Exhibit B-3
PROPOSAL FOR INCLUSION OF A TRANSCO
INCLUDING ENTERGY WITHIN THE SPP RTO
This Proposal outlines the terms and conditions in a proposed Appendix to
the Southwest Power Pool's ("SPP's") Membership Agreement that, provided SPP and
Transco agree to implement the same congestion management regime, would allow a
Transco including Entergy ("the Transco") to operate within the structure, and
under the oversight, of an SPP RTO. This is referred to as a Partnership RTO
structure.
1. Basic Governance and Operational Responsibilities. This proposal will
allow the Transco to operate under the oversight of the Partnership RTO. The
SPP's role shall include (1) acting as regional Security Coordinator for the SPP
and Transco systems; (2) performing, subject to the conditions set forth in
paragraph 4, the ATC and TTC calculations for the Transco; (3) fostering full
and complete input by market participants into the Transco's policies; (4)
overseeing a regional transmission expansion planning process; and (5) providing
an appropriate forum for market monitoring and dispute resolution. The proposal
should also prevent rate pancaking in the SPP's and Transco's regions. Transco
shall have the option of participating on the SPP RTO Board of Directors on the
same terms and conditions as all other SPP RTO Members. These provisions are
currently set out in Sections 4.2 and 4.3 of the Southwest Power Pool Bylaws.
2. Because SPP will perform multiple roles under the Partnership RTO
model, the staff structure and organization will be reviewed and appropriately
modified to ensure non-discriminatory treatment of all parties with respect to
Partnership RTO functions. The organizational structure will be designed to
provide independence between the Partnership RTO functions: oversight, planning,
security coordination and market monitoring, all of which will be performed by
SPP, and the transmission provider and tariff administrator functions, which
will be performed by SPP, by SPP non-Transco members, and by Transco. These
changes are focused on complying with the objectives outlined in FERC Order No.
2000. In particular, the following functions will be separated with a code of
conduct specifying the policies and procedures that must be followed in all
business transactions between these functions:
a) Transmission provider and tariff administration functions. SPP will be
a transmission provider within the Partnership RTO territory, as will
Transco. There should be a level playing field among all transmission
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providers, control area operators, and transmission users under the
Partnership RTO.
b) Regional coordination and planning functions. SPP will provide
security coordination and regional planning functions for the entire
Partnership RTO region. The security coordinator function should be
clearly separated from the transmission provider and tariff
administrator function. The separation of the security coordinator
function may be achieved, at the election of the SPP Board, either
through the use of a strict code of conduct or by organizational
separation, in which case the security coordinator would report to the
SPP Board of Directors, independently from the tariff administrator
function. The code of conduct would strictly forbid the security
coordinator from taking any actions in carrying out the duties and
responsibilities of security coordinator that advantage the
transactions over one transmission owners system over the transactions
over any other transmission owners system.
c) Oversight functions. Under this proposal, SPP's oversight
responsibilities include market monitoring and ADR. These functions
will be carried out by a separate group of employees and managers
reporting directly to the SPP Board. The Board may use an independent
outside firm to assist in the monitoring activities. The scope of the
monitoring function is described below in paragraph 16. It includes
monitoring of the other functions of SPP, including security
coordination.
3. FERC Review and Approval of the Transco Proposal. The Transco shall
seek and obtain FERC approval to establish and operate as a Transco under the
SPP RTO.
4. Transmission Tariff. The Partnership RTO shall administer a single
tariff that will apply to transmission service within the SPP and Transco.
Transco will have control over those portions of the tariff that affect the
commercial terms and conditions of transmission service over Transco's
facilities. Transco shall possess the unilateral right, without receiving any
SPP or Partnership RTO approval, to make filings at FERC proposing rate or rate
structure changes (including incentive rate structures) involving transmission
charges for service to load within the Transco or transmission service that does
not cross any of the SPP transmission operator facilities. Transco also retains
the right to unilaterally make filings at FERC for the purposes of implementing
new transmission services that are not contained in the RTO Transmission Tariff,
provided that such unilateral filings do not alter terms and conditions of
service across the SPP Systems other than the Transco. Transco will provide SPP
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with a copy of any such filing 30 days prior to filing with FERC and will make
reasonable efforts to resolve any issues regarding the new service prior to
filing at FERC, but in no circumstances shall this extend beyond 45 days from
the time SPP is provided a copy of the proposed filing. A detailed list of the
pro forma tariff provisions that Transco will have the unilateral right to
change through FERC filings will be developed and attached to this agreement as
[and set forth in detail in] Service Schedule A.
