On September 19, 2019, FERC concurrently issued two orders granting in part separate complaints filed by American Electric Power Service Corporation (“AEP”) and the City of Prescott, Arkansas (“Prescott”) finding that, to the extent loads pseudo-tied from Midcontinent Independent System Operator, Inc. (“MISO”) to Southwest Power Pool, Inc. (“SPP”) are subject to overlapping or duplicative congestion charges by both MISO and SPP, then such charges are unjust, unreasonable, unduly discriminatory, or preferential. On the same day, FERC also established briefing procedures (“Briefing Order”) related to the complaint orders to further investigate issues concerning potentially unjust, unreasonable, and unduly discriminatory tariff provisions, contract provisions, and/or practices that result in overlapping and/or duplicative congestion charges being imposed on pseudo-tie transactions between MISO and SPP.
On September 15, 2017, AEP filed its complaint on behalf of its operating company affiliate, Southwestern Electric Power Company (“SWEPCO”) against MISO and SPP, alleging that: (i) MISO violated the Joint Operating Agreement between MISO and SPP (“JOA”) by imposing market-to-market congestion charges on loads pseudo-tied out of MISO into SPP, (ii) MISO improperly double-charges for such congestion, and (iii) the MISO Open-Access Transmission, Energy and Operating Reserve Markets Tariff (“MISO Tariff”) and Business Practices Manual (“BPM”) are unjust and unreasonable in that they that allow for the assessment of congestion charges on such loads. FERC denied the complaint in part with regard to the first and third claims, finding, respectively, that nothing in the JOA states that pseudo-tied loads out of MISO into SPP should be exempt from congestion charges, nor is it unjust and unreasonable for the MISO Tariff and BPM to allow for the assessment of congestion charges on such loads. However, FERC granted AEP’s complaint with respect to AEP’s double-charging allegation. Nonetheless, FERC stated that, because it lacked sufficient information to identify the specific tariff or JOA provisions and/or practices that may cause overlapping or duplicative congestion charges, it was directing further briefing to investigate the issue and any appropriate remedy.
On April 5, 2019, Prescott filed its complaint against SWEPCO and MISO, alleging that: (i) SWEPCO and MISO have both thwarted Prescott’s efforts to purchase power from other sources within the MISO footprint, (ii) the MISO Tariff and BPM are unjust and unreasonable with regard to Prescott’s pseudo-tied loads, as they do not allow Prescott to settle congestion charges based on the Day-Ahead Market, and (iii) SWEPCO failed in its obligations under the Power Supply Agreement (“Prescott PSA”) by not effectively hedging Prescott’s congestion risks and economic penalties. FERC denied the complaint with respect to all three of these allegations, finding, respectively, that: (i) Prescott did not provide sufficient evidence that SWEPCO and MISO thwarted its efforts to purchase power from other sources, (ii) Prescott did not persuasively show that FERC should direct MISO to allow pseudo-ties to settle congestion charges based on the Day-Ahead Market, as the current hedging system is not unjust and unreasonable, and (iii) the Prescott PSA does not contain language requiring SWEPCO to effectively hedge Prescott’s congestion risks and penalties. Prescott further alleged that five elements of the Prescott PSA relating to cost-of-service provisions are unjust and unreasonable. FERC found that this allegation raised issues of material fact that could not be resolved on the record before it and thus set the allegation for hearing and settlement judge procedures under Section 206 of the Federal Power Act.
Finally, like in the AEP complaint, Prescott alleged that MISO and SPP double-charged Prescott in violation of the JOA when they assessed Prescott market-to-market congestion charges for the same pseudo-tie. FERC granted Prescott’s complaint in part with respect to this allegation, finding that such overlapping or duplicative congestion charges are unjust and unreasonable, and directed briefing to further investigate the issue and any appropriate remedy.
In the Briefing Order, FERC established procedures to investigate the issues surrounding the overlapping or duplicative congestion charges discussed in the AEP and Prescott complaint orders and directed MISO and SPP to file initial briefs within 45 days of the issuance of the Briefing Order. Specifically, FERC directed MISO and SPP to: (i) identify provisions in the MISO and SPP tariffs, the JOA, or any other documents or procedures that may allow for the assessment of overlapping or duplicative congestion charges, (ii) explain when and in what instances such overlapping has occurred, (iii) propose revisions that could remove the potential for overlapping or duplicative charges, (iv) identify what tools could be used to mitigate or eliminate the potential for overlapping or duplicative charges, (v) detail the discussions that MISO and SPP have had with stakeholders to resolve the issue, and (vi) identify any other pseudo-tied loads or resources that may also have been assessed overlapping or duplicative charges.
A copy of the AEP order is available here.
A copy of the Prescott order is available here.
A copy of the Briefing Order is available here.