completion of the testing of the software, the processing of the historical data, and the calculation of credit payment obligations that must be completed before SPP can issue 19

20 invoices. 42 In order to accommodate the process for waivers of the Safe Harbor Cost Limit and still meet the goal of deadline of fourth quarter 2016, SPP must have Board of Directors action on any requests for waiver of the Safe Harbor Cost Limit in early June. SPP respectfully requests that the Commission issue an order by May 31, 2016 to prevent further delays in the implementation of the revenue crediting process. V. CONCLUSION For the reasons stated above, SPP requests that the Commission grant a waiver of the Tariff provisions necessary for the implementation of the revenue crediting process in Attachment Z2 for the historical period due to the delay in implementation, which includes a waiver of the limitation on billing adjustments in Section 7.1 of the Tariff, recalculation of previously reallocated Balanced Portfolio transfers in Section IV.A of Attachment J of the Tariff, and the posting deadline requirement associated with waiver of the Safe Harbor Cost Limit in Attachment Z1, Section III.C. SPP respectfully requests that the Commission issue an order by May 31, 2016 to prevent further delays in the implementation of the revenue crediting process. 42 SPP provides updates on the implementation schedule monthly at the meetings of the RTWG, CAWG and the Change Working Group, and quarterly at meetings of the MOPC. 20

21 Respectfully submitted, /s/ Tessie Kentner Tessie Kentner Attorney Southwest Power Pool, Inc. 201 Worthen Drive Little Rock, AR Telephone: (501) Attorney for Southwest Power Pool, Inc. Dated April 1,