[Federal Register Volume 71, Number 102 (Friday, May 26, 2006)]
[Notices]
[Pages 30396-30398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-8099]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. EL06-61-000, EL06-71-000]


Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead 
Brownell, and Suedeen G. Kelly; Associated Electric Cooperative, Inc., 
Complainant v. Southwest Power Pool, Inc., Respondent; Order Denying 
Complaint and Instituting Section 206 Proceeding

Issued May 19, 2006.
    1. Associated Electric Cooperative, Inc. (Associated Electric) 
filed a complaint against Southwest Power Pool, Inc. (SPP), arguing 
that SPP violated its Open Access Transmission Tariff (OATT) in 
granting a rollover request by American Electric Power Service 
Corporation, as agent for the subsidiaries of the American Electric 
Power Company, Inc. d/b/a AEPM (collectively, AEP) for 250 megawatts 
(MW) of long-term firm point-to-point transmission service from the 
Union Electric Company d/b/a Ameren UE (Ameren UE) transmission system 
to the Central and South West Services, Inc. (CSW) transmission system. 
In this order, the Commission denies Associated Electric's complaint. 
In this order, the Commission also institutes a proceeding pursuant to 
section 206 of the Federal Power Act (FPA) \1\ to determine whether 
certain language in section 2.2 of SPP's existing OATT may be unjust, 
unreasonable, or unduly discriminatory or preferential. SPP is directed 
to file comments on this matter within 30 days of the issuance date of 
this order.
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    \1\ 16 U.S.C. 824e (2000).
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Associated Electric's Complaint

    2. Associated Electric contends that it is not possible for SPP to 
grant AEP's rollover request for 250 MW of long-term firm service to 
begin on June 1, 2005, because SPP no longer has the rights to the 
underlying contract path needed to provide such service. Associated 
Electric states that the preceding AEP service arrangements to be 
rolled over relied on a contract path provided by an Interchange 
Agreement dated September 22, 1971, as amended December 31, 1996, among 
Associated Electric, Kansas Gas and Electric Company, Public Service 
Company of Oklahoma, and Union Electric Company for the Missouri-
Kansas-Oklahoma 345kV interconnection (MoKanOk Line), which agreement 
was terminated effective June 1, 2005,\2\ the same day AEP's requested 
service was to begin.
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    \2\ See Union Electric Co., 112 FERC ] 61,089, order denying 
clarification, 113 FERC ] 61,320 (2005).
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    3. Associated Electric states that without the MoKanOk Line 
available to SPP to support AEP's rollover request, SPP should not have 
granted AEP's request without first determining if sufficient Available 
Flowgate Capacity (AFC) existed to continue to provide the service.\3\ 
Associated Electric further states that, alternatively, SPP should have 
considered AEP's request for a new transmission service request and 
processed it pursuant to the procedures for handling new service 
requests under SPP's OATT.
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    \3\ Associated Electric argues that the initial 1998 
Transmission Agreements for the 250 MW of service and subsequent 
service requests plainly indicate that SPP's grant of AEP's 
requested rollover is dependent upon the MoKanOk Line. Complaint at 
13-17.
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    4. Associated Electric states that SPP was obliged under section 
15.2 (Determination of Available Transmission Capability), section 19.1 
(Additional Study Procedures for Firm Point-to-Point Transmission 
Service Requests--Notice of Need for System Impact Study), and 
Attachment D (Methodology for Completing a System Impact Study) of 
SPP's OATT, to perform a study to determine whether sufficient 
transmission capability existed to accommodate AEP's service request. 
Associated Electric contends that by rolling over AEP's service without 
first determining the sufficiency of AFC, SPP has adversely affected 
the reliability of Associated Electric's system and neighboring 
systems. Associated Electric, however, is unable to quantify the 
financial impact of SPP's action.\4\
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    \4\ Complaint at 39.
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    5. Associated Electric alleges that SPP's reliance on section 2.2 
(Reservation Priority for Existing Firm Service Customers) of its OATT 
was misplaced because the cost of Associated Electric's portion of the 
MoKanOk Line was not included as part of the SPP firm transmission 
service rates that AEP had been paying.
    6. Associated Electric requests that the Commission (1) determine 
it was inappropriate for SPP to grant AEP's rollover request without 
studying the AFC in the region; (2) order SPP to conduct a study of the 
AFC on SPP and neighboring transmission systems, including Associated 
Electric, to determine if there is sufficient AFC to support AEP's 
request; (3) order SPP to rescind AEP's service and treat it as a new 
request, if SPP is unable to demonstrate sufficient AFC; and (4) order 
SPP to coordinate with the neighboring transmission system owners with 
respect to all future awards of transmission capacity under its OATT 
that may effect neighboring systems.

