FERC on March 26 accepted SPP’s proposed tariff revisions modifying Central Power Electric Cooperative’s formula rate template but suspended them for a nominal period subject to refund and established hearing and settlement procedures (ER24-254).
The commission found the proposed revisions raised issues of material fact that are more appropriately addressed in an administrative hearing. FERC encouraged the proceeding’s parties to reach a settlement before the hearing begins.
The tariff revisions are suspended for a nominal period, effective Jan. 1, subject to refund.
SPP filed Central Power’s requested formula rate template with FERC last year. The cooperative asked for a base return on equity of 10.29% and a 50-basis-point adder for its SPP membership. It said incorporating the adder for its initial and continuing RTO membership, previously approved by the commission, resulted in a total ROE of 10.79%.
The commission said the adder continues to be appropriate given Central Power’s continued SPP membership. However, it found that the ROE, inclusive of the adder, must remain within the zone of reasonableness as determined by hearing and settlement judge proceedings.
FERC rejected protests by the Western Area Power Administration and Missouri River Energy Services that Central Power should revise the template and the formula rate protocols governing the template’s updates and how the resulting rates will be implemented each year. It said the utilities did not demonstrate how the cooperative’s unchanged template and protocols are “integral to the revisions proposed by Central Power.”
“We also find that nothing in the interaction between Central Power’s proposed revisions” and the template’s and protocols’ elements “discussed by Missouri River and [WAPA] create an unjust and unreasonable result,” the commission wrote.
Central Power, headquartered in North Dakota, is a wholesale generation and transmission cooperative interconnected with SPP members WAPA, Basin Electric Power Cooperative and several other utilities.
While Central Power, a borrower from the Rural Utilities Service, is not a “public utility” under the Federal Power Act, FERC cited precedent and a federal appeals court ruling to find it appropriate to apply the act’s just-and-reasonable standard to the cooperative’s proposed formula rate revisions, which are a component of SPP’s jurisdictional rates.
