FERC on May 31 accepted SPP tariff revisions that will allow certain transmission facilities’ costs to be entirely allocated on a regional postage-stamp and cost-by-cost basis, effective June 1, 2024 (ER24-1583). 

The commission found SPP’s capacity, flow and benefit analyses of the Sunflower Electric Power transmission facilities at the center of the proceeding provided benefits to the region as a whole. It said the grid operator demonstrated that its proposal will allocate the facilities’ costs in a manner “at least roughly commensurate with estimated benefits, consistent with the cost-causation principle.”  

SPP’s analysis demonstrated that Sunflower’s “wind-rich” transmission zone had generation capacity that greatly exceeded its load. Flow analyses demonstrate that more than 70% of the power flows over the utility’s byway facilities are from generation unaffiliated with the zone’s load. 

“We find that SPP’s capacity and flow analyses demonstrate that electricity generated from resources inside the Sunflower zone is being used by load outside of the Sunflower zone and that the Sunflower byway facilities are being used to deliver this electricity,” FERC said.  

“The entire SPP region benefits economically,” from Sunflower’s facilities, the commission said. “We find that the proposed 100% regional, postage-stamp cost allocation will allocate the remaining costs of the transmission facilities in a manner that is at least roughly commensurate with benefits received and, therefore, is just and reasonable.” 

SPP allocates one-third of the cost of byway projects — on lines rated at 100 to 300 kV — to the RTO’s full footprint, with customers in the transmission pricing zone where the project is built being allocated the rest. “Highway” projects — those larger than 300 kV — are allocated RTO-wide. 

FERC rejected protests that the proposed allocation for the byway facilities’ remaining costs is inappropriate because those facilities were built to address zonal reliability issues or forecast load growth that never was realized, rather than regional needs. It said other arguments were that SPP’s analysis was “insufficiently granular” to determine whether the entire region would receive benefits at least roughly commensurate with costs. 

“We emphasize that cost-allocation precedent does not require such ‘exacting precision’ in the commission’s cost-allocation decisions,” FERC said. “We find that a granular zone-by-zone benefits analysis is not necessary to find that SPP’s proposal to allocate the remaining costs of the Sunflower byway facilities on a 100% regional, postage-stamp basis is just and reasonable.” 

The commission rejected SPP’s initial 2021 proposal to establish a process allowing entities to petition the RTO’s Board of Directors for exceptions from the highway-byway cost-allocation methodology. FERC accepted a revised proposal in 2022 in a 3-2 decision, only to reverse course in 2023 after several rehearing requests. (See FERC Reverse Course on SPP Byway Cost Plan.) 

Sunflower has advocated for relief from the highway/byway process since 2017. Transmission owners largely have opposed the proposal as it wound its way through the stakeholder process, saying it would shift byway cost responsibility from wind-rich areas to others.