CORPORATE GOVERNANCE COMMITTEE ZOOM Meeting …...Aug 20, 2020 · Affiliate(s): None Page 2 of 58....

CORPORATE GOVERNANCE COMMITTEE

ZOOM Meeting | August 20, 2020 - 8:00 a.m. - 5:00 p.m.

• A G E N D A •

1. Call to Order and Administrative Items ......................................................................................................... Barbara Sugg

a. Minutes (6/16/20)

b. Action Items review

2. Alternative Power/Public Interest Members Committee Vacancy.......................................................Barbara Sugg

a. Steve Gaw – Advanced Energy Alliance

3. Docket ER18-939 Non-jurisdiction Refund Docket ......................................................................................... Mike Riley

4. FERC’s approval of Compliance filing in the AWEA/WC Complaint Docket ER19-2522 ................... Mike Riley

5. Annual Survey and Assessment Schedule ........................................................................................................ Paul Suskie

a. Review of Board Effectiveness Survey Questions

b. Survey Schedule

6. Review of CGC 2020 Annual Assessment ...................................................................................................... Barbara Sugg

7. Review of CGC Scope ............................................................................................................................................. Barbara Sugg

8. Board Meeting and Committee Schedule ..................................................................................................... Barbara Sugg

9. Future meetings

First week of September 2, 2020 2:00pm-5:00pm CT - Virtual

November 12, 2020 - Virtual

10. Adjournment

Executive Session immediately following the business meeting

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Nomination Form Members Committee

Alternative Power / Public Interest Nominee Name & Title:

Steve Gaw

Company:

Advanced Power Alliance

Type of Experience & Responsibilities with Company:

Senior Vice President- Infrastructure and Markets

Nominee’s Phone Number & Email Address:

573-645-0777 [email protected]

Nominated by:

Chase Smith- Southern Power

Affiliate(s):

None

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Sector Representative Company Term Expires

IOU Bleau LaFave NorthWestern Energy 2022

IOU Peggy Simmons Public Service Co. Oklahoma 2022

IOU David Hudson SPS/Xcel Energy 2020

IOU Greg McAuley Oklahoma Gas & Electric Company 2020

IOU Tim Wilson Liberty Utilities 2021

IOU Kevin Noblet Evergy Companies 2021


Cooperative Stuart Lowry Sunflower 2022

Cooperative Tom Christensen Basin Electric 2022

Cooperative Joel Bladow Tri-State Generation & Transmission 2020

Cooperative Zac Perkins Tri-County Electric Cooperative 2021

Cooperative Mike Wise Golden Spread 2021


Municipal Chris Jones City Utilities Springfield 2022

Municipal Dave Osburn Oklahoma Municipal Power Authority 2020


IPP/Marketers Rob Janssen Dogwood 2022

IPP/Marketers Holly Carias NextEra Energy 2020

IPP/Marketers Kevin Smith Tenaska 2021

Members Committee (24 Members)

Vacancies (In Red)

Investor Owned Utility Sector (6 Seats)

Cooperative Sector (5 Seats)

Municipal Sector (2 Seats)

Independent Power Producer/Marketers Sector (3 Seats)

State Agencies Sector (2 Seats)

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State Agencies Joe Lang Omaha Public Power District 2020

State Agencies Tom Kent Nebraska Public Power District 2021


FPMA Jody Sundsted WAPA 2021


Transco Brett Leopold ITC Great Plains 2022


Industrial Jeff Riles Google 2020


Alternative/ PI VACANT 2021

Alternative/ PI VACANT 2020


Retail VACANT 2022

Small Retail Customer Sector (1 Seat)

Federal Power Marketing Agency Sector (1 Seat)

Large Retail Customer Sector (1 Seat)

Independent Transmission Company Sector (1 Seat)

Public Interest/Alternative Power Sector (2 Seats)

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SouthwestPowerPool SPPorg southwest-power-poolHelping our members work together to

keep the lights on... today and in the future.

FERC PROCEEDING: NON-JURISDICTIONAL REFUND OBLIGATIONEL16-91

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2

EL16-91: NON-JURISDICTIONAL REFUND OBLIGATION

• Background

• Recent Developments

• Current Status

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3

EL16-91: BACKGROUND

• July 21, 2016: FERC-initiated examination of the SPP Tariff under Section 206 of the Federal Power Act

ISSUE IDENTIFIED BY FERC:

• There is no refund commitment in the SPP Tariff requiring non-jurisdictional transmission owners to refund revenues received associated with service provided due to their status as RTO transmission owners

• This may result in in SPP’s jurisdictional rates not being just and reasonable

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4

EL16-91: BACKGROUND

CGC Direction:

• February 2017: Coordinate with all SPP Transmission Owners on drafting a straw proposal to comply with FERC’s direction and bring proposal back to CGC.

• November 2017: Work with non-jurisdictional Kansas and Nebraska Members and all Transmission Owners to formulate a compliant proposal that is responsive to Kansas and Nebraska specific issues

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5

OCTOBER 2017 ORDER

• FERC ordered SPP to submit a compliance filing with a proposal to address NJ refund commitment by February 28, 2018, regardless of the outcome of Stakeholder process, or show cause as to why revisions are unnecessary

• FERC was expected to issue a final order on April 30, 2018

• Rehearing Requests of October 2017 Order filed by NPPD; APPA; NRECA; and Midwest

5

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6

SPP’S COMPLIANCE FILING

• Stakeholder process produced two proposals

for the CGC’s consideration

• Staff Proposal

• NPPD Proposal

• WAPA Amendment

• January 5, 2018 – CGC voted unanimously to

approve the proposed Membership

Agreement addition drafted by NPPD, and

approved the WAPA-specific amendment

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7

SPP’S COMPLIANCE FILING

• February 28, 2018: SPP submitted its

compliance filing

• Supportive comments filed by: NPPD;

Sunflower; Midwest; OPPD; WAPA

• Protest comments filed by: KCP&L; Indicated

SPP Transmission Owners = AEP; Empire;

OG&E; Xcel SPS; Westar

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8

RECENT DEVELOPMENTS:MAY 21, 2020 ORDER & FINDINGS

• FERC granted rehearing of the October 2017 Order

• Found that it is neither necessary nor appropriate to impose the refund commitment contemplated there on non-public utility transmission owning members in SPP.

