In re Sw. Power Pool, Inc.

Decision Date19 January 2023
Docket NumberER18-2358-006,ER19-1357-004,ER20-1313-001,Opinion 579-A
PartiesSouthwest Power Pool, Inc. GridLiance High Plains LLC
CourtFederal Energy Regulatory Commission

Southwest Power Pool, Inc. GridLiance High Plains LLC

Nos. ER18-2358-006, ER19-1357-004, ER20-1313-001

Opinion No. 579-A

United States of America, Federal Energy Regulatory Commission

January 19, 2023


Before Commissioners: Willie L. Phillips, Acting Chairman; James P. Danly, Allison Clements, and Mark C. Christie.

ORDER ADDRESSING ARGUMENTS RAISED ON REHEARING AND GRANTING CLARIFICATION

1. On October 24, 2022, GridLiance High Plains LLC (GridLiance)[1] filed a request for rehearing or, in the alternative, clarification of the Commission's September 22, 2022 order in this proceeding, Opinion No. 579.[2] In Opinion No. 579, the Commission affirmed, in part, and reversed, in part, the Initial Decision,[3] which addressed Southwest Power Pool, Inc.'s (SPP) proposal to revise its Open Access Transmission Tariff (Tariff) to incorporate an annual transmission revenue requirement (ATRR) for certain facilities owned by GridLiance (GridLiance Facilities) into SPP transmission pricing Zone 11 (Zone 11)[4] for purposes of rate recovery.

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2. Pursuant to Allegheny Defense Project v. FERC,[5] 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),[6] we are modifying the discussion in Opinion No. 579 and continue to reach the same result in this proceeding, as discussed below.[7] We also grant GridLiance's alternative request for clarification, as discussed below.

I. Background

3. In February 2012, SPP filed proposed revisions to its Tariff to incorporate into Zone 11 an ATRR for certain 69 kilovolt (kV) and 115 kV facilities owned by Tri-County Electric Cooperative, Inc. (Tri-County) in the Oklahoma Panhandle region (Tri-County Facilities).[8] In October 2014, in Opinion No. 535, the Commission determined that the Tri-County Facilities were ineligible for rate recovery from transmission customers in Zone 11 because the Tri-County Facilities did not qualify as transmission facilities under either Attachment AI of the Tariff or the Commission's seven-factor test.[9] In April 2016, GridLiance acquired from Tri-County approximately 410 miles of 69 kV and 115 kV lines and related equipment in the Oklahoma Panhandle, including some of the Tri-County Facilities that were at issue in Opinion No. 535

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(Pre-Upgrade Facilities).[10] Thereafter, GridLiance constructed certain upgrades and extensions to a subset of the Pre-Upgrade Facilities, i.e., the GridLiance Facilities.[11]

4. In August 2018, SPP submitted in Docket No. ER18-2358 proposed revisions to its Tariff pursuant to FPA section 205[12] to add an ATRR for transmission service using the GridLiance Facilities. SPP asserted that the GridLiance Facilities qualify as transmission facilities for placement under SPP's functional control and inclusion under the Tariff for rate recovery, pursuant to Attachment AI of the Tariff.[13] In October 2018, the Commission accepted and suspended the proposed Tariff revisions for a nominal period, effective November 1, 2018, and established hearing and settlement judge procedures.[14]

5. The Commission subsequently set for hearing and settlement judge procedures formal challenges to GridLiance's annual informational filings reflecting its projected net ATRRs for the 2019 and 2020 rate years, including the costs associated with the GridLiance Facilities, in Docket Nos. ER19-1357 and ER20-1313, respectively, and consolidated these dockets with the pending proceedings in Docket No. ER18-2358.[15] In the October 2019 Order, the Commission clarified that, in the event that the GridLiance Facilities fail to meet the definition of Transmission Facilities under Attachment AI, the

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GridLiance Facilities could be included in SPP transmission rates if they meet the Commission's seven-factor test. [16]

A. Attachment AI of the SPP Tariff and the Seven-Factor Test

6. The Commission established the seven-factor test in Order No. 888[17] to assess whether facilities are local distribution facilities subject to state jurisdiction for retail regulatory purposes or transmission facilities under the Commission's jurisdiction.[18] The seven-factor test enables the Commission to identify the "primary function" of a facility. [19] The test is "not subject to formulaic application or categorical standards," but rather "requires comprehensive consideration of how the totality of the circumstances bears on each of the seven factors."[20]

