FERC refuses to order Midland to reimburse Michigan Electric $1.7m

FERC on March 20 denied a request by Michigan Electric Transmission Company (Michigan Electric) that the commission order Midland Cogeneration Venture (Midland) to pay Michigan Electric about $1.7m as reimbursement for operating and maintaining interconnection facilities that connect a Midland power plant to Consumers Energy’s (Consumers) grid (Docket EL11-2-000 and ER11-136-001).

In its complaint, Michigan Electric stated Midland owed it an unpaid balance of about $1.7m under the facilities agreement (FA) for operating and maintenance (O&M) services, plus interest.

Consumers constructed the interconnection facilities needed to connect the 1,566-MW Midland cogeneration plant to its grid and signed an FA in 1988, under which Midland agreed to reimburse Consumers for the costs of owning, operating and maintaining those interconnection facilities.

In 2001, Consumers sought to transfer ownership of its transmission assets, including the interconnection facilities, to Michigan Electric. However, Midland did not consent to the proposed transfer of the FA to Michigan Electric, so Consumers and Michigan Electric executed an agency agreement that authorized Michigan Electric to operate the facilities as Consumers’ agent.

According to Michigan Electric’s complaint, Midland initially reimbursed costs of operation but stopped making those reimbursements in November 2004 and subsequently refused to make further payments, either to Michigan Electric or Consumers, citing an alleged violation of the anti-assignment clause of the FA.

In two orders issued concurrently, FERC ruled that Midland is obligated to reimburse Consumers Energy for the costs incurred under the FA to provide the O&M services, and that Consumers, not Michigan Electric, is entitled to recover the rates authorized from Midland. The amount owed was not specified in either order.

The commission’s orders also clarified that Michigan is entitled to the $500 per month fee for acting as Consumers’ agent, as specified in the agency agreement, and that the fee is “just and reasonable.”

Consumers Energy is the principal subsidiary of CMS Energy (NYSE:CMS).