By Tom Kleckner

FERC last week rejected contested settlements filed by SPP regarding the annual transmission revenue requirements (ATRRs) for two cooperatives.

The commission said that as the settlements were contested, they couldn’t be approved under its guidelines and precedent set by a 1999 case involving Trailblazer Pipeline Co. It remanded both proceedings to the chief administrative law judge to resume hearings.

The first settlement, involving SPP, Corn Belt Power Cooperative, MidAmerican Energy, Basin Electric Power Cooperative, Alliant Energy Corporate Services and the Missouri Public Service Commission, revolves around the RTO’s 2015 Tariff revisions to accommodate Corn Belt’s ATRR as an incoming transmission-owning member (ER15-2028).

The commission accepted the proposed revisions, effective Oct. 1, 2015, and established hearing and settlement procedures. SPP submitted the settlement agreement in July 2017.

The agreement was initially opposed by FERC staff, Missouri River Energy Services (MRES) and the Western Area Power Administration on the grounds that the rate treatment for three Corn Belt grandfathered agreements (GFAs) was unjust and unreasonable and inconsistent with commission precedent. The GFAs provide in-kind transmission service to each of the settlement’s parties. (See “FERC Accepts ITC Midwest’s Interconnection Agreement,” FERC Approves Change to Eliminate Gaming in SPP Markets.)

The supporting parties argued that the GFA’s rate treatment, which credits all GFA revenues against Corn Belt’s revenue requirement, is consistent with the SPP Tariff. They said any attempt by non-settling parties to seek relief inconsistent with the Tariff provisions would amount to “collateral attacks on the SPP Tariff.”

FERC noted its regulations provide that it may decide a contested settlement’s merits only if “the record contains substantial evidence upon which to base a reasoned decision or the commission determines that there is no genuine issue of material fact.”

The commission said it couldn’t approve the settlement under any of the first three approaches for reviewing contested settlements under its Trailblazer ruling, nor could it sever the contesting parties or contested issues under the fourth.

Under the first Trailblazer approach, “if there is an adequate record, the commission can address the contentions of the contesting parties on the merits,” which requires a merits determination on each contested issue. FERC found the supporting parties’ argument that Corn Belt has adhered to the Tariff because it is crediting the revenues from the GFAs against its revenue requirement to be unsupported.

Under the second Trailblazer approach, FERC may “approve a contested settlement as a package on the grounds that the overall result of the settlement is just and reasonable.” The commission said such a finding in this case “does not appear possible because certain crucial information needed to evaluate Corn Belt’s proposed revenue requirement is absent.”

It said there were two obstacles to the third Trailblazer approach: The record is insufficient to determine whether the settlement’s benefits outweigh the objections to it; and the contesting parties are located in Corn Belt’s zone and share a direct interest in the provisions relating to the utility’s revenue requirement.

FERC also used Trailblazer precedent in rejecting a contested settlement involving Northwest Iowa Power Cooperative (NIPCO), SPP, Basin Electric, MidAmerican and the Missouri PSC (ER15-2115).

As in the Corn Belt case, SPP filed Tariff revisions in 2015 to allow for NIPCO’s ATRR when it joined the RTO as a transmission-owning member. The commission accepted the proposed revisions, effective Oct. 1, 2015, and set hearing and settlement procedures. SPP submitted the settlement agreement in July 2017.

MRES and WAPA opposed that settlement as well, objecting to its rate treatment of two NIPCO GFAs. The intervenors said other transmission owners will essentially subsidize transmission loads and shift the cost from NIPCO and its customers to the TOs.

The commission said it couldn’t approve the contested settlement under any of the first three Trailblazer approaches. It also said it couldn’t sever the contesting parties or contested issues under the fourth Trailblazer approach.