Petitioners to withdraw 8th Circuit appeal against SPP cost allocation plan

Five utilities say they plan to withdraw the complaint they filed with the 8th Circuit Court of Appeals against FERC over its approval of Southwest Power Pool’s (SPP) “highway/byway” cost allocation methodology (Appellate Case: 11-3715).

In an April 2 status report to the court, the Empire District Electric Company, Lincoln Electric System, Nebraska Public Power District, Omaha Public Power District, and City of Springfield, Mo., (d/b/a City Utilities of Springfield, Mo.), advised they expect to file a motion for voluntary dismissal of their petition for review “during the week of April 1.”

“I think this is huge,” Paul Suskie, general counsel and senior vice president of regulatory policy for SPP told TransmissionHub at the Gulf Coast Power Association conference in Houston on April 4. “Think how contentious cost allocation is – billions of dollars are being socialized over eight states and nobody’s going to appeal. That’s significant.”

Suskie added the development is likely attributable to wide-ranging support of the RTO’s cost allocation process, which is set by state regulators.

At issue is SPP’s “highway/byway” methodology for allocating base plan upgrade costs to SPP member utilities based on the voltage of new transmission facilities.

Under the plan as outlined in a June 17, 2010 FERC order, the costs of facilities operating at 300-kV and above would be allocated 100% across the SPP region on a postage stamp basis. The costs of facilities operating above 100-kV and below 300-kV would be allocated one-third on a regional postage stamp basis and two-thirds to the zone in which the facilities are located. The costs of facilities operating at or below 100-kV would be allocated 100% to the zone in which the facilities are located. (Docket Nos. ER10-1069-000 and ER10-1069-001.)

The utilities’ protest raised a number of concerns, including that the methodology did not satisfy the cost-causation principle, was unduly discriminatory, and that the commission “did not base its determinations on record evidence, ignored testimony filed by protestors, and accepted SPP’s studies at face value.”

FERC disagreed and denied the petition for rehearing. On Dec. 13, 2011, the five utilities petitioned the Court of Appeals to review FERC’s rulings.

Subsequently, SPP’s regional allocation review task force (RARTF) continued its deliberations into 2012 and according to the April 2 status report, “worked in good faith toward the goal of developing the policy, methodologies, action items and recommendations, including a near future review of needed business practices and tariff provisions, that would be satisfactory to all affected parties, including those SPP stakeholders … who had expressed genuine concerns about the highway/byway cost allocation method.”

The RARTF issued a 23-page final report that was adopted by the RARTF, SPP’s regional state committee, its members committee, and SPP’s board of directors.

In view of those developments, the status report stated the utilities believe that “the adoption of satisfactory methods for analyzing the reasonableness of the highway/byway cost allocation approach … could sufficiently ameliorate the aggrievement petitioners suffer as a result of FERC’s orders,” and that review of the orders by the Court of Appeals would be unnecessary.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.