Monday, February 18, 2019

FERC Denies Rehearing on SPP Tx Cost Shifts

By Tom Kleckner

FERC last week denied a rehearing request by SPP transmission owners of its earlier decision on the allocation of transmission costs, saying the TOs had not shown the RTO’s provisions had become unjust and unreasonable (EL18-20).

The commission’s Oct. 3 order affirmed its March decision, which rejected the TOs’ complaint that SPP unfairly allocates costs to incumbent TOs when a new owner is integrated into an existing transmission pricing zone.

The companies had argued that a “loophole” in SPP’s Tariff forces customers within an existing zone to pay a share of the legacy costs for transmission lines newly integrated into the zone. That practice, the complainants said, runs counter to the “no legacy cost shift” protections SPP has established. (See FERC Rejects TO Complaint on SPP Zonal Placements.)

spp ferc attr transmission costs

SPP transmission zones | SPP

In the March ruling, the commission said the TOs failed to carry the burden of proof to support their request for a prohibition on cost shifts. In last week’s order, FERC said the TOs also failed to prove that SPP’s Tariff is unjust and unreasonable because it lacks provisions dictating what information RTO must include in filings to add a new TO to an SPP zone to justify cost shifts.

“As the commission noted in the March 15 order, SPP will need to make an [Federal Power Act] Section 205 filing to add the ATRR [annual transmission revenue requirement] of a new transmission owner to an existing zone’s ATRR,” the commission said. “The fact that SPP’s Tariff does not expressly require this filing to justify any potential cost shifts does not change the commission’s obligation to determine that the revised ATRR is just and reasonable. … SPP, and any other proponents of the revised ATRR, still has the burden of proof to demonstrate that the rate is just and reasonable and must ensure that there is a sufficient evidentiary record for the commission to make a reasoned decision. Likewise, the fact that SPP’s Tariff does not specify that SPP must justify any potential cost shifts in its filing with the commission does not prevent parties from arguing that the allocation of the costs of a new transmission owner’s facilities to existing customers in the zone in which SPP proposes to place those facilities renders the revised ATRR unjust and unreasonable under the circumstances of the case.”

The commission noted that it considered information regarding cost shifts in its May 17 ruling on SPP’s placement of Tri-State Generation and Transmission Association in existing transmission pricing Zone 17 (ER16-204). (See FERC Rejects NPPD Objection to Tri-State Zonal Placement.)

The order “provides further assurance that the case-by-case approach to assessing the implications of cost shifts espoused in the March 15 order will not result, as indicated SPP transmission owners fear, in rate impacts being excluded from the commission’s consideration or in protesters bearing an unreasonable burden of proof,” FERC said.

The commission also reiterated its conclusion that the TOs failed to prove that cost shifts create a disincentive to RTO membership. “Indicated SPP transmission owners caution that transmission owners may be reticent to join SPP due to the potential that their customers’ rates may one day increase if other transmission owners join and are placed in the same zone. However, as the commission noted in the March 15 order, not all cost shifts will benefit the new transmission owner, and some could even benefit the existing transmission owner and its customers.”

The filing TOs were American Electric Power, on behalf of Public Service Company of Oklahoma and Southwestern Electric Power Co.; City Utilities of Springfield (Mo.); Kansas City Power & Light; KCP&L Greater Missouri Operations Co.; Nebraska Public Power District; Oklahoma Gas & Electric; Omaha Public Power District; Southwestern Public Service; Sunflower Electric Power; Mid-Kansas Electric; Westar Energy; and Western Farmers Electric Cooperative.