January 29, 2013
VIA ELECTRONIC FILING The Honorable Kimberly D. Bose Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C. 20426 Re: Southwest Power Pool, Inc., Docket No. ER13-_____-000 Submission of Tariff Revisions to Modify the SPP Annual Risk Management
Dear Secretary Bose:
Pursuant to Section 205 of the Federal Power Act, 16 U.S.C. 824d (2000) (FPA), and Section 35.13 of the Federal Energy Regulatory Commissions (Commission) Regulations, 18 C.F.R. 35.13 (2011), Southwest Power Pool, Inc. (SPP) submits revisions to its Open Access Transmission Tariff (Tariff)1 to modify the standard Annual Risk Management Certification Form set forth in Appendix E to Attachment X of the SPP Tariff. SPP requests an effective date of March 30, 2013 for the revisions proposed in this filing.
I. BACKGROUND SPP is a Commission-approved Regional Transmission Organization (RTO).2 It is an Arkansas non-profit corporation with its principle place of business in Little Rock, Arkansas. SPP has 68 members, including 14 investor-owned utilities, 11 municipal systems, 12 generation and transmission cooperatives, 4 state agencies, 9 independent power producers, 10 power marketers, and 8 independent transmission companies. As an RTO, SPP is a transmission provider currently administering transmission service over portions of Arkansas, Kansas, Louisiana, Missouri, Nebraska, New
1 Southwest Power Pool, Inc., FERC Electric Tariff, Sixth Revised Volume No. 1
(Tariff). 2 Sw. Power Pool, Inc., 109 FERC 61,009 (2004), order on rehg, 110 FERC
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Mexico, Oklahoma and Texas serving more than 6 million households in a 370,000 square-mile area.
The Tariff revisions proposed in this filing are the result of SPPs stakeholder process and were developed at the request of the Credit Practices Working Group (CPWG) to lessen the administrative burden required for SPP Market Participants to submit the Annual Risk Management Certification Form set forth as Appendix E to Attachment X of the SPP Tariff. Appendix E requires Market Participants to provide information as required by Section 184.108.40.206, including: a description of the Market Participants risk management capabilities and procedures; identification of employees engaged in risk management activities and their relevant skills, training, and experience; and other information to assist SPP in reviewing the Market Participants risk management capabilities.3 The form must be signed by a duly authorized officer of Market Participant and notarized.4 Under Section 220.127.116.11, existing Market Participants are required to submit an Annual Risk Management Certification Form by April 30 of each year, and new Market Participants are required to submit a completed form as part of their credit application.
At its meeting held October 12, 2012, the CPWG approved the proposed language. The Regional Tariff Working Group (RTWG) reviewed the proposed language on October 25, 2012, subject to additional review by the CPWG. The CPWG unanimously accepted the proposed language on November 15, 2012. The RTWG provided its final, and unanimous, approval on November 29, 2012, and forwarded the proposed Tariff revisions to the Markets and Operations Policy Committee (MOPC) for further review and consideration. On January 15, 2013, the MOPC unanimously approved the proposed language and recommended to the SPP Board of Directors that the Tariff revisions be approved. The SPP Board of Directors approved the proposed Tariff revisions on January 29, 2013. The Members Committee also unanimously supported the proposal.
II. DESCRIPTION AND JUSTIFICATION FOR TARIFF REVISIONS
In response to the CPWGs request that the administrative burden required for SPP Market Participants to submit the Annual Risk Management Certification Form set forth as Appendix E to Attachment X of the SPP Tariff be lessened, similar to the practice of other Independent System Operators/Regional Transmission Organizations (ISOs/RTOs), in this filing SPP proposes to revise Section 18.104.22.168 and Appendix E to obviate the requirement that an SPP Market Participant manually provide in Appendix E a description of the Market Participants risk management capabilities and procedures; identification of employees engaged in risk management 3 Attachment X, Appendix E. 4 See id.
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activities and their relevant skills, training, and experience; and other information to assist SPP in reviewing the Market Participants risk management capabilities.
