By Amanda Durish Cook
FERC on Thursday approved MISO and SPP’s uncontested settlement agreement with a trio of orders governing how MISO transfers power between its North and South regions using SPP transmission.
FERC determined the settlement was “fair and reasonable and in the public interest” (ER14-1174, et al). The commission upheld a Jan. 5 settlement judge’s certification that the agreement was uncontested.
The RTOs agreed in October to the terms of the seven-year settlement, which stipulates north-to-south flows be capped at 3,000 MW and south to north be limited to 2,500 MW. (See SPP, MISO Reach Deal to End Transmission Dispute.) MISO and SPP have 45 days to file Tariff changes with FERC.
Two other orders dismissed all rehearing requests relating to issues prior to the settlement and approved the cancellation of SPP’s hurdle rate mechanism.
Clark Urges Caution
Commissioner Tony Clark wrote a concurring statement, saying the order “leaves the door open as to how the commission would analyze the settlement in the event a challenge is brought.”
Clark said the settlement puts new conditions on MISO’s transmission service because of the transfer limits established between MISO Midwest and MISO South.
“Because these terms could impact more than just the settling parties, including future MISO market participants, I do not think it is appropriate to extend the heightened Mobile-Sierra standard to those third parties or the commission acting [without formal prompting from another party]. Consistent with my prior statements, if we are to preserve the integrity of the Mobile-Sierra standard, we should be judicious in its application.”
The Mobile-Sierra doctrine, named after a pair of Supreme Court rulings, holds that negotiated contracts are presumed to be just and reasonable unless it “seriously harms the public interest” or the parties to the contract agree that the standard should not apply.
MISO, SPP Looking Forward
Jennifer Curran, MISO’s vice president of system planning and seams administration, said MISO was pleased with FERC’s approval. “With this issue behind us, we look forward to continued collaboration across our seams for the benefit of all our customers.”
SPP is “pleased to have the issue resolved,” said David Avery, SPP’s director of corporate communications.
As a result of the settlement, FERC moved to eliminate the $9.57/MWh hurdle rate on flows exceeding the 1,000-MW transfer limit per SPP and MISO’s joint operating agreement (ER16-56). MISO’s proposed Tariff revisions to replace the hurdle rate with a mutual compensation system will become effective Feb. 1.
“As explained by MISO, the substitution of the SPP service agreement with a payment structure for SPP’s and joint parties’ available system capacity obviates any need for the hurdle rate,” FERC said.
However, MISO’s proposed revisions to the commission failed to delete a few mentions of the SPP service agreement, as pointed out by MISO stakeholders. FERC directed MISO to remove the phrase and make a compliance filing in 30 days.
FERC also dismissed as moot requests for rehearing from MISO, MISO transmission owners and Entergy over now obsolete matters in the RTOs’ joint operating agreement (ER14-1174-001, et al).
Having made a one-time, $16 million payment to SPP to fund surplus flow charges over the past two years, MISO is continuing cost allocation talks (ER14-1736).
Beginning next month and continuing until February 2017, MISO will pay SPP $1.33 million per month to cover flows over the 1,000-MW contract path that cross MISO’s North-South interface, but MISO hasn’t yet determined a final cost allocation mechanism that would govern how the cost is split among MISO’s generation owners. (See “MISO to Begin SPP Settlement with $16 Million Payment,” MISO Market Subcommittee Briefs.)
