FERC on Jan. 21 signed off on the settlement agreement and a pair of other orders resolving the dispute among the Midcontinent ISO (MISO), the Southwest Power Pool (SPP) and “joint parties” regarding transmission capacity usage.
The orders address the capacity sharing between MISO and SPP, with MISO compensating SPP and the joint parties – which include the Tennessee Valley Association, Southern Company (NYSE:SO) and others – for the use of their systems after Entergy (NYSE:ETR) became a member of MISO at the end of 2013.
“We are pleased that FERC has approved the agreement between MISO, SPP and the joint parties,” Jennifer Curran, vice president of system planning and seams administration at MISO, told TransmissionHub Jan. 21.
“With this issue behind us, we look forward to continued collaboration across our seams for the benefit of all our customers,” Curran said.
The level of compensation from MISO to SPP and the joint parties will be determined by the application of a capacity factor for flows above MISO’s existing 1,000 MW contract path, the companies said when the settlement agreement was filed with FERC
The orders were approved at the Jan. 21 FERC meeting on the consent agenda, meaning without discussion, although Commissioner Cheryl LaFleur commended the parties for reaching an agreement and Acting Chief Administrative Law Judge Carmen Cintron for overseeing the process.
Cintron on Jan. 5 certified the settlement agreement as an uncontested settlement.
“The settlement agreement appears to be fair and reasonable and in the public interest, and is hereby approved,” FERC said in one of the orders, noting that the approval of the agreement “resolves all issues in dispute in these proceedings.”
The case dates back a few years and includes challenges in court and complaints filed at FERC about MISO violating a joint operating agreement (JOA) and the SPP open access transmission tariff. MISO, for its part, contended that the JOA provided the bases for contract path capacity sharing between the grid operators and that SPP was attempting to obtain unauthorized loop flow compensation.
When the settlement agreement was filed in October 2015, the parties noted that the MISO contract path capacity will increase through certain actions, including the addition of facilities that physically connect MISO South and MISO Midwest through changes in the configuration of MISO’s regional transmission organization (RTO) footprint, including adding new members. The MISO contract path capacity will decrease through certain actions, such as the permanent removal of transmission facilities to the extent that such transmission facilities previously had physically connected MISO South and MISO Midwest, the companies said.
Regarding compensation, the settlement noted that for the period of Jan. 29, 2014 through Jan. 31, 2016 (Compensation Phase I), MISO is to pay $8m per year – for a total of $16m – to settle all claims for compensation by SPP and the joint parties for periods prior to Feb. 1, 2016. MISO is to pay 60% of the payment to SPP and 40% of the payment to the collective joint parties.
The settlement further noted that from Feb. 1, 2016 through Jan. 31, 2017 (Compensation Phase II), MISO will pay, half to SPP and half to the joint parties, a monthly amount equal to 1/12th of $16m for available system capacity usage in each direction, subject to a true-up based on the actual capacity factor and certain compensation adjustments for that period.
One of the FERC orders noted that Eric Morris, who is not a party to the proceeding, filed comments on the settlement questioning whether the compensation from MISO to SPP and the joint parties is for “unreserved use.” Because Morris acknowledged that he is not a party to the proceeding, FERC agreed with Cintron that his comments did not prevent the commission from treating the agreement as an uncontested settlement.
Another order dismisses requests for rehearing in the case as moot, since they were addressed in the settlement agreement that was approved.
FERC accepted a tariff change from MISO to remove a “hurdle rate” that MISO had in place to limit its exposure to charges from SPP. The settlement agreement’s structure and terms for compensation to SPP and the joint parties “obviates any need for the hurdle rate,” FERC said.
The commission noted that the New Orleans City Council, which regulates Entergy New Orleans, filed comments on the settlement agreement and sought assurance that the compensation will align with congestion charges associated with the hurdle rate. FERC said that the comments address concerns about charges prior to the removal of the hurdle rate, while the proceeding is based on a finding that removal of the hurdle rate is just and reasonable.
“Therefore, we find the New Orleans Council’s requests to be outside the scope of this proceeding,” FERC said.
FERC Commissioner Colette Honorable, who was a commissioner with the Arkansas Public Service Commission – a party in the cases – before being appointed to FERC, did not participate in the proceeding (Docket Nos. EL14-21, ER14-1174).