The D.C. Circuit Court of Appeals has denied a review of a FERC decision that allowed SPP to incorporate some Missouri transmission facilities into one of its pricing zones, spreading the costs of the newly integrated infrastructure across the zone’s customer base (23-1133).
The court ruled July 11 that FERC “reasonably applied” the cost-causation principle in approving SPP’s tariff revision to include the annual transmission revenue requirement for the city of Nixa’s facilities in the RTO’s pricing Zone 10. Nixa’s 10 miles of transmission lines and substations are owned by GridLiance High Plains.
Writing for the court, Circuit Judge Justin Walker said the commission determined that the Nixa assets brought “integration, reliability and power transfer benefits to Zone 10 customers” that justified spreading the costs across the transmission zone.
“FERC may analyze costs and benefits at the zonal level rather than the customer level, and FERC reasonably determined that all the zone’s customers will enjoy benefits,” he said. “Because of those zone-wide benefits, it was reasonable for FERC to spread the integration’s costs to all the zone’s customers.”
The appeal was brought forward by the Arkansas city of Paragould’s Light & Water Commission and other parties, several of whom unsuccessfully requested FERC rehear its 2023 order approving SPP’s tariff revision (ER18-99-007). (See “City of Nixa, Mo., Annual Transmission Revenue Requirement,” FERC Briefs: Orders Addressing Arguments Raised on Rehearing.)
The utility objected to FERC’s level of generality in considering benefits, the type of benefits considered and the case’s evidence of benefits. The court rejected each of the objections.
Walker said FERC had no duty to “take such a hyper-granular approach to weighing costs and benefits” and that it “reasonably analyzes costs and benefits at the zonal level” when considering integration of new facilities in the zonal system.
“As a significant customer in Zone 10, Nixa has paid a considerable share of Zone 10 transmission facility costs — a share that includes costs for facilities that primarily serve load to non-Nixa customers,” Wright wrote. “So, even though Nixa itself does not draw direct, quantifiable benefits from these facilities, it has footed part of the bill. In sum, the petitioners want Nixa to keep paying a substantial percentage of the costs of facilities that directly serve non-Nixa areas of Zone 10, while the petitioners themselves pay no part of the facilities that directly serve Nixa.”
The D.C. Circuit found that as it and other circuit courts have held, “benefits justifying a cost shift do not need to be tangible, nor must they be amenable to precise tabulation.” It said it is enough that there is “an articulable and plausible reason to believe” the integration’s benefits are “roughly commensurate” with the integration’s costs.
The court also said the claim that FERC did not have sufficient evidence to conclude that integrating the Nixa assets would provide any benefits to non-Nixa customers faced “a high bar.”
“FERC’s decisions need only be supported by ‘substantial evidence,’ which is ‘more than a scintilla’ but ‘less than a preponderance,’” Walker wrote.
The petitioners argued their case before Walker and fellow Circuit Judges Florence Pan and Cornelia Pillard in April 2024.