Notice of Filing and Responsive Pleadings

    7. Notice of the complaint was published in the Federal Register, 
71 FR 16,137 (2006), with comments, interventions, and protests due on 
or before April 10, 2006. Lafayette Utilities System, Ameren Services 
Company, Western Farmers Electric Cooperative, and AEP filed timely 
motions to intervene. Xcel Energy Service Inc.

[[Page 30397]]

(Xcel) filed an out-of-time motion to intervene. SPP filed an answer in 
opposition to the complaint.

SPP's Answer

    8. SPP requests that the Commission dismiss the complaint and deny 
Associated Electric's claim for relief. SPP states that it was required 
to allow the rollover of existing firm service requested by AEP. It 
explains that section 2.2 of its OATT obliges it to allow all existing 
firm service to roll over service, subject only to allocations of 
capacity if there are competing reservation requests, which SPP states 
was not the case here. With respect to Associated Electric's contention 
that SPP's reliance on section 2.2 was misplaced, SPP maintains that 
Associated Electric misinterprets section 2.2.
    9. This reservation priority only applies to the facilities of the 
Transmission Owner(s) where such facility costs have been included as 
part of the firm service rates that the firm service customer has been 
paying.
    10. SPP states that this language is only applicable if there are 
competing requests for service which prevent SPP from allowing the full 
rollover. It explains that the language only limits the amount of 
capacity that a customer may obtain if there are competing requests, 
according to SPP.
    11. SPP further states that section 2.2 does not require a study, 
and, in fact, the Commission has expressly told the transmission 
provider that it should not be performing studies to determine if it 
can accommodate the rollover.\5\ With respect to section 15.2, SPP 
states that it is only required to perform individual system impact 
studies if it determines that there is insufficient transmission 
capacity. SPP contends that it is given discretion as to whether or not 
to conduct such a study elsewhere in its OATT.\6\ SPP states that, in 
this particular case, SPP previously had concluded that there was 
sufficient transmission capacity to fulfill AEP's service request. SPP 
states that it based its decision to use its transmission system on its 
ongoing plans and models, which indicated adequate capacity to support 
the request. SPP further states that it has seen no evidence of any 
adverse effect on Associated Electric's reliability, nor does it have 
any knowledge that service to Associated Electric's loads is in 
jeopardy.
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    \5\ Answer at 10 (citing Constellation Power Source, Inc. v. Am. 
Elec. Power Serv. Corp., 102 FERC ] 61,142 (2003); Tenaska Power 
Servs. Co. v. Sw. Power Pool, Inc., 102 FERC ] 61,140 (2003); Exelon 
Generation Co., LLC v. Sw. Power Pool, Inc., 101 FERC ] 61,226 
(2002)).
    \6\ Answer at 11 (citing to OATT Sec. Sec.  17.5, 19.1).
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    12. SPP avers that Associated Electric assumes the service to AEP 
is tied to a specific path involving the 345 kV MoKanOk Line. However, 
SPP explains that it is providing the service with a contract path 
using only SPP transmission facilities which interconnect directly with 
AmerenUE's transmission facilities, thereby allowing the service 
without the MoKanOk Line.\7\ Indeed, SPP explains that ``[c]urrently, 
including the AEP transaction, SPP has 680 MWs of transactions flowing 
from AmerenUE or the Midwest ISO into SPP's region. This includes 105 
MW of Aquila-MPS service that was not SPP's responsibility at the time 
it accepted the AEPM reservation. Therefore, SPP has the ability to 
satisfy the entire AEP rollover request over a contract path involving 
SPP facilities, thus rendering service over the MoKanOk Line 
unnecessary.'' \8\ The sole issue, according to SPP, is whether SPP 
could provide the rollover service under its OATT to allow imports 
directly from the AmerenUE system. SPP maintains that its grant of 
transmission service to AEP was not contingent on the use of the 
MoKanOk Line. Therefore, SPP concludes that Associated Electric's 
arguments concerning the MoKanOk Line provide interesting historical 
perspective, but are not particularly relevant.
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    \7\ SPP states that it had interconnections with AmerenUE, 
involving 1018 MW of contract path capacity, at the time of SPP's 
acceptance of the AEP reservation. SPP states that subsequently the 
SPP interconnection with AmerenUE has increased to 1688 MW of 
contract path capacity. Answer at 12-13.
    \8\ SPP Answer at 13.
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Discussion

