Pioneer Transmission settlement offer ‘fatally flawed’ – IURC testimonial staff

The testimonial staff of the Indiana Utility Regulatory Commission (IURC) said Sept. 6 that Pioneer Transmission‘s settlement agreement with Northern Indiana Public Service Company (NIPSCO) is neither in compliance with FERC rules, nor relevant, given that FERC on July 19 issued an order denying its complaint

Among its reasons for opposing the settlement, the testimonial staff said Pioneer’s offer “appears to ‘settle’ an issue already decided by [FERC];” excludes Duke Energy (NYSE:DUK), an essential party to the proceeding; and neglects to acknowledge that even if FERC accepted the settlement agreement, Pioneer would have no way of recovering its portion of the project’s costs, as its formula rate “is contingent upon certain conditions precedent that Pioneer has failed to meet.”

“Consequently, Pioneer’s offer of settlement appears to be fatally flawed and, as a result of these flaws, the IURC testimonial staff must recommend that the commission reject Pioneer’s offer of settlement,” the staff said in the filing (FERC Docket No. EL12-24).

Pioneer, NIPSCO and the Midwest ISO (MISO) on Aug. 20 said they had reached a settlement agreement in the ownership dispute over the Pioneer project, or the Reynolds to Greentown multi-value transmission project (MVP). The proceeding was initiated Feb. 8, when Pioneer filed a complaint against NIPSCO and MISO, asking that FERC set aside MISO’s interpretation of its transmission owners agreement (TOA) so that Pioneer, an independent transmission developer, could build the project. FERC on July 19 denied Pioneer’s complain.

Pioneer is a joint venture between American Electric Power (NYSE:AEP) and Duke Energy.

The staff argued that since Pioneer had not disputed any of FERC’s findings in its July 19 order, the proceeding was no longer pending at the time Pioneer filed its settlement agreement, rendering it untimely.

Further, Pioneer did not dispute FERC’s determination that NIPSCO and Duke Energy were the designated entities to construct the project, rendering its settlement agreement an attempt to settle a matter that was already settled on July 19, the staff said.

Pioneer also did not dispute that NIPSCO and Duke Energy were the designated companies to build the project, but Pioneer excluded Duke Energy from the settlement agreement, the staff argued.

The staff also argued that MISO has no authority to designate Pioneer and NIPSCO as the entities responsible for building the project, which the RTO does in the settlement agreement.

Finally, the staff argued that Pioneer has no method to recover costs, as it has not met the condition precedent for its formula rate to become effective. FERC has approved a formula rate for the “Pioneer project,” provided that certain conditions are met.

However, “As noted in the prior comments of the IURC testimonial staff, the Reynolds to Greentown MVP is not the Pioneer project,” the staff said. “Assuming arguendo that the Reynolds to Greentown MVP is a portion of the Pioneer project, Pioneer has failed to meet the condition precedent for its formula rate to become effective.”

The staff stressed that its opposition to the settlement should not be taken as a lack of support of transmission development in either MISO or the PJM Interconnection (PJM). It has supported the formation of RTOs, the regional transmission planning processes of MISO and PJM, multi-value projects, including the Reynolds to Greentown project at issue, and the regional cost allocation methodology.

“Consequently, these comments should not be construed as being against the building of transmission facilities in Indiana or in the regions of either RTO,” the testimonial staff said. “Moreover, the IURC Testimonial Staff does not wish to cause any unnecessary delay in the planning, engineering, and construction of the Reynolds to Greentown MVP.”

NIPSCO is a subsidiary of NiSource (NYSE:NI). 

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.