Southwest Power Pool REGIONAL TARIFF WORKING GROUP Conference Call September 18, :00 a.m. 11:00 a.m. - A G E N D A D R A F T. September 18, 2008

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1 Southwest Power Pool REGIONAL TARIFF WORKING GROUP Conference Call September 18, :00 a.m. 11:00 a.m. - A G E N D A D R A F T September 18, Call to Order & Introductions, Receipt of Proxies... (5 Min.) 9:00 2. External Generation... Patti Kelly (10 Min.) 9:05 3. Nebraska Entities Filing... Pat Bourne (120 Min.) 9:15 Revenue Sharing Bright Line 4. Adjournment... 11:00 Page 1 of 10

2 External Generation Compliance Filing Revisions FERC Docket No. ER FERC issues order on April 21, 2008 accepting SPP s December 14, 2007 filing subject to conditions. 2. On May 21, SPP makes filing to comply with the April 21, 2008 order. This filing attempted to make requested modifications to Attachment AO External Generation Agreement. 3. FERC Staff contacted SPP Regulatory on September 11 expressing concerns with compliance filing regarding items (j) and (m) of Attachment AO. Their request was that we should specifically paraphrase their order. FERC Staff referred SPP to paragraphs 61 and 67 of the April 21 order. (Attached to this message with portions of concerns highlighted by SPP.) 4. SPP revised relevant portions of Attachment AO and sent a discussion draft to FERC Staff for review. SPP advised FERC Staff that proposed language would need to be reviewed by the MWG and RTWG this week. FERC Staff confirmed that the attached revisions addressed their concerns. 5. Revised Attachment AO also attached to this message. 6. After review by WGs, SPP plans to make amended filing in ER for FERC s review and FERC Staff will notice the filing and process accordingly. Other relevant information in this matter- At the time of May 21 compliance filing, SPP also made request in separate docket (ER08-995) to extend the start date for inclusion of external generation in the SPP EIS Market from October 1, 2008 until February 1, 2009 in order to allow time for system changes to be made to allow external gens. This request was granted on July 15. There was some confusion that this order approved the tariff language. It did not; it only approved the extension of time to February Page 2 of 10

3 Southwest Power Poo1 Second Revised Sheet No FERC Electric Tariff Superseding First Revised Sheet No Fifth Revised Volume No. 1 (h) SPP, in accordance with the SPP EIS Market Protocols, will provide the Market Participant with the Dispatch Instruction MW for the next dispatch interval (currently dispatch interval is 5 minutes). (i) SPP will also provide the EIS Net Schedule Interchange ( NSI ) to the Sink Balancing Authority on a 4 second basis that includes the impacts of dispatch instructions for all Resources, including the Facility, within the balancing authority area of the Sink Balancing Authority. (j) The real time pseudo-tie value will be based upon the Dispatch Instruction issued by the SPP to Market Participant. Market Participant shall calculate and simultaneously provide this value to the Source Balancing Authority and the Sink Balancing Authority. The real-time pseudo-tie value shall be calculated and communicated on a frequency no less than 4 seconds and synchronized with the target interval of the SPP dispatch interval. Any Out of Merit Energy (OOME) requests as defined in the SPP EIS Market Protocols shall be included in the real time pseudo-tie values. SPP will negotiate with the Source and Sink Balancing Authorities as to which balancing authority will provide regulation and imbalance services for the Market Participant participating in the EIS Market. Internal and external generators will be treated in a non-discriminatory manner with regard to the costs of regulation and imbalance services associated with participating in the EIS Market. If parties cannot agree to the provision of regulation and imbalance services, SPP will file, with the Commission, an unexecuted agreement, including all agreed-upon non-conforming deviations. (k) The Source Balancing Authority and the Sink Balancing Authority will include this I real time pseudo-tie value in their respective calculations of Net Actual Interchange ( NAI ) and Area Control Error ( ACE ). Formatted: Font: Not Bold Deleted: equally Formatted: Font: Not Bold Deleted: External generators will be subject to the provisions in Schedule 3 and Schedule 4 of the SPP Tariff (l) If communication is lost between any of the Parties (including communication between SPP and the Market Participant), the Source Balancing Authority and the Sink Balancing Authority will freeze at the last known value and it is the responsibility of the Market Participant to verbally communicate changes of the real time pseudo-tie values with the other Parties consistent with the SPP instructions. (m) Market Participant shall notify Parties of any real-time circumstances that affect the Market Participant s obligation or ability to meet the SPP Dispatch Instructions. If the Market Participant or the Source Balancing Authority deviate from the anticipated real time pseudo-tie value, the Market Participant is responsible for costs incurred by the Sink Balancing Authority. External generators will be subject to the same penalties for uninstructed deviations as internal generators under Attachment AE of the SPP Tariff. Deleted: any Deleted: consistent with Schedule 4 of the SPP Tariff Issued by: L. Patrick Bourne, Director Transmission and Regulatory Policy Issued on: May 21, 2008 Effective: On or Before February 1, 2009, Upon Notice By Southwest Power Pool Filed to comply with order of the Federal Energy Regulatory Commission, Docket No. ER , issued April 21, 2008, 123 FERC 61,062 (2008). Page 3 of 10