Procedural Matters

    13. Pursuant to Rule 214 of the Commission's Rules of Practice and 
Procedure, 18 CFR 385.214 (2005), the timely, unopposed motions to 
intervene serve to make the entities that filed them parties to this 
proceeding. We will grant Xcel's motion to intervene out-of-time, given 
its interest in this proceeding, the early stage of this proceeding, 
and the absence of any undue prejudice or delay.

Commission Determination

    14. We will deny Associated Electric's complaint. Contrary to 
Associated Electric's arguments, SPP properly applied section 2.2 of 
its OATT in granting AEP's rollover request.\9\ The Commission has 
consistently held that under section 2.2 all firm service customers 
(requirements and transmission-only with contract terms of one year or 
more) have the right to continue to take transmission service from 
their existing transmission providers when their contracts expire, roll 
over, or are renewed.\10\ SPP correctly implemented section 2.2 of its 
OATT and granted AEP's rollover request.
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    \9\ In relevant part, section 2.2 of SPP's OATT provides that 
``[e]xisting firm service customers (wholesale requirements and 
transmission-only, with a contract term of one-year or more, and 
retail) of the Transmission Owner(s) or Transmission Provider have 
the right to continue to take transmission service from the 
Transmission Provider when the contract expires, rolls over or is 
renewed.''
    \10\ The right to rollover applies regardless of whether there 
is a competing request for transmission service. If there is a 
competing request, the existing transmission customer must agree to 
accept a contract term at least as long as that offered by the 
potential customer and to pay the current just and reasonable rate, 
as approved by the Commission, for such service. Here, there were no 
competing requests for transmission service. In this regard, we 
reject Associated Electric's argument that SPP also violated section 
2.2 ``because reservation priority pursuant to Section 2.2 is only 
to be awarded with respect to the transmission owner's transmission 
facilities where the cost of those facilities has been included as 
part of the firm service rates that the customer has been paying.'' 
Complaint at 41. That portion of section 2.2 applies only in the 
event of competing requests, of which there are none in this 
proceeding, and thus is irrelevant to the issue raised in this 
proceeding.
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    15. As we explained in a prior SPP order, ``[u]nder Section 2.2, 
SPP is obligated to maintain available transmission capacity for its 
existing long-term transmission customers with rollover rights * * * 
until the time expires for those customers to exercise their rollover 
rights.'' \11\ In explaining SPP's obligation to maintain available 
transmission capacity to provide the rollover right, the Commission 
rejected SPP arguments that it could not provide the requested rollover 
service ``due to changes to existing firm uses on its system including 
native load growth, changes in external trading patterns, generation 
dispatch modeling assumptions, and loop flow changes.'' \12\ In this 
proceeding, SPP, consistent with Commission precedent, maintained 
available transmission capacity to provide AEP's requested rollover, 
and Associated Electric's unsupported

