By Amanda Durish Cook

FERC on Tuesday opened an investigation to determine whether the cost recovery for a Cleco Power gas-fired plant that serves as a MISO system support resource unit in southern Louisiana is justifiable.

The commission accepted and suspended a Cleco rate schedule that allots a fixed monthly payment of $1.7 million for the continued operation of the 338-MW Teche Power Station Unit 3, and directed its chief administrative law judge to decide whether to initiate a hearing over the matter (ER18-1237).

MISO first won approval for the plant to operate under an SSR in mid-2017 after Cleco signaled that it intended to retire the unit. (See MISO Wins OK for Cleco Plant SSR.) At the time, the RTO said the Teche plant was needed to prevent severe thermal violations on its transmission system that could not be addressed until the Terrebonne-Bayou Vista 230-kV line could be put into service this year. Entergy now expects the line to be placed into service in early 2019.

In May, FERC granted MISO approval to renew the SSR agreement through March 31, 2019. The agreement provides for both hourly compensation of the plant and the fixed monthly charge, which Cleco says covers costs not included in hourly compensation and fully reimburses it for the costs of operating and maintaining the unit. Cleco had already included the associated $1.7 million in monthly payments in its rate schedule filed with FERC in March.

Entergy protested the rate schedule, saying Cleco failed “to provide enough information to establish that the proposed monthly payments are just and reasonable.” Entergy contended that Cleco’s filing failed to contain “many of the details” required by FERC regulations to allow the commission and interested parties to assess the validity of the costs associated with the agreement.

Cleco has contended that the compensation for its second SSR agreement “is just and reasonable and is no more than necessary to maintain the availability of Teche 3.”

Entergy also contested Cleco’s request for a waiver of the 60-day notice requirement, which would allow the proposed rate schedule to become effective April 1. In its Tuesday ruling setting the Teche matter for hearing, the commission rejected Entergy’s argument, saying its previous rulings have held that nothing in the SSR program would require a generator to shoulder uncompensated costs.

“Here, the record indicates that Teche 3 has been providing reliability service pursuant to the second SSR agreement since April 1, 2017,” the commission said. “Thus, it is appropriate that Cleco be made whole for the costs that it incurs while providing SSR service.”