Settlement judge procedures are terminated regarding a settlement agreement that was filed at FERC around capacity usage and associated compensation to be paid for use of as-available, non-firm transmission capacity on neighboring transmission systems among the Midcontinent ISO (MISO), Southwest Power Pool (SPP) and “joint parties,” which include the Tennessee Valley Authority (TVA), Acting Chief Administrative Law Judge Carmen Cintron said in a Jan. 8 order.
Cintron said that she certified on Jan. 5 the uncontested offer of settlement, which resolves all issues in such dockets as EL14-21. Accordingly, there being no additional matters pending before the Office of Administrative Law Judges and Dispute Resolution, subject to final action by FERC, settlement judge procedures are terminated, Cintron said.
As noted in that Jan. 5 certification filing, SPP, together with the parties – which also include Alabama Power, Georgia Power, Gulf Power and Mississippi Power, by and through their agent Southern Company Services, Inc. (collectively, Southern Companies) – last October filed an offer of settlement and supporting documents, including a settlement agreement. No party to the proceedings or FERC trial staff opposes the settlement agreement and accordingly, approval of the settlement agreement is in the public interest, Cintron said.
As TransmissionHub reported last October, MISO said in a statement that if approved by FERC, the agreement provides the governance for continued shared use of the transmission system where it enables more economical delivery of energy, while also providing compensation for that use.
During an Oct. 13, 2015, media conference call, Jennifer Curran, vice president of system planning and seams coordination with MISO, noted: “[T]his is something that has been going on, that we’ve been talking about since early 2014. We’re excited to have made this filing today [and] we think it’s a good compromise that provides benefits to customers across the entire region.”
Curran noted that the agreement retains capacity sharing between MISO and SPP, and has a payment mechanism for MISO’s use of the neighboring system. The agreement also addresses the operating limits with the joint parties, she said, noting, “[U]p until now, we have had the Operations Reliability Coordination Agreement, or ORCA, in place and this takes the place of that.”
According to MISO’s statement, the agreement creates a mechanism where MISO will compensate SPP and the joint parties for use of their systems, and the level of compensation will be determined by the application of a capacity factor for flows above MISO’s existing 1,000 MW of contract path.
Discussing the procedural history, Cintron noted in the Jan. 5 certification filing that Entergy’s (NYSE:ETR) Entergy Arkansas in 2005 filed a notice to end its participation in the Entergy System Agreement between Entergy Services and the Entergy Operating Companies, effective December 2013.
During discussions occurring among SPP, MISO, Entergy and Entergy’s retail regulators regarding different options, an issue arose involving the MISO-SPP joint operating agreement (JOA). MISO was asked to confirm the availability of contract path capacity sharing under JOA section 5.2 if Entergy Arkansas joined MISO, Cintron said, adding that MISO determined that JOA section 5.2 would apply to Entergy Arkansas after it became a transmission-owning member of MISO. SPP disagreed and concluded that if Entergy Arkansas became a MISO Transmission Owner, MISO could not rely on JOA section 5.2’s contract path sharing provisions to use capacity on the SPP transmission system, Cintron said.
MISO in April 2011 filed a petition for declaratory order (MISO petition) with FERC concerning the dispute over the conflicting interpretations of the JOA’s section 5.2, and in July 2011, FERC issued an order on petition for declaratory order (Declaratory Petition Orders) in Docket No. EL11-34-000, Cintron said. The declaratory petition orders granted the MISO petition, finding JOA section 5.2 permitted sharing available transmission capacity between MISO, SPP and Entergy Arkansas. Cintron also said that requests for rehearing assigned Docket No. EL11-34-001, including one by SPP, were subsequently denied in a FERC January 2012 order on rehearing. SPP appealed the declaratory petition orders to the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), Cintron said.
After Entergy announced in April 2011 its intention to join MISO as a Transmission Owner effective Dec. 19, 2013, MISO and Entergy initiated various filings with FERC to effectuate the proposed integration, Cintron said. FERC in June 2013 issued an order conditionally accepting certain proposed tariff revisions, accepting and suspending certain proposed tariff revisions, and establishing hearing and settlement judge procedures in Docket Nos. ER12-2681-000, ER13-948-000, and ER13-782-000 (consolidated).
Cintron added that SPP and other parties filed for rehearing, seeking, among other things, a determination with respect to the contract path capacity sharing issue. FERC subsequently denied rehearing on the contract capacity sharing issue in a February 2014 order. Cintron added that SPP then filed a petition for review in the D.C. Circuit on the grounds that FERC erred in stating this proceeding was not the proper forum to address the issue; that case remains pending in the D.C. Circuit.
The D.C. Circuit in December 2013 issued an opinion vacating and remanding FERC’s declaratory petition orders issued in Docket No. EL11-34-000. Cintron also said that the D.C. Circuit concluded that the JOA’s contract path capacity sharing language in section 5.2 was ambiguous, but the court did not endorse either the MISO or SPP construction of the provision.
After the D.C. Circuit decision, SPP sought assurances from MISO that it would refrain from any flows of energy between the MISO Midwest region and the new MISO South region in excess of MISO’s 1,000 MW contractual tie between the two regions, Cintron said, adding that MISO declined such assurances, instead taking the position that the D.C. Circuit decision did not endorse SPP’s interpretation of JOA section 5.2.
MISO and Entergy in December 2013 completed the integration process and the Entergy Operating Companies became transmission-owning members of MISO.
SPP in January 2014 filed a complaint (SPP complaint) in Docket No. EL14-21-000 under sections 206 and 306 of the Federal Power Act (FPA), contending that MISO’s use of SPP’s transmission system violated the JOA and the SPP open access transmission tariff (SPP Tariff), Cintron added.
MISO in February 2014 filed an answer to the SPP complaint and a protest with respect to SPP’s Service Agreement filing. In the answer, Cintron added, MISO denied any unauthorized use of SPP’s transmission system, contending that JOA’s section 5.2 permitted contract path capacity sharing.
FERC in March 2014 issued an order on remand and complaints, accepting and suspending the service agreement, consolidating the proceedings and establishing hearing and settlement judge procedures in Docket Nos. ER14-1174-000, EL11-34-002, EL14-21-000 and EL14-30-000, Cintron said.
Cintron noted that the settlement agreement is the long-term successor agreement to the ORCA, which will expire by its own terms upon FERC’s acceptance or approval of the settlement agreement. In addition, the settlement agreement provides that MISO will pay SPP and the joint parties $16m to settle all claims prior to Feb. 1, 2016. Cintron added that MISO will also be able to use, on a non-firm, as-available basis, available system transmission capacity of other parties’ transmission systems.
Among other things, Cintron said that the settlement agreement does not raise any policy implications, and it does not impact any pending cases, with the exception of SPP withdrawing its petition for review in D.C. Circuit Case No. 14-1053 and the hurdle rate as filed in Docket No. ER14-2445-000.