• FERC found that the lack of a general refund commitment by nonpublic utilities similar to that applicable to non-jurisdictional entities pursuant to FPA sections 205 and 206 does not render SPP’s rates unjust and unreasonable or unduly discriminatory or preferential.

• FERC terminated the FPA section 206 proceedings instituted in the July 2016 Order in Docket No. EL16-91 and the October 2017 Order in Docket No. EL18-19; FERC dismissed SPP’s Compliance Filing in Docket No. ER18-939 as moot, and terminated that proceeding.

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MAY 21, 2020 ORDER: IMPACTS?

• SPP’s governing documents remain as they

were prior to the initiation of this proceeding.

• There is no refund commitment in the SPP

governing documents requiring non-

jurisdictional transmission owners to refund

revenues received associated with service

provided due to their status as RTO

transmission owners.

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10


• Instances where refund commitments have

come up

• SPP’s receipt of and distribution of MISO

funds pursuant to FERC settlement

agreement

• Attachment Z2 payments

• Others?

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11


• Recommendation:

• Staff will propose a process to CGC, to be

used for reviewing the current status of

refund obligations in SPP’s governing

documents, including a straw proposal if

applicable

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12

QUESTIONS?

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171 FERC ¶ 61,142

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

Richard Glick, Bernard L. McNamee,

and James P. Danly.

Southwest Power Pool, Inc.

Southwest Power Pool, Inc.

Docket Nos. EL16-91-001

EL18-19-001

(consolidated)

ER18-939-000

ORDER GRANTING REHEARING AND DISMISSING COMPLIANCE FILING

(Issued May 21, 2020)

1. On July 21, 2016, pursuant to section 206 of the Federal Power Act (FPA),1 the

Commission instituted a proceeding in Docket No. EL16-91-0002 to examine whether

the Southwest Power Pool, Inc. (SPP) Open Access Transmission Tariff (Tariff) may

be unjust, unreasonable, and unduly discriminatory or preferential because it does not

include a refund commitment by non-public utility transmission owning members whose

revenue requirements are recovered under the SPP Tariff, and established paper hearing

procedures.3

2. In an order issued on October 19, 2017, the Commission: (1) held the FPA section

206 paper hearing in abeyance pending the ongoing SPP stakeholder process; (2) granted,

in part, and denied, in part, SPP’s requests for clarification; (3) addressed some issues

1 16 U.S.C. § 824e (2018).

2 Sw. Power Pool, Inc., 156 FERC ¶ 61,059 (2016) (July 2016 Order).

3 Id. PP 1, 9-10. See 16 U.S.C. § 824(f). For ease of reference, while such utilities

are subject to the Commission’s authority in certain respects, but not in other respects,

compare 16 U.S.C. §§ 825u, 825v (2018) with 16 U.S.C. § 824c, we nevertheless refer

to FPA section 201(f) entities herein as non-jurisdictional entities, non-jurisdictional

utilities, or non-public utilities.

20200521-3031 FERC PDF (Unofficial) 05/21/2020

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Docket No. EL16-91-001, et al. - 2 -

raised by parties; (4) directed a compliance filing; (5) instituted a proceeding in Docket

No. EL18-19-000 pursuant to FPA section 206 to examine the SPP Membership

Agreement (Membership Agreement) and other jurisdictional documents; and (6)

consolidated Docket Nos. EL16-91-000 and EL18-19-000.4

3. On November 20, 2017, Nebraska Public Power District (NPPD) and American

Public Power Association (APPA) submitted timely requests for rehearing of the October

2017 Order. In addition, National Rural Electric Cooperative Association (NRECA) and

Midwest Energy, Inc. (Midwest) filed a timely request for rehearing and clarification of

the October 2017 Order. On February 28, 2018, SPP submitted a compliance filing in

Docket No. ER18-939-000 in response to the October 2017 Order (SPP’s Compliance

Filing). For the reasons discussed below, we grant rehearing of the October 2017 Order

and, accordingly, dismiss SPP’s Compliance Filing as moot.

I. Background

A. Non-Public Utility Rates and Refund Commitments

4. FPA section 201(f) exempts certain entities, such as state- or municipally-owned

utilities and cooperative utilities, from Part II of the FPA, “unless such provision makes

specific reference thereto.”5 With one limited exception,6 sections 205 and 206 of the

FPA do not contain such references and, by their terms, apply only to public utilities.7

However, the D.C. Circuit has held that when a non-public utility becomes a

transmission-owning member of a regional transmission organization (RTO) or

4 Sw. Power Pool, Inc., 161 FERC ¶ 61,062 (2017) (October 2017 Order).

5 See 16 U.S.C. § 824(f).

6 Section 206(e) provides the Commission with refund authority when section

201(f) entities (except for electric cooperatives or entities that sell less than 8,000,000

MWh per year) make voluntary short-term wholesale sales in organized markets under

rates established by a Commission-approved tariff and the sale violates the terms of the

tariff or applicable Commission rule, subject to additional restrictions as applied to

Bonneville Power Administration and Tennessee Valley Authority.

7 Bonneville Power Admin. v. FERC, 422 F.3d 908, 918 (9th Cir. 2005)

(Bonneville) (“FERC’s rate jurisdiction under § 205 and its refund jurisdiction under

§ 206 expressly apply only to public utilities”); Transmission Agency of N. Cal. v. FERC,

495 F.3d 663, 673 (D.C. Cir. 2007) (TANC) (noting that “the structure of the FPA clearly

reflects Congress’s intent to exempt governmental entities from FERC’s refund

authority”).


