On January 12, 2016, the Federal Energy Regulatory Commission (“FERC”) issued an order rejecting without prejudice Louisiana Generating LLC’s (“Louisiana Generating”) request to recover costs associated with performing its obligations as a local balancing authority (“LBA”) under the Midcontinent Independent System Operator, Inc’s (“MISO”)  Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) Schedule 24 and Schedule 24-A. Going forward, Louisiana Generating may resubmit its request for cost recovery in accordance with FERC’s explicit expectations set forth in the order.

As FERC explained in its order, Louisiana Generating is a signatory to the MISO Balancing Authority Agreement (“MISO BA Agreement”), which delineates balancing authority responsibilities between MISO and the LBAs within MISO. Pursuant to MISO Tariff Schedule 24, a signatory to the MISO BA Agreement is eligible to recover the costs incurred as a result of fulfilling its LBA responsibilities. Section IV of MISO Tariff Schedule 24-A states that an LBA must submit a filing with FERC that “(a) justifies the proposed charges, (b) shows that there is not duplicative recovery of these costs, and (c) sets forth the proposed accounting.” In its April 2015 request for cost recovery, Louisiana Generating described the operational costs for 2014 associated with its function as an LBA and a breakdown of each line item purchase that was included in each cost description. Further, Louisiana Generating stated that there is no duplicative recovery of these costs because it is not otherwise able to recover these costs in any other venue.

In rejecting Louisiana Generating’s request for cost recovery, FERC found that Louisiana Generating had not adequately explained how it determined what costs were appropriately allocable or attributable to the performance of its LBA functions, and did not show that such costs are not otherwise recovered under the MISO Tariff. Further, FERC explained that to meet the requirements of MISO Tariff Schedule 24-A, “[FERC] would expect any future filing by Louisiana Generating to include, but not be limited to, the following information: a full explanation of the role and activities performed under its LBA function, a full description of the non-LBA functions it also performs, an explanation and supporting workpapers identifying costs that are directly assigned to the LBA function, and to the extent costs are allocated to the LBA function, the basis for that allocation and supporting workpapers should be provided.”  Moreover, FERC stated that Louisiana Generating would be expected to demonstrate in any future filing that none of the costs that it seeks to recover are otherwise recovered under the MISO Tariff.

A copy of the order is available here.