page 3 discussion items from the mwg a. rsc / cawg recommendations – discussed in detail below (page 2 of this documen

Page 3
Discussion Items from the MWG
A.
RSC / CAWG Recommendations – Discussed in detail below (Page 2 of
this document).
B.
MOPC action on Protocols and market – At its meeting in January,
the MOPC approved the following motion. MWG & Staff are reviewing
and preparing the materials to respond to this request at the
April MOPC meeting. The motion specifically states:
Direct MWG & staff to facilitate a future discussion before the MOPC
(April) for consideration of the following:
1. An evaluation of whether the benefits of the unique elements of the
SPP IMP design are sufficient to overcome the cost and risks
associated its implementation as compared to the implementation of
other existing market designs.
2. A recommendation to the board of how, specifically what design, SPP
should move forward for implementation
C.
External Market Advisor and Market Monitoring Unit assessments of
market designs Status of the Protocols. These reports and
recommendations will be reviewed at the MWG meeting scheduled for
February 15 & 16, 2011.
D.
Second Analysis of the Costs and Benefits of the Integrated
Marketplace. The SPP staff revised the cost benefit calculations
to take into consideration a revised gas price forecast. The
revisions indicate the net befits to the region, including both
SPP & Member implementation costs, are approximately $45MM per
year.
E.
Board action on Integrated Marketplace. The Board approved the
release of funds necessary to keep the project implementation
activities moving forward through April 2011. This action was
intended to provide the funding necessary to maintain project
activities while the MWG develops and MOPC responds to the report
to be presented in the April 2011 MOPC meeting (see item B above).
RSC / CAWG Recommendations Status:
During the October 25th meeting of the RSC, the CAWG presented several
recommendations concerning the SPP Integrated Market Place. These
recommendations were accepted by the RSC and in some cases served as
guidance/requests to be considered by the Market Working Group. The
MWG discussed these items at their December 13-15, 2010 meeting with
the following results. The notes below are based on the minutes of
that meeting with some additions added by Richard Ross for further
clarification.
Action Item 1A: The MWG should revisit whether or not the first stage
of the allocation of annual ARRs should be restricted to base-load
generation with capacity factors> 50% and long-term firm PTP with a
loading factors > 50%.
MWG Discussion: MWG discussed but did not support changing the current
design. The current design permits market participants to select a
portion of their ARRs in each round without any restriction on
utilization of the path. The MWG felt this approach was appropriate
since the initial round does limit the volume of participant
nominations and therefore allows market participants to determine
based on their own criteria what ARR nominations will best serve the
hedging needs of their company. It is possible that a path with lower
utilization will be of more value if the congestion along the path is
severe.
Action Item 1B: In the future consideration of long-term firm
transmission rights (LTFTRs), the MWG should make recommendations on
LTFTRs in time to implement LTFTRs one year after the start of the
Day-Ahead Market.
MWG Discussion: MWG discussed and determined it will consider
Long-Term Transmission Congestion Rights starting in January 2012.
This issue has been added to the MWG action item list.
Action Item 2: After the first annual ARR auction MWG should evaluate
the issue of TCs not able to get ARRs for base-load requirements.
MWG Discussion: MWG decided to evaluate this after the implementation
of the market. This issue has been added to the MWG action item list
with a targeted resolution date of January 2015.
Action Item 3: Assuming sufficient financial protections (as
determined by the SPP credit standards and approved by the RSC) are
put in place for non-transmission customers to participate in TCR
auctions; the RSC should approve participation by any entity that
meets the required financial protections.
MWG Discussion: MWG agrees with the RSC & CAWG and it is our intent
that entities will be approved based on credit standards. These credit
requirements and the systems necessary to monitor these activities are
under development/review by the Credit Practices Working Group under
the SPP Finance Committee.
Action Item 4: The buyer’s payments for its purchase of an infeasible
TCR should not be paid by the SPP to the seller until the seller makes
good on its commitment to pay the congestion costs. If the seller
defaults on its obligation to pay, then the buyer’s payment to the SPP
should be refunded.
MWG Discussion: The MWG agrees with the concern underlying this
recommendation and believes that the payment provisions included
within the protocols whereby parties payments distributed throughout
the year will mitigate this issue. MWG will continue to monitor this
area, in conjunction with the development of the activities of the
Credit Practices Working Group to determine if further changes are
necessary to protect SPP from such default risks
.
Action Item 5: To eliminate confusion and to properly track profit
taking, the SPP should calculate profit taking in the TCR auctions (i)
Separately for Forward TCRs and Counterflow TCRs; and (ii) Separately
for Transmission Customers and non-Transmission Customers for Forward
TCRs
MWG Discussion: SPP will implement this as a tracking report when the
Market is implemented.

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