4 Southwest Power Poo1 Second Revised Sheet No FERC Electric Tariff Superseding First Revised Sheet No Fifth Revised Volume No. 1 (n) The Source Balancing Authority and the Sink Balancing Authority shall integrate the real time pseudo-tie value on an hourly basis and maintain this information for balancing authority checkout, inadvertent calculations and payback purposes in accordance with the applicable NERC standards. It is the responsibility of the Source Balancing Authority to checkout these hourly integrated values with the Market Participant prior to the Source Balancing Authority s final daily checkout with the Sink Balancing Authority. (o) The Sink Balancing Authority shall act as the Meter Agent on behalf of the Market Participant in the settlement process of the EIS Market in accordance of the SPP EIS Market Protocols. The Sink Balancing Authority shall perform this obligation unless mutually agreed upon by both the Sink Balancing Authority and the Market Participant. The settlement meter data will be the hourly integrated real time pseudo-tie value as calculated by the Sink Balancing Authority and checked out between the parties. (p) Except as otherwise provided in this Section 2, failure by the Market Participant to provide real-time pseudo-tie values in a timely manner and consistent with the SPP dispatch instruction constitutes a basis for the immediate suspension of this Agreement by the Source Balancing Authority or Sink Balancing Authority. In the event of such suspension, the Market Participant shall provide a remedy for the cause of the failure prior to resumption of its participation in the EIS Market. In the event of two suspensions within a thirty day period, this Agreement may be terminated, in accordance with Section 7 of this Agreement, at the sole discretion of the Source Balancing Authority or Sink Balancing Authority. (q) SPP will provide to the Source Balancing Authority the Market Participant s Resource Plan. 3. Losses. Market Participant will be responsible for loss compensation to transmission provider(s) to deliver their EIS energy to the SPP market footprint. Pseudo-tie value(s) will be considered net of losses external to SPP. Losses within the SPP market footprint attributable to the Market Participant s participation in the EIS Market shall be handled in the same manner as other EIS Market transactions. 4. Compensation. Market Participant will compensate the Source Balancing Authority for the reasonable implementation and operations related costs borne by the Source Balancing Authority as a result of this Agreement unless the Market Participant and Source Balancing Authority agree to a different cost arrangement, which shall be filed with the Commission in a non-conforming agreement. SPP shall compensate the Sink Balancing Authority for any and all reasonable implementation and operations related costs borne by the Sink Balancing Authority as a result of this Agreement. Issued by: L. Patrick Bourne, Director Transmission and Regulatory Policy Issued on: May 21, 2008 Effective: On or Before February 1, 2009, Upon Notice By Southwest Power Pool Filed to comply with order of the Federal Energy Regulatory Commission, Docket No. ER , issued April 21, 2008, 123 FERC 61,062 (2008). Page 4 of 10