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Docket No. EL16-91-001, et al. - 3 -

independent system operator (ISO) and its revenue requirement becomes a component of

the RTO’s/ISO’s jurisdictional rate, the Commission has jurisdiction to analyze the non-

public utility’s rates, to the extent that those rates affect jurisdictional transactions, to

ensure that the RTO’s/ISO’s rates remain just and reasonable.8

5. Courts previously have found that the authority to review the rates of non-

jurisdictional entities, to the extent these rates are included in jurisdictional rates, does

not give the Commission the ability to direct non-jurisdictional entities to pay refunds. In

TANC, for example, the D.C. Circuit found that, although the Commission had authority

to review the City of Vernon, California’s (Vernon) transmission revenue requirement,

it lacked authority to direct Vernon to pay refunds.9 The D.C. Circuit expressly rejected

the Commission’s argument “that it has authority to enforce [an agreement by a non-

jurisdictional entity to pay refunds ordered by the Commission] because it was filed by

[California Independent System Operator, Inc. (CAISO)], a jurisdictional entity, and

approved by FERC.”10

6. Although the Commission “does not have refund authority over . . . governmental

entities and non-public utilities,”11 it has established the policy that, “when an RTO

proposes to include a non-public utility’s revenue requirement in the RTO’s rates, the

RTO may not implement the proposal unless the non-public utility makes a voluntary

commitment to make refunds if the rate, as filed, is later found to be not just and

reasonable.”12 That is, where there is a voluntary refund commitment, the Commission

will allow an RTO/ISO to collect a non-public utility’s proposed rate while the

Commission reviews its justness and reasonableness (similar to accepting a public

utility’s rate subject to refund). However, in the absence of such a voluntary refund

8 TANC, 495 F.3d at 667 (explaining that “FERC may consider the rates of a

municipal utility [participating transmission owner] to the extent that they affect the rates

of the ISO, which is subject to the FPA”) (citing Pac. Gas & Elec. Co. v. FERC, 306 F.3d

1112, 1114 (D.C. Cir. 2002)). The Commission thus reviews the non-public utility’s rate

under the same just and reasonable standard as FPA section 205. Id. at 672.

9 Id. at 673-76.

10 Id. at 676.

11 Bonneville, 422 F.3d at 911.

12 See October 2017 Order, 161 FERC ¶ 61,062 at P 20; Xcel Energy Servs. Inc. v.

FERC, 815 F.3d 947, 950 (D.C. Cir. 2016) (Xcel).


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Docket No. EL16-91-001, et al. - 4 -

commitment, “the Commission will delay the effective date of the proposed rate while

it conducts a section 205 review.”13

7. In 2016, the D.C. Circuit held in Xcel that the Commission erred by concluding

that it had no authority to direct refunds after it failed to apply this established policy and

instead allowed SPP’s filing of Tri-County Electric Cooperative’s (Tri-County) annual

transmission revenue requirement (ATRR) to go into effect without suspension or a

voluntary refund commitment, despite finding that the rates may be unjust and

unreasonable.14

B. July 2016 Order

8. In the July 2016 Order, the Commission instituted an FPA section 206 proceeding

and commenced paper hearing procedures to address concerns regarding the

Commission’s ability to ensure that SPP’s rates will be just and reasonable under FPA

section 20515 when they include the revenue requirement of a non-public utility

transmission owning member.16 These concerns arose in an order that the Commission

issued concurrently with the July 2016 Order, on remand from Xcel, regarding refunds

resulting from SPP’s proposed revisions to its Tariff to implement a formula rate for

Tri-County.17 A similar issue arose in another proceeding concerning SPP’s proposal

to allocate revenues it received on behalf of certain SPP transmission owners under a

settlement. In that case, SPP sought clarification that it could withhold revenues from

the settlement from non-public utility transmission owning members of SPP who had

not committed to make refunds in the event that the tariff revisions that SPP proposed

were revised as a result of the settlement judge procedures instituted in that proceeding.18

13 Xcel, 815 F.3d at 950.

14 The Commission initially found that SPP’s filing of Tri-County’s ATRR may

be unjust and unreasonable, but let the rate go into effect on April 1, 2012 without

suspension or voluntary refund commitment. Following rehearing, SPP obtained a

voluntary commitment from Tri-County to make refunds back to the February 22, 2013

date of the rehearing order. The Commission ultimately determined that Tri-County’s

facilities were not eligible to be rolled into SPP’s revenue requirement. Id. at 956.

15 16 U.S.C. § 824d.

16 July 2016 Order, 156 FERC ¶ 61,059 at P 6.

17 Sw. Power Pool, Inc., 156 FERC ¶ 61,057 (2016).

18 SPP, Motion for Clarification, Docket No. ER16-791-000 (filed May 13, 2016).


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Docket No. EL16-91-001, et al. - 5 -

The Commission granted SPP’s request,19 but recognizing the concern regarding the

collection of refunds from non-public utility transmission owning members in SPP, the

Commission issued the July 2016 Order, instituting the paper hearing in this docket.

In the July 2016 Order, the Commission stated that:

It is of concern that the refund commitments provided by the

non-public utility transmission owners thus far do not apply

to the full range of situations in which they may receive

revenues associated with service provided due to their status

as transmission-owning RTO members based on RTO rates,

terms or conditions that are found to be unjust and

unreasonable, in the same manner that public utility

transmission owners could be required to provide refunds of

such revenues under FPA sections 205 or 206.20

9. Therefore, the Commission instituted an FPA section 206 proceeding, established

paper hearing procedures, and noted that SPP might address the Commission’s concerns

by revising the SPP Tariff to require a prospective refund commitment from non-public

utility transmission owning members for all manner of refunds that may be ordered

in FPA section 205 and 206 proceedings related to revenues that they may receive

associated with service provided due to their status as transmission owning RTO

members.21 The Commission stated that, if a non-public utility transmission owning

member chooses not to make such a refund commitment under the Tariff revisions, then

SPP would remove the non-public utility transmission owning member’s transmission

revenue requirement from the SPP Tariff as of a prospective date determined by the

Commission.22

19 Sw. Power Pool, Inc., 156 FERC ¶ 61,058 (2016).

20 July 2016 Order, 156 FERC ¶ 61,059 at P 7.

21 Id. P 9.

22 Id.


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Docket No. EL16-91-001, et al. - 6 -

C. October 2017 Order

10. In the October 2017 Order, the Commission granted in part and denied in part

requests in the briefs for clarification of the July 2016 Order, and held in abeyance the

paper hearing pending completion of SPP’s stakeholder process.23 Among other things,

the Commission clarified that the refund commitment described in the July 2016 Order

must be a contractual commitment that is enforceable by the court, not the Commission.

