By Tom Kleckner
SPP may ask FERC to lower its exit fee in response to the commission’s April order that the RTO eliminate the fee for members who are not transmission owners or load-serving entities.
Staff told the Corporate Governance Committee on June 17 that they believe FERC’s order (EL19-11) suggested the commission may approve a lower amount. SPP faces an Aug. 1 deadline to make a compliance filing and has already submitted a rehearing request to clarify the definitions of TOs and non-TOs. (See FERC Tells SPP to End Exit Fee for Non-TOs.)
The committee agreed in executive session to recommend a fixed $100,000 exit fee to the Board of Directors when it meets on July 30. The current exit fee is estimated at $631,915, nearly twice the $327,191 fee that FERC approved in 2006, when it last required the RTO to impose an exit fee on all members.
Load-serving members would be subject to an additional share of SPP’s financial obligations and future interest based on their net energy for load percentage. LSEs would be defined as distribution or electric utilities that have a service obligation and/or secures energy and transmission service to serve its end-use customers’ demand and energy requirements.
Staff noted the commission’s order said “some level of exit fee that does not act as a barrier to membership and is not excessive could be appropriate in SPP.”
By making the fee a fixed amount, SPP said it would be addressing the commission’s concern that the exit fee can move up or down.
FERC’s order came in response to a complaint filed by the American Wind Energy Association and Advanced Power Alliance, formerly the Wind Coalition. The groups charged that SPP’s exit fee results in unjust and unreasonable rates and creates “a barrier to membership” for non-TOs and non-LSEs.
“What’s being proposed here does not seem to track with cost-causation principles. Such an exit fee that’s not based on any … principles would likely be opposed,” APA’s Steve Gaw said. “We would like to see something that is more in line with what other RTOs have found to be appropriate for membership and stakeholder participation.”
CGC member Denise Buffington, director of federal regulatory affairs with Evergy companies Kansas City Power & Light and Westar, cautioned against the move considering the pending rehearing request.
“If FERC gets this as an alternative … it’s an easy pass for them not to deal with this issue. My preference would be to wait until we get an order on the rehearing request,” she said. “If I were giving legal advice on behalf of the client, I would stick close to what FERC has ordered.”
SPP CEO Nick Brown said staff debated the timing of the alternative proposal but said the recommendation was “to help FERC get the right answer.”
“We’ve continued to debate this [issue] at the request of non-members or members who wished to withdraw but couldn’t afford the exit fee,” he said. “In putting this proposal on the table, we specifically wanted to influence FERC’s thinking and help them to make a decision. We consider this just and reasonable.”
Other committee members favored the lower exit fee. Dogwood Energy’s Rob Janssen said the reduced fee would solve the problem of “zombie members”: those who stayed members “because it was easier than paying the exit fee.”
“I think this change will make them come out of the woodwork and make a decision one way or the other,” Janssen said.
The CGC will also recommend approving the compliance filing, which would change SPP’s governing documents in response to FERC’s order. Staff said it will include what it believes are errors in FERC’s order, for which they are seeking rehearing.
If the board approves the committee’s recommendations in July, they will be promptly filed at FERC to meet the Aug. 1 deadline.