7. In Order No. 888-A, the Commission explained that it would entertain FPA section 205 classification or cost allocation proposals for transmission and local

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distribution facilities submitted by public utilities "[a]s a means of facilitating jurisdictional line-drawing."[21]

8. Under the SPP Tariff, a Transmission Facility is a facility that is included as part of the transmission system that meets any one of six criteria in Attachment AI.[22] The Commission accepted the addition of Attachment AI to SPP's Tariff in 2005.[23]

B. Certified Question Orders

9. During the course of the consolidated hearing and settlement judge procedures, the Presiding Judge certified the following question to the Commission: "[d]oes meeting the Attachment AI criteria in the SPP Tariff qualify facilities as 'Transmission' for purposes of Commission jurisdiction and inclusion in the SPP Tariff and thereby eliminate any need to analyze the facilities under the Commission's seven-factor test?"[24] The Commission answered "no," explaining that the seven-factor test is a "fallback test" that

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may be used either to declassify or classify facilities as transmission facilities when they meet, or fail to meet, respectively, any of the Attachment AI criteria, and can be used to determine whether a facility is eligible to be included as a transmission facility under Attachment AI of the SPP Tariff.[25] On rehearing, the Commission further specified that Attachment AI constitutes:

an initial screen to facilitate jurisdictional line drawing for facilities operated at or above 60 kV that will suffice to classify such facilities for inclusion under the SPP Tariff unless an entity seeks a determination from this Commission or a state commission to classify or declassify any facility by applying the seven-factor test.[26]

C. Initial Decision

10. In the Initial Decision, the Presiding Judge found, among other things, that the GridLiance Facilities are transmission facilities eligible for rate recovery under the SPP Tariff.[27] In particular, the Presiding Judge found that the GridLiance Facilities are transmission facilities under the SPP Tariff because they meet three of the six criteria in Attachment AI. Although Xcel Energy Services Inc. (Xcel), on behalf of its utility operating company affiliate SPS, sought a determination under the Commission's sevenfactor test that the facilities were not transmission, the Presiding Judge found that Xcel had not met its burden to demonstrate that the GridLiance Facilities should be declassified as transmission and that, under a totality of the circumstances, the GridLiance Facilities are transmission because they meet three of the Attachment AI criteria and, at a minimum, Factors 2 and 7 of the seven-factor test.[28]

D. Opinion No. 579

11. In Opinion No. 579, the Commission reversed the Initial Decision, in part, rejected the proposed Tariff revisions, and directed GridLiance and SPP to make refunds of the amounts associated with GridLiance's ATRR in Zone 11 collected from SPP customers,

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plus interest.[29] As relevant here, the Commission found that the proposed Tariff revisions had not been shown to be just and reasonable and not unduly discriminatory or preferential because SPP and GridLiance failed to meet their burden to prove by a preponderance of the evidence that the GridLiance Facilities are transmission facilities eligible for recovery in transmission rates under the SPP Tariff.[30] The Commission explained that SPP and GridLiance, as the proponents of the FPA section 205 filing, had the ultimate burden of persuasion that the proposed Tariff revisions were just and reasonable. The Commission stated that, in this case, this ultimate burden of persuasion included the initial burden of providing prima facie evidence that the GridLiance Facilities were properly classified as transmission facilities under the SPP Tariff, because eligibility for recovery in transmission rates under the Tariff was an essential element of the section 205 filing.[31] The Commission found that SPP and GridLiance satisfied their initial burden of proof by producing evidence showing that the GridLiance Facilities met at least one of the six Attachment AI criteria.

12. The Commission explained that the burden of going forward then shifted to parties challenging the rate filing to present sufficient evidence to call into question that classification.[32] Consistent with the Certified Question Orders, the Commission stated that one way of meeting this burden was to present probative evidence in support of the contention that the GridLiance Facilities should be declassified as transmission because they qualify as distribution facilities under the seven-factor test.[33] The Commission found that Xcel presented such evidence here and that, as a result, SPP and GridLiance could not prevail by solely relying on their prima facie evidence that the facilities met the Attachment AI criteria, because they retained the ultimate burden of persuasion to prove by a preponderance of the evidence that the facilities are properly classified as transmission under the seven-factor test.[34] The Commission concluded that requiring

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Xcel to make that ultimate showing "would effectively shift the onus from the proponent of a rate change, in contravention of section 205 of the FPA and section 7(c) of the [Administrative Procedure Act (APA)]."[35]

E. GridLiance's...

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