The Commission explained that “[w]hen a non-public utility becomes a participating

transmission owner in an RTO, its transmission revenue requirement becomes a

component of the RTO’s jurisdictional rate.”24 The Commission stated that, under its

policy, “when an RTO proposes to include a non-public utility’s revenue requirement in

the RTO’s rates, the RTO may not implement that proposal unless the non-public utility

makes a voluntary commitment to make refunds if the rate, as filed, is later found to be

not just and reasonable.”25 The Commission relied on TANC for the proposition that

“a non-public utility’s voluntary contractual commitment to make refunds does not

authorize the Commission to issue an order requiring the nonpublic utility to make

refunds” and Alliant for the proposition that a court may enforce such commitments.26

On the other hand, the Commission described the D.C. Circuit in Xcel as acknowledging

this policy and holding that the Commission erred in “failing to adhere to its policy and

in not providing full retroactive relief to remedy this error.”27

11. In addition, the Commission instituted a new proceeding in Docket No. EL18-19-

000, pursuant to FPA section 206, to examine the SPP Membership Agreement and

other jurisdictional documents and consolidated it with Docket No. EL16-91-000. The

Commission also directed SPP to submit a compliance filing by February 28, 2018, with

a proposal to address the lack of a refund commitment for non-public utility transmission

23 October 2017 Order, 161 FERC ¶ 61,062. The Commission granted SPP’s

request for clarification that it should have flexibility to develop a proposal that

recognizes the unique status of Western Area Power Administration (Western) Upper

Great Plains (UGP) Region (Western-UGP) as a federal power marketing agency and

participating transmission owner in SPP. Id. P 56.

24 Id. P 18.

25 Id. P 20.

26 Id. P 21 (citing TANC, 495 F.3d at 675; Alliant Energy v. Neb. Pub. Power

Dist., 347 F.3d 1046, 1050 (8th Cir. 2003) (Alliant)).

27 Id. (citing Xcel, 815 F.3d at 950 (internal citations omitted)).


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Docket No. EL16-91-001, et al. - 7 -

owning members or show cause as to why revisions to its Tariff or other governing

documents are not necessary.

12. APPA and NPPD filed timely requests for rehearing of the October 2017 Order.

NRECA and Midwest filed a timely request for rehearing and clarification of the

October 2017 Order. The Kansas Corporation Commission (Kansas Commission) filed

an answer in support of NRECA’s and Midwest’s request for rehearing and clarification.

II. SPP’s Compliance Filing

13. On February 28, 2018, SPP made a filing proposing amendments to its

Membership Agreement and the company-specific provisions of the Membership

Agreement applicable to Western-UGP (Western-UGP Membership Agreement).

Specifically, SPP proposes to add a new section 3.0(i) of its Membership Agreement to

require non-public utility transmission owning members to pay refunds on any amount

collected by SPP on behalf of and distributed to such non-jurisdictional member for

overcharges caused by (1) a billing or computational error, as agreed by SPP and the

non-jurisdictional member, or (2) the inclusion of facilities not deemed Transmission

Facilities, as defined by Attachment AI of the SPP Tariff.

14. SPP also proposes language in new section 3.0(i) of its Membership Agreement to

require non-public utility transmission owning members to pay refunds for charges “in

excess of the rate ultimately determined in any other order issued by the [Commission]

to be just and reasonable . . . .”28 SPP states that such refunds would be limited in the

event that the non-jurisdictional member cannot issue refunds because, as the language

proposed in new section 3.0(i) provides, “[(1)] its rates are subject to a state regulatory

authority authorized by state statute to set transmission rates that are subject to judicial

review and [(2)] the refund order issued by the [Commission] is inconsistent with

applicable state law, regulation, or regulatory determination.”29

15. With respect to Western-UGP Membership Agreement, SPP proposes new

section A1.12 , which SPP states will limit and condition Western-UGP’s refund

obligations as follows: (1) by paying refunds, Western-UGP does not waive its non-

jurisdictional status or its rights described in sections 3.10 and 3.11 of the Western-UGP

Membership Agreement; (2) Western-UGP’s refund obligations shall be prospective

from the date of an initial Commission order establishing the date of any refund;

(3) Western-UGP shall make a refund only if such refund is not otherwise covered by

28 SPP Compliance Filing, Docket No. ER18-939-000, Transmittal Letter, at 9

(Feb. 28, 2018) (SPP Compliance Filing Transmittal Letter).

29 Id.


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Docket No. EL16-91-001, et al. - 8 -

section 3.10 of the Western-UGP Membership Agreement; and (4) any disputes related

to section A1.12 shall be resolved in accordance with federal contract law and interest

shall be capped at the Prompt Payment Act interest rates.

III. Notice and Responsive Pleadings

16. Notice of the FPA section 206 proceeding in Docket No. EL18-19-000 initiated

in the October 2017 Order to examine the SPP Membership Agreement and any other

Commission-jurisdictional SPP documents that must be revised to fully implement the

refund commitment concerns identified in the July 2016 Order was published in the

Federal Register, 82 Fed. Reg. 49,364 (Oct. 25, 2017) with interventions and protests due

on or before November 9, 2017. The notice indicated that the refund effective date will

be the date of publication of the notice in the Federal Register.

17. The Missouri Public Service Commission filed a notice of intervention. Timely

motions to intervene were filed by: Midwest; Associated Electric Cooperative, Inc.;

Western Farmers Electric Cooperative; Minnkota Power Cooperative, Inc.; Southwestern

Power Administration; Sunflower Electric Power Corporation (Sunflower); Mid-Kansas

Electric Company, LLC (Mid-Kansas); NPPD; Xcel Energy Services Inc. (Xcel); APPA;

Tri-County; Western Area Power Administration (Western); Southwest Transmission

Dependent Utility Group;30 and Michigan Public Power Agency. SPP filed a motion to

intervene out of time.

18. Notice of SPP’s Compliance Filing was published in the Federal Register, 83 Fed.

Reg. 9728 (Mar. 7, 2018), with interventions and protests due on or before March 21,

2018.

