By Amanda Durish Cook

NextEra Energy last week asked the D.C. Circuit Court of Appeals to overturn two FERC orders in a generator interconnection dispute with Ameren Illinois.

NextEra filed a petition for review of FERC decisions in May 2014 and August  2015 (ER14-1470), saying it was being overcharged by $6 million under a facilities service agreement between Ameren and NextEra subsidiary White Oak Energy for a wind generation project near Carlock, Ill.

In the first order, FERC conditionally accepted an unexecuted facilities service agreement under which White Oak was required to pay Ameren a monthly network upgrade charge retroactive to Aug. 28, 2007, the date of White Oak’s generator interconnection agreement with Ameren.

NextEra requested rehearing, saying it should only pay Ameren $2.4 million, instead of the almost $8.3 million FERC ordered.

NextEra says it is being overcharged because Ameren applied MISO’s “Option 1” pricing to White Oak, under which the interconnection customer provides up-front funding for network upgrades and receives a 100% refund from the transmission owner after the upgrades are complete, with the costs then recovered through a monthly network upgrade charge. The network upgrade includes a return on Ameren’s rate base, operations and maintenance expenses, depreciation and taxes.

That is in contrast with Option 2, under which the transmission owner retains the interconnection customer’s initial funding for the upgrades and the interconnection customer is assessed no further charges.

Option 1 Voided

NextEra is relying on a 2011 FERC order in which the commission ordered MISO to remove Option 1 from its Tariff, saying that it increased the costs to interconnection customers without providing any increase in service compared to other funding options (EL11-30).

The removal was ordered effective March 22, 2011, the filing date of the complaint challenging the funding mechanism. The commission said the removal would not apply to agreements effective before that date as “a reasonable remedy that balances the interests of the parties, the need for regulatory certainty and ease of administration.”

NextEra said Ameren cannot elect to apply Option 1 pricing to the facility service agreement because it didn’t select it when the GIA was executed in 2007.

Ameren responded that MISO’s Tariff did not require it to make an Option 1 pricing selection at the time White Oak agreed to take interconnection service, and NextEra never requested that Ameren commit to a compensation option.

In its Aug. 21 rehearing order, FERC told Ameren to change the GIA to avoid “confusion regarding the full extent of White Oak’s Section 206 rights” but denied NextEra’s request to void the Option 1 charges.

FERC also rejected NextEra’s argument that the FSA should be limited to a return of and on amounts Ameren invested to fund the network upgrades, saying the transmission owner also was entitled to recovery of operations and maintenance costs.