Thursday, February 21, 2019

FERC Declines to Re-examine White Pine SSR Refunds

By Amanda Durish Cook

FERC on Monday denied the Michigan Public Service Commission’s request to reconsider a decision over refunds associated with a two-year system support resource (SSR) agreement for an Upper Peninsula generating plant.

The PSC sought rehearing of a June 2018 order accepting MISO’s compliance filing containing a report setting out refunds for overcharges stemming from the RTO’s SSR agreement with P.M. Power Group’s White Pine natural gas plant. FERC rebuffed the request, saying it fell outside the scope of the compliance proceeding, among other issues (ER15-767-004).

The proceeding originated in a 2014 decision in which FERC ordered MISO to scrap its practice of allocating SSR costs on a pro rata basis to all load-serving entities in the American Transmission Co. service territory and instead assign costs to LSEs that required the White Pine, Escanaba and Presque Isle power plants for reliability. Two years later, FERC approved MISO’s plan to refund Wisconsin LSEs overcharged under the original rules of the White Pine SSR agreement. (See FERC Upholds MISO’s White Pine, Escanaba Refunds.)

White Pine power plant | Traxys

MISO was authorized to end the White Pine SSR in late 2016 after ATC submitted a transmission reconfiguration plan to split a load pocket, boosting reliability in the area. (See MISO Allowed to End White Pine SSR.)

The PSC argued that MISO’s refund report was problematic on three counts, saying the refunds run “contrary to [FERC] precedent where the commission has traditionally denied refunds in cost allocation cases” and that they amount to “retroactive ratemaking,” which is prohibited under the Federal Power Act. It also contended that MISO’s corrected cost allocation methodology should only be implemented prospectively.

“MISO did not make clear it would seek authorization to impose retroactive surcharges in this proceeding until the filing of the refund report,” the PSC added.

The state regulator further argued that FERC should not have considered the refund report final while a pending appeal of three other Upper Peninsula SSR reallocation cost methodologies was before the D.C. Circuit Court of Appeals. The court has since rejected the appeal.

In denying the PSC’s rehearing request, FERC said the White Pine proceedings weren’t the place to “challenge the commission’s authority to order retroactive surcharges.”

The “Michigan commission’s challenge to the requirement for refunds and surcharges, including its arguments that the refunds and surcharges are contrary to commission precedent, the FPA, the filed rate doctrine and the rule against retroactive ratemaking, are outside the scope of this compliance proceeding and, in any event, have been rejected by the D.C. Circuit,” FERC said.

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