The Transco will be responsible for conducting studies and scheduling
transactions on the Transco's system and shall be the provider of last resort
for ancillary services in accordance with FERC Order Nos. 888 and 2000. The SPP
and Transco agree to use a single model incorporating the VST model (Vacar,
Southern and TVA) for calculating ATC/TTC. Provided that the SPP and Transco
agree to utilize the same congestion management regime, the SPP RTO will perform
all ATC/TTC calculations utilizing a methodology that is mutually agreed to
between Transco and the SPP, including the requirement that the SPP RTO agrees:
to (1) accommodate Transco's ATC/TTC calculation frequency requirements; (2) to
coordinate with adjoining reliability regions to ensure that differing
calculation assumptions or methods between the adjoining regions and Transco/SPP
do not invalidate the border ATC/TTC values; (3) that Transco shall be
responsible for establishing the ratings of its facilities; (4) to ensure that
TTC/ATC values are consistent with a simultaneously feasible set of transmission
rights; and (5) to coordinate with Transco to ensure that the most up-to-date
VST model information is included in the SPP model .- The Transco shall have
real-time access to the ATC/TTC calculations. If the Transco and the SPP cannot
resolve a disagreement over the calculation of ATCs or TTCs, then the Transco
can submit that disagreement to the Partnership RTO's ADR process, provided
that, in the absence of System security issues, the Transco's calculation shall
be binding during the pendency of the ADR proceeding.
5. Transmission Rates. In designing transmission rates, SPP and
Transco agree that there shall be no pancaked rates for transmission service
with respect to transactions using both the Transco and SPP systems. To
implement this, they will agree to reciprocal waiver of access charges for
transactions scheduled on one system that terminate on the other system. For
transmission service on either the Transco's system or the SPP's system, but not
both, that is scheduled to sink outside the Partnership RTO's system (including
transmission through and out service), the customer shall pay the transmitting
system's rate. For transmission service on both the Transco's and SPP's systems
to load outside the system (including transmission through and out service), the
Transco and the SPP shall develop an appropriate single joint rate. The Transco
and the SPP shall develop a rate formula that compensates the Transco and the
SPP for their proportionate contribution to these transactions. Within these
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limitations, the Transco shall possess the unilateral right to propose rates and
ratestructures (including innovative rate-making proposals) for transmission
service over the Transco's transmission facilities.
6. Billing. The Transco shall be responsible for billing for
transmission service that terminates on or only crosses the Transco's system.
The SPP shall be responsible for billing for transmission service that
terminates on or only crosses the SPP system. For transactions on both the SPP's
and the Transco's systems that terminate outside the combined region, the
billing shall be handled by the system on which the power exits the combined
region, provided, however, that the rate for such service will be the single
joint rate described in paragraph 4 of this document.
SPP's Schedule 1 tariff administration fee shall apply to transmission
service within the Transco. If Transco maintains a separate tariff, Transco
shall develop, file and apply a rate schedule to collect this fee and will
provide such revenues to SPP on a monthly basis, consistent with SPP's billing
processes. Transco's total responsibility for SPP costs incurred to provide
services and systems that are used by Transco and other SPP members shall be
capped at a level equal to such costs multiplied by the ratio of the share of
annual load served by Transco's transmission system to the annual load served by
the Partnership RTO's transmission system.
7. Unified OASIS Site. The SPP and the Transco shall work to jointly
develop and administer a unified OASIS site for transmission service under the
SPP's and Transco's tariff. Both parties, however, shall have the option to
build, maintain and administer additional features to the OASIS site in response
to the needs of customers or the market. SPP and Transco shall ensure that
market participants have the ability to obtain transmission service across the
transmission facilities of the SPP/Transco RTO through the use of one OASIS
site.
8. Congestion Management. The Transco and SPP shall develop and
implement a congestion management plan for managing and relieving constraints
within the Transco's system. The Transco and the SPP agree to work together in
an effort to develop a single regional approach to congestion management. If the
SPP so requests, Transco agrees to make its congestion management system
available to SPP members at cost. Should SPP elect to develop its own system for
congestion management, Transco and SPP will coordinate their systems to ensure
maximum efficiency. At a minimum, they agree to develop a system for the joint
procurement of ancillary services and a joint protocol to address the effect of
parallel flow within the combined region that is caused by transactions
scheduled on either SPP or Transco.
