In re Sw. Power Pool, Inc.
| Decision Date | 19 January 2023 |
| Docket Number | EL22-54-001 |
| Citation | 182 FERC ¶ 61, 016 |
| Parties | Southwest Power Pool, Inc. |
| Court | Federal Energy Regulatory Commission |
Before Commissioners: Willie L. Phillips, Acting Chairman; James P Danly, Allison Clements, and Mark C. Christie.
1. On April 21, 2022, Southwest Power Pool, Inc. (SPP) filed a petition for declaratory order pursuant to Rule 207 of the Commission's Rules of Practice and Procedure.[1] SPP requested that the Commission assert exclusive or primary jurisdiction over sales of emergency energy made by Associated Electric Cooperative, Inc. (AECI) to SPP during Winter Storm Uri (Emergency Energy Transactions) and determine that SPP properly compensated AECI in accordance with Attachment AE of the SPP Open Access Transmission Tariff (Tariff). In an order issued August 22 2022, the Commission found that it was appropriate for the Commission to exercise primary jurisdiction over the Emergency Energy Transactions and that SPP properly compensated AECI in accordance with Attachment AE of the Tariff[2]
2. On September 19, 2022, AECI timely filed a request for rehearing of the August 2022 Order. Pursuant to Allegheny Defense Project v. FERC,[3] the rehearing request filed in this proceeding may be deemed denied by operation of law. However, as permitted by section 313(a) of the Federal Power Act (FPA),[4] we are modifying the discussion in the August 2022 Order and continue to reach the same result in this proceeding, as discussed below.[5]
3. SPP is a non-profit corporation and a Commission-approved regional transmission organization (RTO).[6] SPP administers the Integrated Marketplace, a centralized day-ahead and real-time energy and operating reserve market with locational marginal pricing and market-based congestion management.[7] The Integrated Marketplace includes the pricing and settlement of the day-ahead market, the real-time balancing market, and the Transmission Congestion Rights market.[8] Entities seeking to transact in the Integrated Marketplace must first execute a Market Participant Service Agreement with SPP that is subject to, and incorporates by reference, all terms and conditions of the Tariff[9]
4. Attachment AE requires SPP to calculate and settle day-ahead and real-time balancing market transactions at the locational marginal price (LMP) for each Settlement Location (i.e., the location of finest granularity for calculation of settlements).[10] Section 6.6 of Attachment AE states that SPP may request emergency energy assistance from an adjacent balancing authority, and specifies that:
5. The SPP Integrated Marketplace Protocols, which provide detailed procedures that implement the provisions of Attachment AE, also provide guidance with respect to emergency energy assistance transactions:
The Interchange Transactions representing emergency energy assistance are settled through the [real-time balancing market] as . . . a fixed import schedule in which the SPP Balancing Authority is receiving assistance from an adjacent balancing authority at the applicable External Interface Settlement Location LMP. The import or export schedules related to emergency energy assistance will be settled similar to all other import or export schedules.[12]
6. SPP uses an emergency operating plan to maintain the integrity of the SPP balancing authority area and to assist neighboring entities when a disturbance occurs that is external to the SPP balancing authority area.[13] The emergency operating plan obligates SPP to invoke assistance from neighboring entities in accordance with standing seams agreements and emergency assistance agreements once conditions are severe enough to rise to an Energy Emergency Alert level 2.[14] These seams agreements include a joint operating agreement (JO A) among SPP and AECI (SPP-AECI JO A).[15]
7. AECI is a rural electric cooperative that is owned by and provides wholesale power to six regional generation and transmission cooperatives. AECI is not a public utility as defined in the FPA and generally is not subject to the Commission's rate jurisdiction under the FPA. AECI's balancing authority area is adjacent to the SPP balancing authority area and AECI is a signatory to the SPP-AECI JOA. AECI has executed a Market Participant Service Agreement with SPP and is a market participant in the SPP Integrated Marketplace.[16]