5 6. Effective Date. The Agreement is effective upon full execution if it is not filed with the Commission. If the Agreement is filed with the Commission, then it is effective upon the later of the date of execution or the date allowed by the Commission. 1 If the parties are unable to resolve any issues, SPP shall file an unexecuted agreement with the Commission, including all agreed-upon non-conforming deviations. 7. Termination. Notwithstanding 2(p), this Agreement shall terminate on [Date], unless extended by agreement of all the Parties. Any Party shall have the right to terminate this Agreement upon month s notice, subject to receiving all necessary regulatory approvals for such termination. 8. Governing Law. The interpretation and performance of this Agreement and each of its provisions shall be governed and construed in accordance with the applicable Federal and or State laws without regard its conflicts of laws provisions that would apply the laws of another jurisdiction. 9. Interpretation. In this Agreement: (a) the words include, includes and including are deemed to be followed by the words without limitation ; (b) references to contracts, agreements and other documents and instruments shall be references to the same as amended, supplemented or otherwise modified from time to time; (c) references to laws or standards and to terms defined in, and other provisions of, laws or standards shall be references to the same (or a successor to the same) as amended, supplemented or otherwise modified from time to time; and (d) references to a person shall include its successors and permitted assigns and, in the case of a governmental or other authority (including the Southwest Power Pool and the North American Electric Reliability Corporation), any person succeeding to its functions and capacities. 10. Severability. If any provision of this Agreement is held invalid, illegal or unenforceable in any jurisdiction, then, the Parties agree, to the fullest extent permitted by law, that the validity, legality and enforceability of the remaining provisions hereof in such or any other jurisdiction and of such provision in any other jurisdiction shall not in any way be affected or impaired thereby. With respect to the provision held invalid, illegal or unenforceable, the Parties will amend this Agreement as necessary to effect the original intent of the Parties as closely as possible. 1 The effective date shall not be earlier than the date that SPP has systems in place to effectuate this agreement; SPP currently estimates that such systems will be in place by March 1, Page 5 of 10

6 61. While parties may negotiate which balancing authority will provide regulation and imbalance services for external generators participating in the EIS Market, the cost of these services is a different matter. The Commission finds that internal and external generators should be treated in a non-discriminatory manner with regard to the cost of these services. To the extent that internal generators participating in the EIS Market are not required to compensate sink balancing authorities for providing regulation and imbalance services, external generators should not be held responsible for any such costs either. Therefore, within 30 days of the date of this order, SPP must make a compliance filing revising its pro forma agreement to state that internal and external generators will be treated equally with regard to the costs of regulation and imbalance services associated with participating in the EIS Market. 67. Accordingly, any parties seeking to recover deviations-related costs must undergo the same procedures to recover these costs (i.e., make a FPA section 205 with the Commission), regardless of whether the deviating generator is internal or external to SPP. There is no reason for the pro forma agreement to resolve this issue by obligating external generators to pay these costs straight away, when internal generators are not subject to a similar procedural shortcut. In addition, external generators should be subject to the same penalties for uninstructed deviations as internal generators under Attachment AE of SPP s tariff, 1 and this requirement should be clear from the pro forma agreement. 1 See Attachment AE section 4.1. Page 6 of 10

7 Southwest Power Pool First Revised Second Revised Sheet No. 221 FERC Electric Tariff Superseding Substitute First Revised Sheet No. 221 Fifth Revised Volume No. 1 ATTACHMENT H Annual Transmission Revenue Requirement For Network Integration Transmission Service SECTION I: General Requirements 1. The Zonal Annual Transmission Revenue Requirement within each Zone for purposes of determining the charges under Schedule 9, Network Integration Transmission Service, is specified in Column (3). The Base Plan Zonal Annual Transmission Revenue Requirement within each Zone for the purposes of determining the zonal charges under Schedule 11, Base Plan Charges, is specified in Column (4). (1) Zone (2) (3) Zonal ATRR (4) Base Plan Zonal ATRR 1 American Electric Power West (Total) 1 $ 92,432,463 $0 American Electric Power (Public Service Company of Oklahoma and Southwestern Electric Power Company) $ 88,681,579 East Texas Electric Cooperative, Inc. $2,733,879 Tex-La Electric Cooperative of Texas, Inc. $588,874 Deep East Texas Electric Cooperative, Inc. $428,131 2 Cleco Corporation $ 29,328,000 $0 3 City Utilities of Springfield, Missouri $ 8,651,509 $0 4 Empire District Electric Company $ 14,075,000 $0 5 Grand River Dam Authority (Est.) $ 24,589,256 $0 6 Kansas City Power & Light Company $ 35,461,776 $54,193 7 Oklahoma Gas & Electric Zone (Total) $ 65,881,101 $2,025 Oklahoma Gas & Electric Company $ 65,065,032 Westar Energy, Inc. (Kansas Gas & Electric and Westar Energy) $ 816,069 8 Midwest Energy, Inc. $ 4,197,347 $0 9 Aquila Networks-MPS/L&P (Total) $ 20,759,283 $0 9a Aquila Networks-MPS $14,059,183 9b Aquila Networks-L&P $6,700, Southwestern Power Administration $9,155,900 $0 11 Southwestern Public Service $65,500,000 $ Sunflower Electric Corporation $ 14,484,045 $22, Western Farmers Electric Cooperative $ 20,719,639 $0 14 Westar Energy, Inc. (Kansas Gas & Electric and See Section Westar Energy) II. 1 $1,708, Mid-Kansas Electric Company $ 5,947,002 $27, Lincoln Electric System $#,###,### $0 17 Nebraska Public Power District $#,###,### $0 1 The existing ATRRs and Base Plan Zonal ATRRs applicable to Zone 1 became effective July 1, Issued by: L. Patrick Bourne, Director Transmission and Regulatory Policy Issued on: March 28, 2008 Effective: May 27, 2008 Page 7 of 10