19. Timely motions to intervene were filed by: ITC Great Plains, LLC; Westar

Energy, Inc. (Westar); Mid-Kansas; Sunflower; Kansas City Power & Light Company

and KCP&L Greater Missouri Operations Company (KCP&L Companies) Companies;

American Electric Power Service Corporation; NPPD; Central Power Electric

Cooperative, Inc.; Associated Electric Cooperative, Inc.; Xcel, City Utilities of

Springfield, Missouri; United States Department of Energy – Headquarters; Empire

30 Southwest Transmission Dependent Utility Group is comprised of Aguila

Irrigation District, Ak-Chin Energy Services, Buckeye Water Conservation and Drainage

District, Central Arizona Water Conservation District, Electrical District No. 3, Electrical

District No. 4, Electrical District No. 6, Electrical District No. 7, Electrical District No. 8,

Harquahala Valley Power District, Hohokam Irrigation and Drainage District, Maricopa

County Municipal Water District No. 1, McMullen Valley Water Conservation and

Drainage District, City of Needles, Roosevelt Irrigation District, City of Safford,

Tonopah Irrigation District, and Wellton-Mohawk Irrigation and Drainage District.


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Docket No. EL16-91-001, et al. - 9 -

District Electric Company; Lincoln Electric; Western; Southwestern Power

Administration; Kansas Power Pool; Western Farmers Electric Cooperative; NRECA;

Omaha Public Power District (OPPD); Midwest; APPA; Basin Electric Power

Cooperative; Oklahoma Gas and Electric Company; and Southwest Transmission

Dependent Utility Group.

20. NPPD, OPPD, Lincoln Electric, Midwest, Sunflower, Mid-Kansas, and Western-

UGP filed comments in support of SPP’s Compliance Filing. Indicated SPP

Transmission Owners31 and KC&PL Companies filed protests opposing SPP’s

Compliance Filing. SPP and APPA filed answers to the comments and protests on its

Compliance Filing.

IV. Discussion

A. Procedural Matters

21. Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.214 (2019), the notice of intervention and timely, unopposed motions

to intervene serve to make the entities that filed them parties to the proceedings in

which they sought intervention.

22. Pursuant to Rule 214(d) of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.214(d), we grant SPP’s late-filed motion to intervene in Docket

No. EL18-19-001 given its interest in the proceeding, the early stage of the proceeding,

and the absence of undue prejudice or delay.

23. Rule 713(d) of the Commission’s Rules of Practice and Procedure, 18 C.F.R.

§ 385.713(d)(1) (2019), prohibits an answer to a request for rehearing. Accordingly, we

reject the Kansas Commission’s answer in support of Midwest’s and NRECA’s request

for rehearing and clarification in Docket Nos. EL16-91-001 and EL18-19-001.

24. Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure, 18 C.F.R.

§ 385.213(a)(2) (2019), prohibits an answer to a protest unless otherwise ordered by the

decisional authority. We are not persuaded to accept SPP’s and APPA’s answers in

Docket No. ER18-939-000 and will, therefore, reject them.

31 Indicated SPP Transmission Owners are American Electric Power Service

Corporation, Public Service Company of Oklahoma, Southwestern Electric Power

Company, Empire District Electric Company, Oklahoma Gas & Electric Company,

Westar, Xcel, and Southwestern Public Service Company.


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Docket No. EL16-91-001, et al. - 10 -

B. Substantive Matters

1. Rehearing Requests of the October 2017 Order

25. APPA alleges that the Commission erred in the October 2017 Order by finding

that it has authority to require SPP to revise its Tariff and governing documents to

include refund commitments by non-public utility transmission owning members, and

by relying on the non-public utility transmission owning members’ choice as to RTO

membership and revenue recovery under the SPP Tariff to justify that finding. APPA

asserts that the Commission’s reliance on Alliant is misplaced because that case held that

a court can enforce a refund commitment in an agreement that an entity has itself already

chosen to execute, not whether the Commission may require a jurisdictional agreement to

include such a commitment.32 APPA argues that, because the Commission may not

regulate non-jurisdictional transmission owning members of an RTO, whether these

entities have refund commitments is irrelevant to whether an RTO’s rates are just and

reasonable. APPA and NPPD argue that the Commission erred by ordering SPP to make

a compliance filing without first finding that the SPP Tariff and governing documents

were unjust, unreasonable, and unduly discriminatory, or preferential. APPA states that

the requirements the Commission has imposed contravene the Commission’s policy of

accommodating participation of non-public utilities in RTOs, thereby discouraging non-

public utility participation in SPP.

26. NPPD suggests that the Commission impose a carve-out for existing SPP non-

public utility transmission owning members so that only new members would be bound

by the refund commitments imposed in this case. NPPD argues that the October 2017

Order reverses “a decade-long policy of approving and maintaining provisions in RTO

tariffs and membership agreements to accommodate the needs of non-jurisdictional

public power entities.”33 NPPD also asserts that this order contradicts the Commission’s

approval of WestConnect’s regional transmission planning and cost allocation process

that enables non-public utilities to participate as coordinating transmission owners

without being subject to regional cost allocation.

27. Like APPA and NPPD, NRECA and Midwest argue that the Commission in

the October 2017 Order erred in doing indirectly what it is prohibited from doing

directly, i.e., by requiring that SPP include a refund commitment by non-public utility

32 APPA Rehearing Request at 7-8 (citing Alliant, 347 F.3d at 1050); NPPD

Rehearing Request at 9-12.

33 NPPD Rehearing Request at 17.


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Docket No. EL16-91-001, et al. - 11 -

transmission owning members, a requirement that the Commission concedes that it

could not enforce.34

28. NPPD asserts that, if exercised, imposing a commitment by NPPD to make

refunds of unknown amounts in response to future Commission orders creates a conflict

with Nebraska state law and a portion of SPP’s existing Tariff that elevates state law

over Commission regulation with respect to public power entities. NPPD states that

the Commission has not made the requisite threshold finding or provided analysis

showing that conditions have changed such that the SPP Tariff and NPPD’s Membership

Agreement are unjust and unreasonable. NPPD argues that the October 2017 Order

unduly discriminates against NPPD by providing SPP flexibility to develop a proposal

that recognizes the federal-regulated status of Western-UGP without recognizing the

similarly situated state-regulated status of NPPD.

