Southwest Power Pool (SPP) is currently developing a new participation model known as Price Adaptive Load (PAL) Service, designed to integrate flexible loads into the wholesale market and transmission system. Originating from SPP’s Large Load Initiative, PAL addresses a stakeholder need for a permanent, non-firm transmission service option for loads that can vary their consumption based on energy prices. While developed alongside services for High Impact Large Loads (HILLs), PAL is not restricted to large customers; small and medium-sized loads may also register as PALs.
How PAL Works: Market Participation and Operations
The core of the PAL model is its ability to submit price-sensitive demand bids into both the Day-Ahead and Real-Time Balancing Market (RTBM). Unlike traditional fixed loads, PALs are dispatched by the market engine similarly to a generating resource, but for energy withdrawal rather than injection.
- Dispatch and Price Sensitivity: PALs follow dispatch instructions based on the Locational Marginal Price (LMP). They submit a demand bid curve specifying the megawatt quantities they are willing to purchase at various price points. Their bids are limited by a demand bid cap to prevent them from causing new, expensive resource commitments in the Day-Ahead market.
- Operational Requirements: Reliability is a paramount concern for these loads. PALs must be capable of ramping down to zero load within a single five-minute interval. They are also required to provide real-time telemetry and utilize five-minute interval metering.
- Scarcity and Emergencies: In capacity scarcity conditions, PAL demand bids are automatically overridden to $0, and during Energy Emergency Alerts (EEA1), PALs are curtailed to zero load. This alignment ensures that PALs, as non-firm service takers, are among the first to be removed from the system when reliability is stressed.
Tariff Nuances and Transmission Service
The PAL service introduces several unique nuances to the SPP Open Access Transmission Tariff (Tariff), primarily within the newly proposed Part VIII and Schedule 16.
- Non-Firm Transmission Basis: PAL utilizes a non-firm transmission service where customers pay only for what they actually use. This differs from most other SPP transmission services, which are typically billed based on reserved capacity rather than actual megawatt-hour consumption.
- No Network Upgrades: One of the most significant benefits of PAL is that it does not require the construction of new Network Upgrades. Because the service is “as-available” and non-firm, SPP will not call for upgrades through the study process to serve the load.
- Rate Structure and Monthly Cap: PAL billing is based on hourly on-peak and off-peak rates ported from Schedule 8 (non-firm point-to-point). However, to ensure PALs never pay more than firm customers, SPP implements a monthly charge cap. The total bill for a month is capped at the monthly rate of the load’s zone multiplied by the peak usage recorded during that month.
- Study Process and Terms: PAL requests undergo a 90-day network study to determine the maximum capacity the system can accommodate at that location. The service has a one-year minimum term and a ten-year maximum initial term, with renewal requiring a restudy.
- Administrative Tracking (Oasis): Because PAL is not a “true” transmission reservation from a specific source to a specific sink, it does not use a traditional Oasis reservation. Instead, SPP creates a “dummy” or “admin” Transmission Service Request (TSR) number solely for tracking, billing, and reporting within the settlement system.
Financial Incentives and Reliability Safeguards
To ensure PALs strictly follow market dispatch and curtailment instructions, SPP has proposed a series of financial penalties and physical safeguards:
- Uninstructed Load Deviation (ULD): PALs incur ULD charges if they operate outside of their defined tolerance bands. If a PAL withdraws more energy than instructed, it faces a penalty factor that increases with the size of the deviation, with rates potentially reaching $10,000 per megawatt-hour in high-LMP scenarios.
- Unreserved Use (UU): PALs are subject to Unreserved Use charges if their actual usage exceeds the “PAL usage limit,” which is the lowest of four values: their average set point plus tolerance, their studied capacity, a curtailment limit, or an economic interruption limit.
- Physical Control: PALs must have remote breaker capability, allowing SPP to manually open the breaker and disconnect the load as a last resort if it fails to respond to market instructions.
Regulatory Context
The development of PAL aligns with recent directives from the Federal Energy Regulatory Commission (FERC). In a recent Section 206 show cause order, FERC preliminarily found that SPP’s Tariff may be unjust and unreasonable because it lacks sufficient transmission services for flexible large loads that are willing to limit their grid use. SPP intends for PAL to help address these regulatory concerns by providing a dedicated, permanent pathway for such flexible load participation.
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