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9. Losses. The Transco shall develop and implement a proposal for loss
responsibility within the Transco's system. The Transco will coordinate with the
SPP, and its members, to develop a proposal to calculate losses on transactions
over the SPP's and the Transco's system.
10. Curtailments. SPP shall act as the regional Security Coordinator
for the SPP and Transco systems. In its role as Security Coordinator, SPP will
allow Transco to provide redispatch alternatives to the Security Coordinator for
transactions not scheduled by Transco that affect Transco flowgates that will
alleviate the need for transmission line loading relief (TLR). These redispatch
instructions will be by Transco.
11. Operations. The Transco shall be responsible for the operation of
the Transco's transmission system. This includes the responsibility to establish
ratings and operating procedures, and develop transmission and generation outage
schedules which will be coordinated with the SPP RTO, and to develop congestion
management proposals. Transco and SPP will develop transmission and generation
outage schedules designed to balance grid optimization with good utility
practice.
12. New Generator Interconnections. Transco shall be responsible for
evaluating and implementing requests for new generator interconnections on its
system. SPP and Transco will work together to develop a single procedure for
generator interconnections within the Partnership RTO. Market participants
seeking generator interconnections with Transco may use the SPP dispute
resolution process.
13. Reliability Oversight and Input. The SPP shall be informed of, and
shall be allowed to provide input into, the operational practices of the Transco
so that the SPP can determine whether such practices have an adverse reliability
impact anywhere in the region. The SPP may challenge operational procedures or
practices of the Transco through the SPP's dispute resolution process; provided
that the Transco's actions shall be binding pending the dispute resolution
process.
14. Planning and Expansion. The Transco shall develop its own
transmission plan for its region that includes both market-funded and
rate-funded projects. This will be submitted to the SPP for review and inclusion
in an RTO-wide plan which the SPP shall prepare. Transco may, at its option,
participate in the expansion of the transmission grid through market-funded
projects. The SPP shall review all rate-funded projects for reliability
considerations and appropriateness and then incorporate such projects into the
overall Partnership RTO expansion plan.. The SPP's review of market-funded
projects shall be limited to reliability considerations. SPP and Transco will
develop a formula to be used to apportion responsibility among all RTO
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transmission owners for the funding of projects that were not included in the
Transco's plan but that the SPP has determined are required for regional
reliability reasons.
SPP, through its affected members, and Transco mutually agree to construct
facilities to meet new requests for firm transmission service subject to the
development of appropriate cost-sharing arrangements and subject to obtaining
all necessary governmental and regulatory approvals. In carrying out this
obligation, Transco and SPP agree to use due diligence in meeting these requests
regardless of whether the request originates on the Transco system or the
portion of the grid under the control of the SPP transmission operator. SPP and
Xxxxxxx also agree to work together to determine the financial responsibility
and the sharing of costs required to construct any new facilities required to
meet these requests.
15. Multi-State Transmission Planning Agreements. SPP and Transco
agree to work together jointly to support any multi-state transmission planning
compact that is developed in their region.
16. Monitoring. The Partnership RTO shall be responsible for all
market monitoring activities required of the Partnership RTO. The monitoring
function will also extend to SPP's security coordination function. In its role
as market monitor, the SPP shall have the authority to collect information and
issue reports to appropriate regulatory agencies, but it shall not have the
authority to impose penalties. The SPP's cost of monitoring the Transco's
markets shall be borne by the Transco and its customers. The SPP and Transco
shall be responsible for enforcing compliance with the provisions of their
respective tariffs.
17. Liability. The Transco shall assume liability for all acts or
omission resulting from the functions performed by the Transco and shall
indemnify and hold the SPP harmless for its actions in performing those
functions.
18. Dispute Resolution. The SPP, and its dispute resolution process,
shall be utilized for addressing all disputes between the Transco and SPP
concerning the arrangements set forth in this RTO Partnership Agreement provided
that disputes between the SPP and Transco shall be subject to non-binding
arbitration unless the parties agree otherwise. Disputes between Transco, SPP
members, or other market participants shall be subject to non-binding dispute
resolution procedures unless the parties agree otherwise.
19. Coordination. The Transco and the SPP shall cooperate and use
their best efforts to develop procedures and protocols to allow the Transco to
operate within the structure of the SPP.
