FERC last week reversed its earlier stance that would have required nonpublic utility transmission owners in MISO and SPP to explicitly commit to providing refunds.
The issue dates to 2012, after FERC concluded that it couldn’t order refunds from Oklahoma’s Tri-County Electric Cooperative even though its rates might have been inflated. The commission explained it approved SPP’s filing of the co-op’s annual transmission revenue requirement (ATRR) without a suspension or a voluntary refund commitment. Xcel Energy, acting on behalf of its Southwestern Public Service subsidiary, appealed the issue to the D.C. Circuit Court of Appeals in 2016.
The court remanded the issue back to the commission for action. FERC then opened an investigation into the RTOs’ Tariffs over nonpublic utility TOs’ revenue requirements that weren’t accompanied by refund commitments. (See FERC Backs off Nonpublic Utility Refunds in MISO, SPP.)
But on Thursday, the commission acknowledged it would be an overreach of its authority if it required the refund commitments. It also said the move was unnecessary (EL16-99).
The commission noted that the D.C. Circuit in 2016 never ordered it to obtain refund commitments from nonpublic utility TOs in RTOs. FERC also said its authority to order refunds under the Federal Power Act only applies to jurisdictional public utilities.
“Although the commission has the authority to review nonpublic utility rates included in jurisdictional rates to ensure that the jurisdictional rate remains just and reasonable, it does not necessarily follow that a refund commitment from those nonpublic utilities is an intrinsic component of a just and reasonable rate. Generally, the commission does not treat refunds as a measure of a just and reasonable rate, but as an available remedy when a rate has been found unjust and unreasonable,” FERC explained.
The commission said it can still approve voluntary refund commitments made by nonpublic utilities in ATRRs found in RTOs’ jurisdictional rates.
The commission also said that by not mandating refund commitments, it could encourage RTO membership among nonpublic utilities.
MISO filed changes to its Transmission Owners Agreement and Tariff in 2018 requiring nonpublic utility transmission owners provide “all manner of refunds” that may be ordered under the FPA. FERC dismissed those compliance filings as moot in the order.
Commission Grants Rehearing in SPP Docket
In the SPP docket, FERC granted rehearing requests by several public power entities of its 2017 order, finding that it is “neither necessary nor appropriate” to impose the refund commitment on nonpublic utility TOs, as previously contemplated (EL16-91).
The commission also terminated its FPA Section 206 investigation of SPP and dismissed as moot the grid operator’s compliance response to the 2017 order.
The Nebraska Public Power District, American Public Power Association, National Rural Electric Cooperative Association and Midwest Energy filed rehearing requests following the 2017 decision.
FERC found the D.C. Circuit’s Xcel decision does not compel the commission to require a prospective refund commitment from all of SPP’s nonpublic TOs. It said the court recognized that FERC “generally” does not have authority to require refunds if the entities do not voluntarily do so, and that its authority under the FPA applies only in limited circumstances.
