By Tom Kleckner

FERC on Tuesday rejected separate complaints by the Nebraska Public Power District and Xcel Energy over billed charges under Attachment Z2 of SPP’s Tariff.

Filing on behalf of its Southwestern Public Service affiliate, Xcel alleged SPP’s assignment of $12.8 million in credit payment obligations under Z2 and $485,000 in zonal charges violated service agreements with SPS, and that the filed rate doctrine and the RTO’s implementation of Z2 violated the Tariff’s “but for” test (EL18-9).

NPPD complained SPP misinterpreted its Tariff and improperly billed the utility for 86 Z2 revenue credit obligations and said the misinterpretation will subject it to future monthly charges under regionwide and zonal rates eligible for recovery (EL17-86).

Attachment Z2 assigns financial credits and obligations for sponsored transmission upgrades. The RTO last year completed a resettlement of the Z2 revenue, crediting amounts for March 2008 to August 2016, a move made necessary because of corrections and true-ups to the data that were identified before the first settlement of the charges. (See “More Z2 Woes; SPP to Resettle 9 Years of Data,” SPP Markets and Operations Policy Committee Briefs: July 11-12, 2017.)

FERC has consistently sided with SPP in member complaints to the commission. It denied requests by several members to rehear FERC’s 2016 order waiving the one-year limit for adjusting Z2 payment obligations and revenue distributions for transmission projects. It also partially granted Kansas Electric Power Cooperative’s complaint in a separate transmission dispute with SPP, denying some claims and setting settlement judge procedures on others. (See FERC Rejects SPP Change on Network Resource Upgrades.)

FERC: Xcel Should Have Been Aware of Z2 Costs

The commission dismissed Xcel’s argument that SPS’ service agreements with SPP resulted from the RTO’s aggregate transmission service study process, were accepted by the commission and should have reflected SPS’ final cost responsibility as part of the filed rate. Xcel asserted that when SPS executed the resulting service agreements with SPP, the agreements should have contained all of the final responsible upgrade costs.

But FERC found the aggregate study reports alerted Xcel to the potential for SPS to be directly assigned costs for upgrades later determined to be necessary to support the transmission service request (TSR) in SPS’ agreements. It noted SPP was developing the Z2 revenue crediting mechanism when it provided Xcel with study reports and, “therefore, could not provide accurate estimates.”

The commission also rejected Xcel’s allegation that SPP’s assignment of costs violated Attachment Z2 and the filed rate doctrine, finding that Xcel misinterpreted the RTO’s application of the “but for” test. FERC found SPP’s methodology to be “reasonable” in determining whether a TSR makes subsequent use of creditable upgrades and that the “but for” test to determine credits under Attachment Z2 was a “reasonable and practical application.”

SPP’s Tariff Interpretation Correct

FERC also found SPP correctly interpreted its Tariff by classifying more than $860,000 in upgrades identified in NPPD’s complaint as service upgrades eligible for base plan funding cost allocation. The commission said the upgrades were initially determined to be necessary for generator interconnection requests, and the costs were directly assigned to customers “consistent” with interconnection procedures and the Tariff’s pro forma interconnection agreement, making them creditable upgrades.

The directly assigned upgrade costs became eligible to be recovered through revenue credit payments that made “subsequent use of the upgrades,” the commission said. In implementing the Z2 crediting process, SPP identified additional creditable upgrades subsequently used by previously studied TSRs and associated credit payment obligations, FERC said.

The commission said those obligations became eligible for base plan funding under the Tariff’s cost allocation rules and were included in the rolled-in allocation of costs to transmission customers through the regionwide and zonal rates.

“Therefore … these costs were properly allocated under base plan funding,” FERC said, in rejecting NPPD’s assertions that SPP should allocate the costs differently.