SPP proposes to revise Section 22.214.171.124 of Attachment X to permit SPP Market Participants to attest to risk management capabilities rather than requiring each Market Participant to manually provide this information each year,5 and, further, to revise the Annual Risk Management Certification Form set forth as Appendix E to Attachment X to include the following declarations:
1. Training. Employees or agents transacting in markets or services provided pursuant to the Tariff on behalf of the Market Participant have received, or will receive, applicable training with regard to their participation under the Tariff as a condition of being authorized to transact on behalf of Market Participant. As used in this representation, training is deemed applicable where it is commensurate and proportional in sophistication, scope and frequency to the volume of transactions and the nature and extent of the risk taken by the Market Participant.
2. Risk Management. Market Participant maintains current written risk management policies and procedures that address those risks that could materially affect Market Participants ability to pay its SPP invoices when due, including, but not limited to, credit risks, liquidity risks and market risks.
3. Operational Capabilities. Market Participant has available appropriate personnel resources, operating procedures, and technical abilities to promptly and effectively respond to SPP communications and directions related to, but not limited to, settlements, billing, credit requirements and other financial matters.
4. Financial Capacity. Market Participant maintains that it meets or exceeds the minimum financial criteria as specified in Section 126.96.36.199 of Attachment X of the Tariff. The Market Participant shall submit audited financial statements for the most recent fiscal year to demonstrate minimum Tangible Net Worth or minimum total assets, or provide a report produced by a Rating Agency to establish its Credit Rating. In the event the Market Participant is unable to meet at least one of these minimum financial requirements, the Market Participant shall maintain with SPP the
5 See Proposed Tariff, Attachment X 188.8.131.52.
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amount of Financial Security required by Section 184.108.40.206(e) of Attachment X to the Tariff.6
The Tariff revisions proposed herein are consistent with7 the minimum participation criteria annual certification forms adopted by other ISOs/RTOs8 and will minimize the administrative effort required for Market Participants to submit to SPP the required attestation of risk management capabilities by April 30 of each year. It is SPPs desire and intent that this new and improved Annual Risk Management Certification Form be implemented and available for the benefit of Market Participants in complying with the April 30, 2013 deadline.
As stated previously, the revisions proposed by SPP were developed at the request of the CPWG, are the result of the stakeholder process, and were approved by the SPP Board of Directors. Further, the addition of this language will enhance the expediency by which Market Participants may comply with the requirements of Section 220.127.116.11 of Attachment X to the SPP Tariff. For these reasons, SPP requests the Commission to approve the Tariff revisions included in this filing, effective March 30, 2013.
III. EFFECTIVE DATES/REQUEST FOR WAIVER
SPP requests that the Commission accept the proposed revisions to the Tariff to become effective March 30, 2013, which is not less than 60 days, or more than 120 days, after the submission of this filing as required by the Commission.9
IV. ADDITIONAL INFORMATION
A. Documents Submitted with this Filing:
6 See Proposed Tariff, Attachment X, Appendix E. 7 The Commission has declined to require that ISOs/RTOs adopt uniform certification
statements. Sw. Power Pool, Inc., 136 FERC 61,189, at P 37 (2011); Midwest Indep. Sys. Operator, 136 FERC 61,188, at P 34 (2011); ISO New Eng. Inc. and New Eng. Power Pool, 136 FERC 61,191, at P 46 (2011); Cal. Indep. Sys. Operator Corp., 136 FERC 61,194 at P 43 (2011); N.Y. Indep. Sys. Operator, Inc., 136 FERC 61,193, at P 41 (2011).
8 See e.g., Midwest Independent Transmission System Operator, Inc. Exhibit VI to Attachment L (Credit Policy) and ISO New England Inc. (ISO-NE) Attachment 3 to the ISO New England Financial Assurance Policy; see also California Independent System Operator Corporation Business Practice Manual for Credit Management Section 2.1 and New York Independent System Operator, Inc.s Market Services Tariff Attachment K Section 26.1.2.
9 See 18 C.F.R. 35.3 at (a)(1).
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In addition to this transmittal letter, the following documents are included with this filing:
Clean and Redline Tariff