By Amanda Durish Cook

FERC last week granted Missouri River Energy Services (MRES) an extension to comment on a series of “zonal agreements” submitted by ALLETE and Great River Energy to resolve revenue-sharing and cost recovery disputes (ER16-1107, et al.).

The commission extended the commenting deadline to April 5, a week short of MRES’ request but four days longer than what ALLETE and GRE were willing to concede.

The agreements would resolve the two companies’ disputes over revenue-sharing and cost recovery for transmission projects in MISO’s Minnesota Power (MP) pricing zone — including the proposed Great Northern Transmission Line linking the region with hydro resources in Manitoba.

ALLETE and GRE filed a joint answer urging the commission to disregard the protest by MRES, which contends the agreements were negotiated “outside of commission processes” and could be inconsistent with MISO’s Tariff.

“These complex, interrelated agreements proposed by the applicants as a black box settlement that implicitly cannot be ‘pried apart,’ present a challenge of analysis because of their complexity and lack of transparency,” MRES wrote in a March 24 filing.

“All of MRES’ claims are either procedurally improper or unfounded and should not delay the commission’s approval of the zonal agreements,” the two companies countered.

MRES’ concerns have less to do with the revenue-sharing portion of agreements than with their possible implications for transmission cost allocation within the MP pricing zone. Chief among of those concerns is whether ambiguous language in the settlement opens the door for ALLETE to eventually roll costs related to the 500-kV Great Northern line into its revenue requirement, a move MRES said should be prohibited under MISO’s Tariff because the project is participant-funded.

ALLETE and GRE counter that MRES is pursuing its concerns under the wrong proceeding — that the revenue-sharing methodology under the zonal agreements represents a separate issue from Great Northern’s cost allocation. The companies say MRES should raise allocation concerns under the Tariff’s Attachment O protocol, which deals with project cost recovery.

The two companies also defended the settlement process and its outcome, saying their agreements “worked within the context” of MISO’s Transmission Owner Agreement, which spells out how transmission revenue should be distributed in pricing zones with multiple transmission owners.

“MRES’ protest, at best, reflects a misunderstanding of the process used to negotiate the zonal agreements as well as such agreements’ fundamental purpose,” the companies said.

ALLETE and Great River insist that if they “had not resolved their differences, they would have been forced to litigate complex and fact-intensive issues” regarding MISO pricing zone boundaries, asset classification for cost allocation purposes and revenue sharing for select facilities and load within the MP pricing zone.

“This litigation likely would have taken years and resources away from all parties (including MISO and commission staff), who all may prefer to focus on other areas,” the companies said.