On November 26, 2019, FERC rejected, without prejudice, various filings from Basin Electric Power Cooperative (“Basin”) to establish FERC-jurisdictional rates, terms, and conditions of wholesale power and transmission service ahead of certain anticipated changes among Basin’s member cooperatives that would trigger FERC jurisdiction. FERC generally rejected the filings as “patently” deficient.
As background, Basin is a consumer-owned electric generation and transmission cooperative that provides wholesale electricity to 141 member cooperatives at cost-based rates pursuant to long-term wholesale contracts. Since its incorporation in 1961, Basin and its members have operated outside of FERC’s Federal Power Act (“FPA”) Sections 205 and 206 regulatory authority by operation of FPA Section 201(f), which, as relevant to the filings, largely exempts from FERC oversight certain types of consumer-and government-owned entities, electric cooperatives selling less than four million MWh of electricity per year, as well as, in the case of Basin, corporations that are wholly owned by such entities.
In a series of filings submitted on September 30, 2019, Basin explained how certain status changes among its membership would likely render Basin no longer wholly-owned by exempt entities and therefore subject to FERC jurisdiction. Specifically, Basin referred to the changing jurisdictional status of Basin member, Tri-State Generation and Transmission Association, Inc. (see WER on October 16, 2019), and that two member cooperatives expected to exceed the four million MWh of electricity sales per year threshold. In anticipation of the jurisdictional impact of these membership changes, Basin submitted certain filings to become subject to FERC regulatory oversight, including: (1) a stated rate for wholesale electric service (“Rate Schedule A”); (2) transmission agreements; (3) an Open Access Transmission Tariff (“OATT”); (4) an application for market-based rate authority; and (5) nineteen long-term wholesale power contracts.
On review, the Commission generally found that Basin’s filings failed to comply with Commission regulations and were therefore “patently deficient.” FERC found that Basin’s Rate Schedule A and OATT filing failed to comply with the Commission’s filing requirements. The Commission further noted that because the wholesale power contracts filing was dependent upon the Rate Schedule A filings, and the transmission agreements filing and the application for market-based rate authority were dependent upon the OATT filing, those filings must also be rejected. The Commission specifically noted, for example, that Basin provided insufficient cost support for Rate Schedule A and failed to comply with the Commission’s rate schedule filing requirements. The Commission further noted that Basin did not, pursuant to section 35.12 of the Commission’s regulations, provide estimates of the transactions and revenues for the November 2019 to October 2020 time frame as part of its Rate Schedule A filing.
Regarding Basin’s OATT filing, the Commission noted, for example, that Basin did not provide cost support or work papers to demonstrate that its annual transmission revenue requirement, if based on current data, is just and reasonable. FERC also expressed concern about Basin’s failure to provide cost support for certain transmission agreements. Finally, the Commission concluded noting that with the rejection of Basin’s OATT, Basin failed to demonstrate a lack of vertical market power as required under section 35.37(d) of the Commission’s regulations. Accordingly, the Commission rejected Basin’s application for market-based rate authority.
Because the filings were rejected without prejudice, Basin can refile each filing once it cures the issues identified in the order.
FERC’s November 26 order, including an index of all entities that filed motions to intervene, protests, comments, and answers in the Basin proceeding is available here.