8. In February 2021, unusually cold winter weather affected SPP and other parts of the South, Southwest, and West. This weather event, known as Winter Storm Uri, resulted in record high electricity use.[17] During the event, SPP engaged its emergency operating procedures to maintain system reliability across its regional footprint. On February 15, 2021, AECI began providing emergency assistance to the SPP balancing authority area by selling power into the SPP real-time balancing market and submitting respective e-Tags for the transactions. SPP settled each of AECI's transactions occurring between February 15, 2021 through February 19, 2021 using the real-time balancing market LMP for the applicable External Interface Settlement Location.[18]
9. In its Petition, SPP represented that AECI filed suit in the United States District Court for the Western District of Missouri on February 11, 2022 (Federal Complaint), seeking additional compensation for the Emergency Energy Transactions.[19]
10. SPP requested that the Commission issue a declaratory order exercising its exclusive jurisdiction under the FPA to declare that SPP, pursuant to Attachment AE of the Tariff, paid AECI the full, correct, and only legally permissible rate for power provided by AECI during Winter Storm Uri - that is, the real-time balancing market LMP at the appropriate External Interface Settlement Location.[20] SPP claimed that AECI's provision of emergency energy to serve the SPP balancing authority area was governed exclusively by the terms and conditions of the SPP-AECI JOA, Tariff, and related guidance documents subject to the Tariff. Thus, SPP argued, AECI's actions under the SPP-AECI JOA and Tariff were squarely within the Commission's exclusive jurisdiction.[21]
11. SPP averred that the situation here necessitated that the Commission exercise its exclusive jurisdiction over SPP's wholesale markets to terminate the lawsuit that AECI pursued in federal court seeking additional compensation above and beyond the amount explicitly afforded under the filed rate (i.e., collectively, the provisions of Attachment AE of the Tariff, the AECI MP Agreement, and the SPP-AECI JOA). SPP explained that the SPP-AECI JOA was implicated when SPP declared emergency conditions and AECI supplied power to SPP. SPP acknowledged that the SPP-AECI JOA is silent on the price to be paid for emergency power, but claimed that the AECI MP Agreement expressly governs the price to be paid for energy supplied by AECI to SPP. According to SPP, the AECI MP Agreement incorporated the Tariff, which governs pricing in the SPP Integrated Marketplace and stated that, absent a JOA provision setting a different price, prices for emergency energy shall be calculated based on the prevailing market price at the applicable settlement location.[22]
12. SPP next argued that even if the Commission lacked exclusive jurisdiction, the Commission should exercise primary jurisdiction to decide this matter. SPP argued that its petition satisfied all three Arkla[23] factors pursuant to which the Commission evaluates whether to assert its primary jurisdiction to decide a matter.[24]
13. SPP argued that AECI's claims that its costs exceeded the amount settled in the SPP Integrated Marketplace are irrelevant with respect to determining the appropriate rate to be paid for its transactions. SPP claimed that, like in Old Dominion I, [25] the Tariff prescribes the price to be paid, which in this case is the real-time balancing market LMP at the applicable External Interface Settlement Location. SPP asserted that allowing AECI to recover more than what the Tariff will accommodate is a violation of the filed rate doctrine and the rule against retroactive ratemaking. Moreover, SPP argued that, like in Old Dominion II, AECI's breach of oral contract and unjust enrichment claims in federal court effectively challenge the pricing terms of the Tariff, and thereby violate the filed rate doctrine.[26]
14. The Commission in the August 2022 Order granted SPP's request that the Commission assert primary jurisdiction over the rate to be paid to AECI for the Emergency Energy Transactions and found that the Emergency Energy Transactions are governed by the Tariff, that AECI is only entitled to the compensation provided for in the Tariff, and that SPP has paid all compensation owed to AECI. The Commission found that it is appropriate for the Commission to exercise primary jurisdiction over the Emergency Energy Transactions, and found that the SPP Tariff is the filed rate for purposes of pricing and settling the Emergency Energy Transactions.27[]
15. Based on the Arkla factors,28[] the Commission exercised its primary jurisdiction over the contract claims regarding compensation for the Emergency Energy Transactions that is the subject...
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