FERC last week affirmed an administrative law judge’s 2017 decision that SPP’s proposed Tariff revisions to incorporate Tri-State Generation and Transmission Cooperative as a new transmission owner in an existing pricing zone are just and reasonable (ER16-204).
Nebraska Public Power District, the dominant TO in the affected zone, objected to SPP’s decision to incorporate certain Tri-State transmission facilities and the annual transmission revenue requirement (ATRR) into its zone.
The commission denied NPPD’s request to reopen the record, saying it failed to demonstrate the existence of “extraordinary circumstances” and that a change in circumstances was “more than just material.”
“NPPD’s motion relies on a change in the criteria that SPP applies to determine zonal placements and additional information” regarding another potential SPP member (Western Area Power Administration-Rocky Mountain Region) joining the RTO, the commission said. “Neither of these arguments demonstrate extraordinary circumstances or changes that go to the heart of the case.”
When SPP adds a new TO to an existing zone, the TO’s ATRR and any of its load not already included in the zonal load are added to the existing zone’s totals, resulting in a new total zonal ATRR and a new total load. That leads to new service rates for all transmission customers within the zone.
NPPD argued that the proposed ATRR, including the proposed return on equity, was not just and reasonable. It said that because Tri-State’s average per-megawatt cost of serving load was higher than NPPD’s average cost of serving its existing load, adding Tri-State would shift more than half of the costs of the co-op’s transmission facilities to existing Zone 17 customers and increase the costs to serve them.
The commission accepted SPP’s Tariff revisions in December 2015, and established hearing and settlement judge procedures over whether the placement of Tri-State’s facilities and ATRR in NPPD’s zone was just and reasonable and whether Tri-State owed any refunds.
ALJ John P. Dring found SPP’s proposed Tariff revisions and their placement of Tri-State’s transmission facilities in NPPD’s zone just and reasonable. He also determined Tri-State owed no refunds in connection with its proposed zonal placement.
FERC agreed that the criteria SPP applied to determine whether Tri-State should be placed in NPPD’s zone “are appropriate for determining zonal placement” in this proceeding. It also sided with Dring that “what matters in this proceeding is whether the criteria render just and reasonable results,” agreeing that SPP’s criteria did so.
“We agree … that shifting cost responsibility for some degree of legacy costs is not per se unjust and reasonable, but there may be cases in which a cost shift would be unjust and unreasonable,” the commission wrote.
Fifteen SPP members joined NPPD in intervening in the docket, many of whom filed a Section 206 complaint in October alleging that SPP’s zonal placement is unjust and unreasonable (EL18-20). FERC rejected the complaint in March, but the TOs have filed a rehearing request. (See FERC Rejects TO Complaint on SPP Zonal Placements.)
Colorado-based Tri-State, a nonprofit cooperative that sells wholesale electricity to its member-owner distribution cooperatives and public power districts in Nebraska, New Mexico and Wyoming, joined SPP in January 2016.
Commission Denies Rehearing Requests on SPP’s ARR, TCR Rules
The commission denied Xcel Energy’s rehearing request of a 2017 order that rejected proposed revisions to SPP’s tariff regarding the eligibility of customers with network service subject to redispatch to receive certain financial transmission rights (ER17-1575).
The commission’s October 2017 order directed SPP to rewrite its rules on auction revenue rights and long-term congestion rights (LTCRs), saying the RTO’s proposed grandfathering provisions would “inappropriately extend practices that the commission finds unjust and unreasonable.” (See FERC Again Rejects SPP Rules on ARRs, LTCRs.)
FERC affirmed its decision to grandfather ARRs and LTCRs that have already been granted to network customers with service subject to redispatch. It had also said it was not reasonable to extend the grandfathering provisions through July 15, 2017, as SPP had proposed as a transition to new ARR/LTCR eligibility rules.
Xcel argued for a rehearing on behalf of its Southwestern Public Service subsidiary, alleging that FERC’s order disregarded SPS’ contractual rights, concluded that network service subject to redispatch is not similarly situated to network service not subject to redispatch and determined that the remedy did not have retroactive effect.
The commission responded that Xcel failed to show that SPP’s Tariff “provided [SPS] with a contractual right that was abrogated” in its Tariff order. FERC found it was reasonable to distinguish “between rights that customers already had been granted and rights that customers may have expected to be allocated.”
“Southwestern is not losing any rights that already have been granted and remains eligible to be allocated ARRs in the future” subject to the limitation in the Tariff order, the commission said.
FERC issued a related order that also addressed Xcel’s claims that the commission had “fundamentally mischaracterized the nature of redispatch service,” rejecting Enel Green Power North America and Southern Company Services’ rehearing request (EL16-110).
Both companies appealed October orders filed along with ER17-1575 (EL16-110 and EL17-69) that found SPP was not barred by its Tariff from allocating ARRs and LTCRs to network customers subject to redispatch for the amounts and periods subject to redispatch during the 2017-2018 annual allocation process. Enel and Southern filed on behalf of their Buffalo Dunes Wind Project and Alabama Power subsidiaries, respectively.
The commission said both parties failed to show that the Oct. 19, 2017, effective date set in EL16-110 for the Tariff revisions is not appropriate. It said the effective date preserved its ability to order refunds, if appropriate, “back to this date.”
FERC said that its decision that SPP’s Tariff revisions do not apply to the 2017-18 annual allocation process “was neither ‘internally inconsistent’ nor erroneous.” It pointed out that the annual ARR and LTCR allocations for 2017/18 were made in March and April 2017, prior to the Tariff revisions’ effective date.
OMPA Complaint Against OG&E Goes to Settlement
The commission set the Oklahoma Municipal Power Authority’s complaint against Oklahoma Gas and Electric for hearing and settlement judge procedures, with a refund effective date of Jan. 26, 2018 (EL18-58).
FERC found OMPA raised “issues of material fact that cannot be resolved based upon the record before us.” The state agency filed the complaint in January, alleging that OG&E’s ROE is unjust and unreasonable and that its formula rate needs to be revised to reflect the Tax Cuts and Jobs Act.
The commissioners said OMPA’s analysis was enough to show OG&E’s cost of equity may have declined significantly below its existing 10.6% base ROE. They also said any tax-related changes to OG&E’s formula rate should ensure that its rates properly reflect the effects of the tax legislation.
OG&E said its formula rate will automatically reflect the change in the federal corporate income tax rate, but it will not automatically address the effect of the legislation on accumulated deferred income tax balances.
— Tom Kleckner