29. NRECA and Midwest argue that, before the ATRR of a non-public transmission

owning member of SPP is included in the SPP Tariff, any refund commitment before

the Commission should account for prior findings made by state regulators in order to

prevent a jurisdictional conflict. NRECA and Midwest request that the Commission

clarify that in the October 2017 Order the Commission held that accommodating and

accounting for these jurisdictional issues is within the scope of what SPP must address in

its stakeholder process. NRECA and Midwest argue that if these issues are not resolved,

non-public utility transmission owning members of SPP could be forced to choose either

to make refunds that expose them to non-recovery under state-jurisdictional rates or

undertake the complex and costly decision to withdraw from SPP.

2. Commission Determination

30. For the reasons discussed below, we grant rehearing of the October 2017 Order

and find that it is neither necessary nor appropriate to impose the refund commitment

contemplated there on non-public utility transmission owning members in SPP.

31. First, we find that the D.C. Circuit’s Xcel decision does not compel the

Commission to require a prospective refund commitment from all non-public utility

transmission owning members in SPP, as contemplated by the October 2017 Order.

In Xcel, the D.C. Circuit based its decision on the fact that, having adopted a policy

of requiring voluntary refund commitments before allowing RTOs to implement rates

including the revenue requirements of non-jurisdictional entities, the Commission failed

to follow its established policy and allowed a rate that it had determined may be unjust

34 NRECA Rehearing Request at 4-5.


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Docket No. EL16-91-001, et al. - 12 -

and unreasonable to go into effect without suspension or voluntary refund commitment.35

The Commission had acknowledged its own legal error, and the court found that, in

light of that legal error, the Commission could provide a remedy under FPA section 309.

Here, by contrast, prior to the July 2016 Order, as clarified and confirmed in the

October 2017 Order, the Commission had no comparable policy requiring non-public

utility transmission owners to provide a prospective refund commitment for all situations

under which refunds might be directed pursuant to FPA sections 205 and 206. In

addition, here the Commission made no legal error analogous to the facts of Xcel, where

the court focused on the Commission’s remedial discretion to address such an error.

32. Second, the D.C. Circuit has recognized that the Commission generally does not

have authority to require FPA section 201(f) entities to make refunds if they do not

voluntarily do so.36 Instead, the Commission’s refund authority found in FPA sections

205 and 206 applies to FPA section 201(f) entities only in the limited circumstances

described in FPA section 206(e); FPA sections 205 and 206 otherwise apply only to

jurisdictional public utilities. The Xcel decision is consistent with that understanding,

acknowledging that the Commission has no authority under FPA section 205 to require a

non-jurisdictional entity to make refunds.37 Thus, non-public utilities are not similarly

situated to other RTO transmission owning-members with respect to refunds by virtue of

the fact that they are not generally subject to the Commission’s jurisdiction under FPA

sections 205 and 206.

33. Third, the Commission retains authority to approve voluntary contractual refund

commitments when RTOs include a non-public utility’s ATRR in their jurisdictional

rates. Although the Commission has the authority to review non-public utility rates

included in jurisdictional rates to ensure that the jurisdictional rate remains just and

35 Xcel, 815 F.3d at 953.

36 See, e.g., Bonneville, 422 F.2d at 926; TANC, 495 F.3d at 673.

37 Xcel, 815 F.3d at 950 (citing TANC, 495 F.3d at 672). In addition, the D.C.

Circuit subsequently cited TANC in finding that the Commission could order recoupment

of funds paid in error to a non-jurisdictional entity because, although “[t]he case law is

clear that § 205, when read in conjunction with § 201(f), bars [the Commission] from

ordering a non-jurisdictional entity to provide a refund to another entity,” recoupment

under FPA section 309, 16 U.S.C. § 825h (2018), is a distinct remedy. TNA Merchant

Projects, Inc. v. FERC, 857 F.3d 354, 359-62 (D.C. Cir. 2017) (citing TANC, 495 F.3d

at 673-75).


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Docket No. EL16-91-001, et al. - 13 -

reasonable, it does not necessarily follow that a refund commitment from those non-

public utilities is an intrinsic component of a just and reasonable rate. Generally, the

Commission does not treat refunds as a measure of a just and reasonable rate, but as an

available remedy when a rate has been found unjust and unreasonable.38

34. Fourth, declining to require the refund commitment contemplated in the October

2017 Order is consistent with the Commission’s longstanding policy goal of encouraging

the participation of non-public utilities in RTOs/ISOs, 39 and appropriately accounts for

distinct characteristics of these entities like those described above.

35. For these reasons, we find that the lack of a general refund commitment by non-

public utilities similar to that applicable to non-jurisdictional entities pursuant to FPA

sections 205 and 206 does not render SPP’s rates unjust and unreasonable or unduly

discriminatory or preferential.40 In light of this determination, we terminate the FPA

section 206 proceedings instituted by the Commission in the July 2016 Order in Docket

No. EL16-91-000 and the October 2017 Order in Docket No. EL18-19-000.

36. In granting rehearing of the October 2017 Order and terminating these section 206

proceedings, we note that the Commission’s longstanding policy regarding its treatment

of section 205 filings by RTOs to implement rate changes by non-public utility

38 See, e.g., City of Redding v. FERC, 693 F.3d 828, 838-39 (9th Cir. 2012)

(citations omitted) (“Congress expanded FERC’s authority to address ‘unjust and

unreasonable’ rates by adding § 206(b) to the FPA in 1988, over fifty years after the

enactment of the original law. Section 206(b) provides that after FERC has determined a

rate to be unjust and unreasonable, it ‘may order refunds of any amounts paid . . . in

excess of those which would have been paid under the just and reasonable rate . . . which

the Commission orders to be thereafter observed and in force.’”).

39 TANC, 495 F.3d at 667 (citing Order Nos. 888 and 2000 and explaining that the

Commission encouraged all transmission owners, including non-public utility

transmission owners, to place their transmission under the control of RTOs voluntarily).

40 Because we grant rehearing of the October 2017 Order and find that it is neither

necessary nor appropriate to impose the refund commitment contemplated there on non-

public utility transmission members in SPP, we do not address requests for rehearing

regarding conflicts with Nebraska state law or accounting for prior findings made by state

regulators.


