The D.C. Circuit Court of Appeals on Tuesday denied a petition to review FERC’s approval of SPP’s tariff revisions setting up a uniform planning criteria in each transmission zone to evaluate zonal reliability upgrades.
The court said Evergy Kansas Central, GridLiance High Plains and Oklahoma Gas & Electric “oversell” the risk that the proposal “will foist the costs of new projects on individual owners” (22-1252).
“In any case, FERC may balance the need to ensure that transmission owners bear perfectly proportional costs and benefits with other policy goals,” said Circuit Judge Justin Walker, writing for a three-judge panel. “It did that here by approving a regime that allows participants in regional transmission zones to collaborate on selecting and funding new projects.”
FERC last year approved SPP’s second attempt to establish an annual process allowing each pricing zone to develop uniform planning criteria. The commission affirmed its decision in October when it rejected rehearing requests from Evergy, OG&E, GridLiance and ITC Great Plains. (See FERC Affirms SPP’s Zonal Planning Criteria.)
Evergy, GridLiance and OG&E appealed to the D.C. Circuit, saying FERC approved an unjust and unreasonable change to SPP’s transmission-funding regime. They claimed the methodology would likely force TOs to pay for projects that benefit the entire RTO.
Under a two-step voting process, each zone’s customers vote on the criteria, with approval determined by a percentage of votes greater than or equal to the largest customer’s load plus half of the zone’s remaining load. In the second step, all the zone’s transmission customers and TOs vote, with a simple majority needed for approval.
The petitioners said a backup plan that allows any TO in the zone to create its own local planning criteria and build a project — though it would have to foot the bill — violated the cost-causation principle that generally prohibits FERC from “singl[ing] out a party for the full cost of a project, or even most of it, when the benefits of the project are diffuse.”
The court said that rule “is not rigid” and found that, according to Consolidated Edison Co. v. FERC, the commission “may permissibly approve a rate that does not perfectly track cost causation,” particularly if it is balancing competing goals.
“That is what FERC did here. [SPP]’s old funding regime let transmission owners unilaterally thrust the costs of new transmission facilities onto customers — whether it benefited them or not,” the court said. “When FERC approved [SPP’s] new proposal, it balanced the benefit of eliminating that unfairness against the risk that transmission owners might pay for some upgrades alone.”
It said balancing competing policy goals on a ratemaking matter is left to FERC’s “considered judgment.”
The court also denied five additional challenges to FERC’s order, saying, “None persuades.”