8 Southwest Power Pool First Revised Second Revised Sheet No. 221 FERC Electric Tariff Superseding Substitute First Revised Sheet No. 221 Fifth Revised Volume No Omaha Public Power District $#,###,### $0 Issued by: L. Patrick Bourne, Manager, Transmission and Regulatory Policy Issued on: March 28, 2008 Effective: May 27, 2008 Page 8 of 10

9 Southwest Power Pool First Revised Second Revised Sheet No. 221 FERC Electric Tariff Superseding Substitute First Revised Sheet No. 221 Fifth Revised Volume No For Zones 16, 17, and 18, the Base Plan Region-wide Annual Transmission Revenue Requirement for the purposes of determining the region-wide charges under Schedule 11 shall be $0. For all other Zones, the Base Plan Region-wide Annual Transmission Revenue Requirement for the purposes of determining the region-wide charges under Schedule 11 shall be $894, The revenue requirements stated in this Attachment H shall not be changed absent a filing with the Commission, accompanied by all necessary cost support. 4. New or amended revenue requirements in this Attachment H shall not be filed with the Commission by the Transmission Provider unless such revenue requirements have been provided by or for a Transmission Owner. Such revenue requirements shall have been accepted or approved by the applicable regulatory or governing authority except in the event of a simultaneous filing with the Commission by the Transmission Owner and Transmission Provider. 5. If a Transmission Owner has a Commission approved formula rate, the successful completion of its approved annual formula rate update procedures shall constitute regulatory acceptance sufficient to authorize the Transmission Provider to file with the Commission to update that Transmission Owner s revenue requirements. The Transmission Provider shall follow any special procedures related to updating a Transmission Owner s revenue requirements as outlined in Section II of this Attachment. 6. The Transmission Provider shall allocate the accepted or approved revenue requirement associated with a Base Plan Upgrade, in accordance with Attachment J to this Tariff, to the Base Plan Region-wide Annual Transmission Revenue Requirement in Section 2 above and to the appropriate Base Plan Zonal Annual Transmission Revenue Requirements in Column (4) of Section 1 above. Deleted: T Deleted: 894,469 Issued by: L. Patrick Bourne, Manager, Transmission and Regulatory Policy Issued on: March 28, 2008 Effective: May 27, 2008 Page 9 of 10

10 1.3j Base Plan Upgrades: Those upgrades included in and constructed pursuant to the SPP Transmission Expansion Plan in order to ensure the reliability of the Transmission System. Base Plan Upgrades shall also include those Service Upgrades required for new or changed Designated Resources to the extent allowed for in Attachment J to this Tariff. For Zones 16, 17, and 18, all such upgrades shall specifically exclude planned Transmission System facilities identified in the SPP Transmission Expansion Plan Report ( ) that are required to be in service to meet the SPP Criteria and the NERC Reliability Standards for the summer of For all other Zones, all such upgrades shall specifically exclude planned Transmission System facilities identified in the SPP Transmission Expansion Plan that are: (i) placed in service during the 2005 calendar year or (ii) required to be in service to meet the SPP Criteria and the NERC Reliability Standards for the summer of Deleted: All Formatted: Not Highlight Deleted: : (i) placed in service during the 2005 calendar year or (ii) Deleted: 2005 Page 10 of 10