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Docket No. EL16-91-001, et al. - 14 -

transmission owners has not changed. In Xcel, the D.C. Circuit described that policy as

one pursuant to which the Commission:

will accept the RTO’s filing of a tariff revision where the

non-jurisdictional entity voluntarily agrees to make refunds in

the event the Commission determines the rate as filed is not

just and reasonable, or the Commission will delay the

effective date of the proposed rate while it conducts a section

205 review, unless there is no material issue.41

The Commission intends to apply this policy with respect to such filings made by SPP.

37. Finally, because we are granting rehearing of the October 2017 Order, we dismiss

SPP’s Compliance Filing in Docket No. ER18-939-000 as moot, and terminate that

proceeding.

The Commission orders:

(A) The requests for rehearing of the October 2017 Order are hereby granted, as

discussed in the body of this order.

(B) SPP’s Compliance Filing is hereby dismissed as moot, as discussed in the

body of this order.

(C) The proceeding in Docket No. ER18-939-000 is hereby terminated, as


(D) The proceedings in Docket Nos. EL16-91-000 and EL18-19-000 are hereby

terminated, as discussed in the body of this order.

By the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.

41 Xcel, 815 F.3d at 950 (citing, e.g., Lively Grove Energy Partners, LLC,

140 FERC ¶ 61,252, at P 47 & n. 59 (2012)).


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Document Content(s)

EL16-91-001.DOCX......................................................1-14


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SouthwestPowerPool SPPorg southwest-power-poolHelping our members work together to

keep the lights on... today and in the future.

SPP MEMBERSHIP EXIT FEE: FERC ORDER ON COMPLIANCE ER19-2522

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2

ER19-2522: SPP COMPLIANCE FILING

• Background

• FERC’s July 16, 2020 Order

• Current Status

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3

ER19-2522: BACKGROUND

April 2019: FERC issued an order partially granting a complaint filed by the American Wind Energy

Association (AWEA) and The Wind Coalition against SPP, finding that SPP’s membership exit fee, as

applied to non-transmission owners, was unjust and unreasonable because it created a barrier to

membership, was not needed to maintain SPP’s financial solvency or to avoid cost shifts, and was

excessive as a means for ensuring the stability of SPP’s membership. FERC ordered SPP to eliminate

its membership exit fee for non-transmission owners.

August 2019: SPP submitted a compliance filing in Docket No. ER19-2522.

December 2019: FERC issued an order conditionally accepting SPP’s compliance filing in Docket No.

ER19-2522-000 and directed SPP to submit a further compliance filing to revise its Governing

Documents Tariff to ensure that a withdrawing non-transmission-owning member is only exempt

from paying a share of SPP’s long-term financial obligations, rather than all existing obligations

associated with the member’s withdrawal. FERC also ordered SPP to propose revisions to ensure that

a withdrawing transmission-owning member’s previous year net energy for load includes the load of

all load-serving entities connected to the withdrawing transmission owner’s system.

April 29, 2020: SPP submitted revisions to its Governing Documents Tariff in compliance with the

December 2019 order

July 16, 2020: FERC issued order finding that SPP’s proposed revisions comply with the directives in

the December 2019 Order. FERC accepted SPP’s filing, effective December 19, 2019.

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4

EL19-2522: JULY 16, 2020 ORDER

P. 17: FERC finds that SPP’s proposed revisions comply with the directives in the December 2019 Order.

The proposed revisions ensure that a withdrawing non-transmission-owning member is only exempt from paying a share of SPP’s long-term financial obligations, rather than all existing obligations associated with withdrawal.

Additionally, the proposed revisions ensure that a withdrawing transmission-owning member’s previous year net energy for load includes the load of all load-serving entities connected to the withdrawing transmission owner’s system.

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5

EL19-2522: CURRENT STATUS

• FERC accepted SPP’s compliance filing effective December 19, 2019.

• The Membership Agreement and Bylaws reflect

• Only Transmission Owning Member’s withdrawal obligations include obligation to pay SPP’s long-term debt

• Non-Transmission Owning Member’s withdrawal obligations do not include obligation to pay SPP’s long-term debt

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6


• Potential Issues that may arise in the future

• Treatment of load that exits the footprint

which is served by more than one

transmission owner member

• Determination of responsibility for “all load”

attached to the withdrawing transmission

owner’s system

• Others?

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7


• Recommendation:

• Staff will propose a process to CGC, to be

used for reviewing any potential open items,

including a straw proposal if applicable

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8

QUESTIONS?

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172 FERC ¶ 61,028

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

Richard Glick, Bernard L. McNamee,

and James P. Danly.

Southwest Power Pool, Inc. Docket No. ER19-2522-002

ORDER ON COMPLIANCE

(Issued July 16, 2020)

On April 29, 2020, Southwest Power Pool, Inc. (SPP) submitted revisions to its

Governing Documents Tariff in compliance with directives in a Commission order issued

on December 19, 2019.1 As discussed below, we find that SPP’s proposed revisions

comply with the directives in the December 2019 Order. Accordingly, we accept SPP’s

filing, effective December 19, 2019.

I. Background

In April 2019, the Commission issued an order partially granting a complaint filed

by the American Wind Energy Association (AWEA) and The Wind Coalition against

SPP, finding that SPP’s membership exit fee,2 as applied to non-transmission owners,

was unjust and unreasonable because it created a barrier to membership, was not needed

to maintain SPP’s financial solvency or to avoid cost shifts, and was excessive as a

means for ensuring the stability of SPP’s membership. The Commission directed SPP to

eliminate its membership exit fee for non-transmission owners.3 In August 2019, SPP

submitted a compliance filing in Docket No. ER19-2522-000 to comply with the

Commission’s directive in the Complaint Order.

1 Sw. Power Pool, Inc., 169 FERC ¶ 61,227 (2019) (December 2019 Order).

2 SPP’s membership exit fee, as it existed at the time of the complaint, was a fee

charged to a member that chose to withdraw its membership in SPP and was calculated

as the withdrawing member’s share of SPP’s outstanding long-term financial obligations.

SPP, Governing Documents Tariff, Membership Agreement, § 4.3.2(b)(iii) (2.0.0);

Bylaws, § 8.7.2 (4.0.0) (describing the calculation).

3 Am. Wind Energy Ass’n v. Sw. Power Pool, Inc., 167 FERC ¶ 61,033 (2019)

(Complaint Order).


