By Amanda Durish Cook

FERC on Wednesday resolved a dispute over overlapping congestion charges on the MISO–SPP seam when it accepted a settlement between Southwestern Electric Power Co. (SWEPCO) and the city of Prescott, Ark.

The settlement outlines a new rate schedule and documentation that the utility must provide the city for a power supply agreement (ER20-869).

Prescott filed its complaint against SWEPCO, an American Electric Power subsidiary, and MISO last April, but the issue behind the complaint can be traced to the 2013 integration of Entergy into the RTO. The city opposed Entergy’s integration because it would be moved into MISO and served by a pseudo-tie from SPP member SWEPCO under a power supply agreement. SWEPCO proposed eight years ago to build a new transmission line to buffer the city from excessive charges from MISO, but it was never built.

Prescott’s 2019 complaint claims that the failure of MISO and SWEPCO to guard it from congestion have pinned the city with about $770,000 per year in duplicate congestion charges and unreasonable transmission rates. SWEPCO neither hedged the city’s transmission congestion risks nor protected it from rate pancaking, abandoning duties under the power supply agreement, Prescott contended.

The situation also spurred SWEPCO to file a separate complaint alleging MISO violated its joint operating agreement with SPP regarding congestion charge assessments for loads that are pseudo-tied out of MISO and into SPP. The utility said the charges resulted in a $963,974 overpayment to MISO for one four-month period in 2016. A FERC investigation into MISO and SPP’s potentially overlapping congestion charges is ongoing. (See FERC Sets Briefings on MISO, SPP Congestion Fees.)

Under the settlement agreement approved Wednesday, SWEPCO must file updated depreciation rates as formula rate inputs to FERC whenever the Louisiana Public Service Commission, Arkansas Public Service Commission or the Public Utility Commission of Texas approve changes to the utility’s state depreciation rates that would affect Prescott’s rates. If four years pass without an update, SWEPCO must make a FERC filing to update its depreciation rates.

The settlement also holds SWEPCO to providing Prescott with an annual populated formula rate, “including detailed work papers and other relevant supporting documentation, and to responding to Prescott’s requests for additional data related to the formula rate calculations.”

Finally, SWEPCO must also detail all RTO transmission charges and MISO market charges in its monthly invoices to Prescott.

FERC trial staff said the settlement agreement “reflects thoughtful and reasoned negotiations undertaken by all participants in good faith.”