The Midcontinent ISO (MISO) on March 25 asked FERC to deny the request by the Southwest Power Pool (SPP) to hold an evidentiary hearing in the ongoing dispute between the two entities over their joint operating agreement (JOA).
Holding an evidentiary hearing would unnecessarily expand the scope of the proceeding, MISO argued (FERC Docket No. EL14-21). According to MISO, SPP is asking FERC to initiate further proceedings to respond to the D.C. Circuit Court of Appeals’ decision in December 2013 to vacate FERC’s previous finding, which ruled in favor of MISO.
“The commission already examined extrinsic evidence in the orders vacated by the court, when it found JOA section 5.2 to be ambiguous and therefore provided an interpretation,” MISO said in the filing. “Consistent with the court’s finding, the commission’s obligation on remand is to provide an adequate explanation to support its order.”
The D.C. Court on Dec. 3, 2013, ruled that FERC’s finding in favor of MISO was arbitrary and capricious, as it failed to provide a reasoned explanation for its decision and “leapt to an interpretation of one item of evidence without explaining its implicit rejection of alternative interpretations, and, equally without explanation (or at least adequate explanation), it disregarded evidence that the applicable law required it to consider.”
Section 5.2 of the RTOs’ JOA stipulates the terms under which the RTOs share contract path capacity.
SPP is seeking to recover from MISO at least $16m in charges and penalties, which was accrued over a 10-week period and which SPP contends it is owed because of transmission service that MISO provided to Entergy (NYSE:ETR) subsidiary Entergy Arkansas across SPP’s contract path. MISO, in turn, contends that Section 5.2 allows it to use SPP’s contract paths and should not constitute a reason to treat it as an SPP transmission customer. Entergy joined MISO, leaving SPP, on Dec. 19, 2013.
“The JOA is the exclusive contractual relationship between MISO and SPP; it establishes reciprocal use and benefits, but does not provide for additional compensation,” MISO said.
However, SPP contends that MISO using its system without any form of compensation runs counter to a core FERC tenet.
“Allowing MISO to enjoy uncompensated use of the SPP transmission system and MISO’s members to obtain the benefits of that use at the expense of SPP’s other customers that have to support the full investment and operating costs of the system, when SPP members obtain no comparable benefits in return under the JOA, is not just and reasonable,” SPP said in a March 5 filing. “Regardless [of] whether the JOA was just and reasonable when the commission first approved it, the JOA interpreted as MISO insists following the integration of Entergy and MISO’s extensive use of the SPP system can no longer be found to be just, reasonable, and not unduly discriminatory.”
SPP also noted that FERC has already conceded that Entergy’s move to MISO necessitates a reinterpretation of the JOA.
Section 5.2 of the MISO-SPP JOA: “If the parties have contract paths to the same entity, the combined contract path capacity will be made available for use by both parties. This will not create new contract paths for either party that did not previously exist. SPP will not be able to deal directly with companies with which it does not physically or contractually interconnect and the [Midcontinent] ISO will not be able to deal directly with companies with which it does not physically or contractually interconnect.”