On February 27, 2012, FERC issued an order in Docket Nos. ER12-715 and EL-56 (not consolidated) allowing revisions in the Midwest Independent Transmission System Operator, Inc.’s (“MISO”) tariff, subject to clarification.  The proposed revisions would allow MISO to charge a Withdrawing Transmission Owner, defined as an owner of transmission facilities that withdraws its transmission facilities from the operational control of MISO after July 16, 2010, a monthly Multi-Value Project (“MVP”) usage rate that includes a share of the costs of all MVP projects that the MISO Board of Directors approved prior to the effective date of the transmission owner’s withdrawal.  In the Order, the Commission accepted tariff revisions allowing MISO to charge a withdrawing transmission owner a monthly MVP usage rate that includes a share of the costs of all MVP projects approved by the MISO board before the effective date of the transmission owner’s withdrawal – a withdrawing transmission owner will be required to pay the same usage rate as that paid by others that are assessed costs of MVPs.  The Commission is requiring MISO to clarify certain specific language relating to the methodology used to determine the Withdrawing Transmission Owners monthly MVP usage charge.

The tariff revisions also detail the collection method of charges associated with MVPs.  In addition, the Commission found just and reasonable MISO’s plan to apply a 5% annual growth factor to historical data used to calculate the Schedule 39 charge for a withdrawing transmission owner that does not provide its energy withdrawal information to MISO, stating that not including an escalation factor would give Withdrawing Transmission Owners an incentive to not provide MISO with the actual data needed to calculate the charge.  If the transmission owner should believe that the default mechanism does not produce an accurate estimate, it can always provide MISO with its actual energy withdrawal information.  FERC found that arguments made by parties in response to the tariff changes relating to cost causation were irrelevant, and stressed that the issues presented in the current Order have nothing to do with cost causation and are instead the result of the contractual and tariff obligations of Withdrawing Transmission Owners.  The Commission stated that through these tariff changes Withdrawing Transmission Owners are appropriately required to pay for already planned transmission facilities so that those costs are not inappropriately shifted to the remaining members.  The Commission therefore refused to address any issues relating to cost causation.  The Commission also clarified that the transmission owner, and not its transmission customers, should pay those financial obligations because it is the transmission owner that decided to withdraw from MISO.  If a transmission owner wishes to recover these costs from wholesale customers, it would have to submit a new section 205 filing and demonstrate that the benefits to its wholesale transmission customers exceed the costs arising from its decision to withdraw from MISO.

In its filing, MISO had also sought to apply the MVP costs methodology to Duke Energy Ohio, Inc./Duke Energy Kentucky, Inc. (together, “Duke”) and American Transmission Systems, Incorporated (“ATSI”), who both withdrew from MISO prior to the proposed January 1, 2012 effective date.  To determine whether this application is appropriate, the Commission had to determine whether the revised tariff provisions are consistent with the MVP-related withdrawal obligations in MISO’s tariff at the time that Duke and ATSI withdrew from the RTO.  The Commission found that the issue could not be resolved based on the current record and set the question for hearing and settlement judge procedures.

The Order also addressed, and dismissed, a petition for declaratory order made by FirstEnergy Service Company on behalf of its six affiliates requesting that MISO not allocate the costs of the Michigan Thumb Project to entities that have announced withdrawal.  The Commission noted that by waiting until after it withdrew from MISO to file its complaint, the filing was too late to modify the Tariff Provisions in effect at the time of its withdrawal under Federal Power Act section 206 (the complaint section), and to the extent that the argument related to the just and reasonableness of the tariff provisions as applied to the complaint, it will have an opportunity to present such arguments in the hearing on Schedule 39 and Appendices A and B to 39.

For a copy of the order, click here.