Hoosier Energy Rural Electric Cooperative and Southern Illinois Power Cooperative are asking a court to review two FERC orders, including one in which the commission reaffirmed its approval of proposals involving transmission and cost allocation by the Midwest Independent Transmission System Operator and Southwest Power Pool.
The Touchstone Energy Cooperatives filed their petition for review with the United States Court of Appeals for the Seventh Circuit because they disagree with the regional cost allocations.
“In our opinion, the regional cost allocations would require us to pay a lot of money for transmission facilities from which we would get very little benefit,” a Hoosier Energy spokesperson said Nov. 1. “MISO has said there will be regional benefits, but has not shown that there will be direct benefits to Hoosier Energy or other stakeholders. We believe they need to verify what benefits there would be for specific entities.”
SIPC’s attorney said Nov. 1 that FERC found in its order that the identification of transmission project benefits on a regional basis rather than by utility or zone satisfied the cost-causation principle of ensuring that cost distribution would be roughly commensurate.
“It was the 7th Circuit that in 2009 remanded the region-wide cost allocation issue to FERC regarding PJM Interconnection’s proposed postage stamp cost allocation process – a case that still awaits FERC action,” the attorney said. “The court found that FERC failed to provide enough evidence to support regional cost allocation.”
In that case, the court ruled that FERC is not authorized to approve a pricing scheme that requires a group of utilities to pay for facilities from which its members derive no benefits, or benefits that are trivial in relation to the costs sought to be shifted.
As for how this applies to the MISO proceeding, SIPC read the 7th Circuit 2009 ruling as “requiring a comparison of the costs that are allocated to a particular entity and the benefits that will be derived.”
The attorney also said that SIPC believes that the orders require the cooperative to pay large amounts of money for transmission facilities from which it is likely to get very little benefit. “We argue that FERC has not, in fact, required MISO to prove that the benefits and costs allocated will be commensurate,” the attorney said. “There’s been no showing and there’s no provision in the MVP tariff for there to be a showing that there’ll be any benefits to SIPC.”
Other companies seeking court review of the FERC orders are Duke Energy‘s (NYSE:DUK) Duke Energy Ohio and Duke Energy Kentucky, which have filed a petition with the United States Court of Appeals for the District of Columbia Circuit.
In their petition, the companies note that their request for rehearing of a Dec. 16, 2010, FERC order involving MISO, in which FERC conditionally accepted tariff revisions, has been denied.
The companies said they own and operate electric generation and transmission facilities, serve load as members of MISO, and have received conditional approval from FERC to transfer their transmission facilities to PJM’s control. “As transmission owners in the process of withdrawing from the Midwest ISO and joining PJM, DEO and DEK have a significant and direct interest in the outcome of the commission’s proceedings,” the companies said.