A federal appeals court on Jan. 2 rejected Lincoln Electric System’s request to review a 2022 FERC decision turning down the Nebraska utility’s request to recover costs from its investment in a Wyoming generating facility.
The D.C. Circuit Court of Appeals said the commission correctly ruled the proposal as “unjust and unreasonable” to recover Lincoln Electric’s costs for Laramie River Station (LRS), which is located in a different SPP transmission pricing zone than the one assigned to the utility (22-1205).
At issue is Lincoln Electric’s joint ownership of LRS along with Basin Electric Power Cooperative, Tri-State Generation & Transmission Association and the Western Minnesota Municipal Power Agency/Missouri River Energy Services. The 1,700-MW, coal-fired facility is in eastern Wyoming and SPP’s Zone 19. Lincoln Electric is in Zone 16.
Lincoln Electric transferred operational control of its Nebraska facilities when it joined SPP in 2009. However, it has not done the same for the LRS facilities, choosing to recover those costs through rates charged to its Zone 16 customers.
In 2021, SPP filed tariff revisions at FERC modifying Lincoln Electric’s formula rate template to allow recovery from Zone 19 customers. The LRS owners and the zone’s transmission providers protested the filing, pointing out that SPP does not control Lincoln Electric’s LRS interest and that the proposal would illegitimately shift costs to Zone 19 customers.
“Lincoln’s proposal violates the cost-causation principle because Lincoln invested in LRS to serve its Zone 16 customers only,” Circuit Court Judge Karen LeCraft Henderson wrote. “That principle does not support Lincoln’s recovery of any of its LRS investment from Zone 19 customers, who did not cause Lincoln to incur these costs.”
Henderson noted that Basin Electric and Missouri River both transferred to SPP operational control of their LRS facilities.
“FERC reasonably found Lincoln’s proposal unjust and unreasonable, and it correctly interpreted its precedent and rejected Lincoln’s undue discrimination claim,” she said.
