On August 31, 2026, FERC granted The Empire District Electric Company (Empire District) two transmission rate incentives for its portfolio of electric transmission projects in the Southwest Power Pool, Inc. (SPP) region (SPP Project Portfolio): (1) Abandoned Plant Incentive; and (2) construction work in progress (CWIP) Incentive. The Abandoned Plant Incentive will allow Empire District to recover 100% of prudently incurred costs for any SPP Project Portfolio component cancelled or abandoned for reasons beyond its control. The CWIP Incentive will allow Empire District to include 100% of prudently incurred CWIP costs in rate base during the development and construction phase of the SPP Project Portfolio.
Empire District’s SPP Project Portfolio includes (1) a new 345 kV transmission line, (2) rebuilds of several 161 kV lines, and (3) approximately 28.2 miles of 69 kV to 161 kV transmission facility upgrades, a roughly $800 million investment expected to be completed by the end of 2031. These projects were identified in SPP’s 2024 Integrated Transmission Planning (ITP) Assessment Report as addressing reliability, economic, policy, and operational needs throughout the SPP region. Empire District’s rate incentive filing requested the following rate incentives: (1) Abandoned Plant Incentive to help mitigate risks that the SPP Project Portfolio is cancelled for reasons beyond Empire District’s control (including regulatory, environmental, siting, and construction risks) and (2) CWIP Incentive to allow Empire District to recover its financing costs during the SPP Project Portfolio’s construction period.
In its August 31 order, FERC granted Empire District’s rate incentives request.
First, FERC found that Empire District qualified for the rebuttable presumption under Order No. 679 that the SPP Project Portfolio will either ensure reliability or reduce the cost of delivered power by reducing transmission congestion. The Commission reached this conclusion because the SPP Project Portfolio was selected through SPP’s ITP process, which FERC has previously recognized as a fair and open regional transmission planning process that evaluates whether identified projects will enhance reliability and/or reduce congestion.
Second, FERC found that Empire District qualified for the Abandoned Plant Incentive because Empire District demonstrated meaningful risks of project abandonment outside its control. These demonstrated risks include the need for permits from several federal, state, and local authorities; significant stakeholder engagement; landowner easement negotiations; material procurement delays due to increased long-lead times for high-voltage equipment; and contract labor constraints present in rural Missouri. The Commission found these risks established the requisite nexus between Empire District’s requested incentive and its planned investment.
Third, regarding the CWIP Incentive, FERC found that the approximately $800 million SPP Project Portfolio would place significant downward pressure on Empire District’s credit ratings and cash flow during construction because such investment would more than double Empire District’s existing electric transmission plant in service and increase its total assets by approximately 20%. FERC concluded that the CWIP Incentive would ease that financial constraint, spread rate impact over the construction period, and reduce overall financing costs to the benefit of ratepayers.
Taken together, FERC determined that the total package of incentives requested for the SPP Project Portfolio were tailored to address distinct, but related risks: the Abandoned Plant Incentive mitigates the risk of non-recovery of costs in the event of cancellation, while the CWIP Incentive addresses cash flow pressures during the development and construction periods.
A copy of FERC’s order, issued in Docket No. ER26-3172, is available here.