[[Page 30398]]

allegations to the contrary are unavailing.\13\
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    \11\ Exelon Generation Co., 99 FERC ] 61,235 at P 26 (2002).
    \12\ Id. SPP, as the Commission has consistently held, could 
restrict a transmission customer's rollover rights only in certain 
limited circumstances. Absent the limited circumstances that the 
Commission has identified for a transmission provider to restrict a 
transmission customer's rollover, and Associated Electric does not 
argue that those circumstances exist, SPP had no basis to deny AEP's 
rollover request.
    \13\ SPP also could not deny AEP's rollover request on a claim 
that there was insufficient capacity on a third-party's transmission 
system. See Commonwealth Edison Co., 95 FERC ] 61,252 at 61,875 
(2001) (``A transmission provider may not condition a transmission 
customer's rights to roll over transmission service on the 
transmission provider's system at the end of an existing service 
agreement based on whether there is enough transmission capacity 
available on a third-party's transmission system.'').
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    16. Moreover, contrary to Associated Electric's complaint, section 
2.2 contains no requirement that SPP perform any studies before 
granting a rollover request.\14\ As explained above, SPP has an ongoing 
obligation to plan its system and maintain available transmission 
capacity to provide existing transmission customers' rollover requests. 
To impose a study obligation on transmission providers, as Associated 
Electric argues, would provide transmission providers the opportunity 
to stall rollover requests and undermine the purpose of section 2.2 of 
ensuring that transmission customers may continue to receive 
transmission service.
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    \14\ AEP's rollover request is subject to section 2.2 of SPP's 
OATT and is not a request for new transmission service. AEP is 
requesting that it continue to receive the same service that it 
previously received. In any event, as SPP points out, even if it 
were treated as a new transmission request, studies would only be 
needed if the transmission provider determined that sufficient 
capacity did not exist to provide the service. See SPP Answer at 11. 
That is not the case here.
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    17. Finally, we reject Associated Electric's arguments with respect 
to loop flow. SPP is obligated under its OATT to offer to provide 
transmission service on its system if there is available transmission 
capacity. SPP has complied with the requirements of section 2.2 and 
provided rollover service to AEP. To the extent that Associated 
Electric faces loop flows on its system as a result of this transaction 
or any other transaction, the Commission's policy is that owners and 
controllers of the transmission facilities must attempt to resolve the 
matter on a consensual, regional basis.\15\ The possibility that 
Associated Electric may face loop flows as a result of the AEP rollover 
transaction is no basis for SPP to deny AEP's request. In this regard, 
we note that Associated Electric, to date, has chosen not to join the 
SPP Regional Transmission Organization or any other regional entities 
that would provide solutions for loop flow problems.
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    \15\ See, e.g., Southern California Edison Co., 70 FERC ] 61,087 
at 61,241-42 (1995).
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    18. Accordingly, we will deny Associate Electric's complaint.
    19. In addition, pursuant to section 206 of the FPA, we find that 
the language in the last three sentences of section 2.2 of SPP's 
existing OATT may not be just and reasonable,\16\ and may be unjust, 
unreasonable, unduly discriminatory or preferential, or otherwise 
unlawful, because the language may place limitations on customers' 
rollover rights that are contrary to Commission policy. Once a 
transmission provider evaluates the impact on its system of serving a 
customer, Commission policy requires the transmission provider to plan 
and operate its transmission system with the expectation that it will 
continue to provide service to the customer should the customer request 
rollover.\17\ The Commission has explained that a transmission provider 
can deny a customer the ability to roll over its long-term firm service 
contract only if the transmission provider includes in the original 
