Entities that own transmission within the Southwest Power Pool (SPP) must submit an annual transmission revenue requirement, which indicates the amount of revenue needed that year to recoup costs associated with its transmission system.
When Heartland and the other owners of the Integrated System moved into SPP, the Upper Missouri Zone (UMZ) was established. All entities that owned transmission rolled their transmission investments into SPP to achieve a rate of return from SPP. That return is essentially paid by transmission users in the UMZ through an established network transmission rate.
An additional opportunity also arose with the move into SPP for lower voltage transmission investments to be rolled into SPP because voltage criteria changed. Entities owning 60 kV transmission and above could now seek rate recovery for their investments, as opposed to the previous voltage criteria of 100 kV.
The UMZ rate increased substantially in 2015 over the previous Integrated System rate because more assets were now seeking rate recovery while load levels remained the same.
Now, some of the eligible transmission facilities have been disqualified for rate recovery and many challenged formula rate templates have reached final settlement. However, these entities collected revenue throughout 2016 while their formula rate templates were being challenged.
With settlement negotiations and discussions complete, virtually all entities that applied for rate recovery must pay back the over-collected revenue in 2018.
Therefore, SPP’s transmission rate is expected to be approximately 14% lower in 2018 than budgeted, providing savings to Heartland’s customers.