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20. Stakeholder and State Commission Input. The SPP's oversight shall
allow input from state commissions and market participants into the Transco's
operations and procedures. This may take the form of an SPP advisory committee
to be established for this purpose. The Transco shall establish a liaison with
such advisory committee, or comparable organization, and shall support the
process allowing input from state commissions and market participants.
Additionally, Transco will establish a Market Rules Committee, comprised of
market participants, for the purpose of providing input and recommendations to
Transco on changes to the market rules that will improve the overall efficiency
and operation of the competitive generation market.
21. Expandability of Transco. The Transco shall be structured to
reasonably accommodate other SPP members and non-members who elect to join. Any
current SPP member shall have the right, upon one year's advance notice,
(consistent with Section 4 of the SPP Members Agreement) to commit its assets to
the Transco and to have its transmission facilities included within the Transco
Tariff on terms and conditions comparable to the terms and conditions provided
to the initial Transco members.
22. Survivability. This Agreement shall remain binding and shall be
accommodated in the event that the SPP merges or combines with another regional
transmission entity. In any instance where the provisions contained within this
RTO Partnership Agreement, are in conflict with the SPP Bylaws or the SPP
Membership Agreement, the terms and conditions of this document shall control.
23. Withdrawal Rights. The Transco shall have the same rights to
withdraw from the SPP as other SPP members under section 4 of the SPP Membership
Agreement. Such withdrawal shall be subject to FERC approval.
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SOUTHWEST POWER POOL
BOARD OF DIRECTORS MEETING
EMBASSY SUITES OUTDOOR WORLD - D/FW AIRPORT
JULY 20, 2000
-SUMMARY OF ACTION ITEMS-
1. Approved minutes of the May 11, 2000 meeting as distributed.
2. Approved a memorandum of understanding containing terms and conditions for
the development of a contractual attachment to SPP's membership agreement
for an independent transmission company (Transco) including Entergy to
operate within the structure and under the oversight of the SPP RTO.
3. Endorsed a report of the RTO Working Group as indication the organizational
documents, to be modified pursuant to RTOWG recommendations, meet with the
Board's satisfaction fora second SPP filing seeking FERC recognition as an
RTO.
SOUTHWEST POWER POOL
BOARD OF DIRECTORS MEETING
D/FW AIRPORT HYATT -DALLAS, TEXAS
AUGUST 30, 2000
-SUMMARY OF ACTION ITEMS-
Approved minutes of the July 20, 2000 Board of Directors meeting as distributed.
Approved recommended actions by the RTO Working Group for a second filing
seeking FERC recognition of SPP as an RTO, which included:
1. Acceptance of the RTOWG report as indication the collaborative
process used in its development met with the Board of Director's
satisfaction;
2. Concurrence on maintenance of SPP's existing Bylaws, including
SPP's current governance structure;
3. Approval of proposed process for Section 203 filings by FERC
jurisdictional transmission owning members with SPP's RTO filing;
4. Approval of a new RTO membership agreement;
5. Approval of proposed public and regulatory education process to
be used in development of SPP RTO filing;
6. Approval of proposed market settlement process and budgeting
items covering a six-year net present cost of $42 million for
implementation of necessary systems and additional personnel,
subject to approval of a specific methodology, financial plan,
and vendor recommendation by the Commercial Practices Committee;
7. Approval of market monitoring procedures and proposed personnel
(3 FTEs), or the outsourcing of this responsibility if more
cost-effective;
8. Acceptance of the report as indication the efforts undertaken to
address SPP's scope and configuration meet with the Board of
Director's satisfaction.
9. Approval of proposed hybrid principles for market-based
congestions management and formation of a Market Rules Working
Group, reporting to the Commercial Practices Committee, to
proceed with development of market rules to implement the hybrid
principles;
10. Acceptance of the report as indication the Seams Sub-Team
proposed actions meet with the Board of Director's satisfaction
and are to be further developed for subsequent action; and
11. Approval of proposed modifications to SPP's regional transmission
service tariff with specific changes to be approved by the
Regional Tariff Working Group prior to filing.
Approved a recommendation from the floor directing the Staff to recommend a
formula rate methodology, including functionalization, for consideration by the
Board of Directors at their regular November meeting.
Approved a recommendation from the Market Settlement Working Group and the
Commercial Practices Committee to ratify the selection of Xxxxxxxx Consulting to
develop SPP's market settlement system, and the development of a specific
contract for such.