service agreement a specific limitation based on reasonably forecasted 
native load needs for the transmission capacity provided under the 
contract at the end of the contract term.\18\ The Commission also has 
explained that a transmission provider may limit the terms under which 
a new long-term agreement may be rolled over if it has a pre-existing 
contract obligation that commences in the future.\19\ If the 
transmission system becomes constrained (for reasons other than 
reasonably forecasted native load growth or pre-existing contract 
obligations that commence in the future) such that the transmission 
provider cannot satisfy all existing long-term customers, then the 
obligation is on the transmission provider either to curtail service to 
all affected customers (not just the later-accepted firm customers) 
pursuant to the provisions of its OATT or to build more capacity to 
relieve the constraint.\20\
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    \16\ These sentences provide:
    This reservation priority only applies to the facilities of the 
Transmission Owner(s) where such facility costs have been included 
as part of the firm service rates that the firm service customer has 
been paying. If competing existing firm service requirements 
customers apply for service that cannot be fully provided, the 
priority rights will be ranked in accordance with first-come, first-
served principles. If firm service customers tie, then the capacity 
for which they receive priority rights under this tariff shall be 
apportioned on a pro rata basis.
    \17\ See, e.g., Southern Company Services, Inc., 103 FERC ] 
61,117 at P 5 (2003).
    \18\ See, e.g., Southern Company Services, Inc., 110 FERC ] 
61,379 (2005).
    \19\ Id.
    \20\ Id.
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    20. The limitations included in section 2.2 of SPP's existing OATT 
(the last three sentences) appear to go beyond those allowed by the 
Commission. Consequently, we will institute an investigation, under 
section 206 of the FPA, in Docket No. EL06-71-000, into the justness 
and reasonableness of this language, and direct SPP to file comments on 
this matter within 30 days of the issuance date of this order.
    21. In cases where, as here, the Commission institutes a section 
206 investigation on its own motion, section 206(b) of the FPA requires 
that the Commission establish a refund effective date that is no 
earlier than publication of notice of the Commission's initiation of 
its investigation in the Federal Register, and no later than five 
months subsequent to that date. In order to give maximum protection to 
customers, and consistent with our precedent,\21\ we will establish a 
refund effective date at the earliest date allowed. This date will be 
the date on which notice of our investigation in Docket No. EL06-71-000 
is published in the Federal Register.
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    \21\ See, e.g., PJM Interconnection, L.L.C., 90 FERC ] 61,137 
(2000); Cambridge Elec. Light Co., 75 FERC ] 61,177, clarified, 76 
FERC ] 61,020 (1996); Canal Elec. Co., 46 FERC ] 61,153, reh'g 
denied, 47 FERC ] 61,275 (1989).
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    The Commission orders:
    (A) Associated Electric's complaint is hereby denied, as discussed 
in the body of this order.
    (B) Pursuant to the authority contained in and subject to the 
jurisdiction conferred by the Federal Energy Regulatory Commission by 
section 402(a) of the Department of Energy Organization Act, 
particularly section 206 thereof, and pursuant to the Commission's 
Rules of Practice and Procedure and the regulations under the Federal 
Power Act (18 CFR chapter I), an investigation is hereby instituted, in 
Docket No. EL06-71-000, concerning the justness and reasonableness of 
the last three sentences of section 2.2 of SPP's existing OATT.
    (C) The Secretary shall promptly publish in the Federal Register a 
notice of the Commission's initiation of the proceeding ordered in 
Ordering Paragraph (B) above, under section 206 of the Federal Power 
Act, in Docket No. EL06-71-000.
    (D) The refund effective date in Docket No. EL06-71-000, 
established pursuant to section 206(b) of the Federal Power Act, shall 
be the date of publication in the Federal Register of the notice in 
Ordering Paragraph (C) above.

    By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. E6-8099 Filed 5-25-06; 8:45 am]
BILLING CODE 6717-01-P