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Docket No. ER19-2522-002 - 2 -

In the December 2019 Order, the Commission conditionally accepted SPP’s

compliance filing in Docket No. ER19-2522-000 and directed SPP to submit a further

compliance filing to revise its Governing Documents Tariff to ensure that a withdrawing

non-transmission-owning member is only exempt from paying a share of SPP’s long-

term financial obligations, rather than all existing obligations associated with the

member’s withdrawal.4 The Commission also directed SPP to propose revisions to

ensure that a withdrawing transmission-owning member’s previous year net energy

for load includes the load of all load-serving entities connected to the withdrawing

transmission owner’s system.5

II. SPP Filing

SPP proposes to revise section 8.7.1 of its Bylaws to remove current subsections

(a) through (e), which describe a withdrawing member’s existing obligations, and to

instead provide that such obligations will be defined in accordance with section 4.3.2 of

SPP’s Membership Agreement.6 SPP states that as a result, the Bylaws will reference

the existing obligations contained in the Membership Agreement, rather than duplicating

the language in both documents, and that retaining this language in the Membership

Agreement is appropriate because that is the contractual arrangement between SPP and

each member.7

In addition, SPP proposes to revise section 8.7.2 of its Bylaws to provide that a

withdrawing transmission-owning member’s previous year net energy for load includes

the load of all load-serving entities connected to the withdrawing transmission-owning

member’s system. SPP further proposes conforming edits to reference the existing

obligations for transmission-owning members contained in proposed sections 4.3.2(b)-(f)

of the Membership Agreement.8

SPP proposes several revisions to section 4.3.2 of its Membership Agreement.

Proposed section 4.3.2(a) provides that a withdrawing transmission-owning member shall

pay all existing obligations set forth in section 4.3.2(b), while non-transmission-owning

members will only be subject to the existing obligations defined in sections 4.3.2(b)(i)

through (iii). Proposed sections 4.3.2(b)(i) through (iii) include the member’s unpaid

4 December 2019 Order, 169 FERC ¶ 61,227 at P 114.

5 Id. P 115.

6 SPP, Governing Documents Tariff, Bylaws, § 8.7.1 (5.1.0).

7 Transmittal at 4.

8 SPP, Governing Documents Tariff, Bylaws, § 8.7.2 (5.1.0).


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Docket No. ER19-2522-002 - 3 -

annual membership fee,9 unpaid dues or other assessments,10 and “any costs, expenses or

liabilities incurred by SPP directly due to the Termination, regardless of when incurred or

payable,”11 respectively. Proposed section 4.3.2(b)(iv) provides that a withdrawing

transmission-owning member’s existing obligations will additionally include the

member’s share of SPP’s long-term debts, including any prepayment premiums or

penalties.

SPP also proposes to revise section 4.3.2(a) of the Membership Agreement to

provide that both transmission-owning and non-transmission-owning members will

remain subject to the partial termination, invoicing, and refund procedures set forth in

sections 4.3.2(c)-(f) upon withdrawal. SPP also proposes to revise sections 4.3.2(c) and

4.3.2(f) to add the phrase “if applicable” to the obligations contained therein. SPP states

that its proposed revision to section 4.3.2(f) clarifies that long-term financial obligations,

as defined in section 4.3.2, apply only to transmission-owning members.12

III. Notice and Responsive Pleadings

Notice of SPP’s filing was published in the Federal Register, 85 Fed. Reg. 26,677

(May 5, 2020), with interventions and protests due on or before May 20, 2020. On

May 20, 2020, AWEA, Solar Energy Industries Association, Advanced Power Alliance,

Sustainable FERC Project, and Solar Council (collectively, Renewable Advocates) and

EDF Renewables, Inc., RWE Renewables Americas, LLC, and Savion, LLC

(collectively, SPP Generation Market Participants) filed protests.13 Savion, LLC also

filed a timely motion to intervene. On June 4, 2020, SPP filed an answer to the protests.

9 SPP, Governing Documents Tariff, Membership Agreement, § 4.3.2(b)(i) (3.1.0).

10 SPP, Governing Documents Tariff, Membership Agreement, § 4.3.2(b)(ii)

(3.1.0).

11 SPP, Governing Documents Tariff, Membership Agreement, § 4.3.2(b)(iii)

(3.1.0).

12 Transmittal at 7.

13 AWEA, Solar Energy Industries Association, Advanced Power Alliance,

Sustainable FERC Project, and EDF Renewables, Inc. intervened and were granted party

status earlier in this proceeding. See December 2019 Order, 169 FERC ¶ 61,227 at P 17.


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Docket No. ER19-2522-002 - 4 -

IV. Discussion

A. Procedural Matters

Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.214 (2019), Savion, LLC’s timely, unopposed motion to intervene

serves to make it a party to this proceeding.

Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure, 18 C.F.R.

§ 385.213(a)(2) (2019), prohibits an answer to a protest unless otherwise ordered by the

decisional authority. We accept SPP’s answer because it has provided information that

assisted us in our decision-making process.

B. Substantive Matters

As discussed below, we find that SPP’s proposed revisions comply with the

directives in the December 2019 Order. Accordingly, we accept SPP’s filing, effective

December 19, 2019.14

1. Renewable Advocates Protest

Renewable Advocates state that they generally support SPP’s filing, but they

request that the Commission direct SPP to make a further clarifying revision to proposed

section 4.3.2(b)(iii) in the Membership Agreement.15 Specifically, Renewable Advocates

contend that SPP’s proposed language is broadly worded and contains potential

ambiguity as to the precise types of costs that are to be borne by withdrawing non-

transmission-owning members. Renewable Advocates state that they are unaware of any

SPP guidance document, business practice, or other source that provides further detail

regarding which costs might be included under proposed section 4.3.2(b)(iii). Renewable

Advocates request that the Commission direct SPP to revise proposed section 4.3.2(b)(iii)

to read (with proposed revisions in underline/strikeout): “Any costs, expenses or

liabilities incurred by SPP to process or effectuate directly due to the Member’s

withdrawal directly due to the Termination, regardless of when incurred or payable.”

Renewable Advocates maintain that without this specific clarification, SPP’s proposed

language increases uncertainty and perpetuates barriers to membership in SPP. In the

alternative, Renewable Advocates request that the Commission clarify that it interprets

14 In the December 2019 Order, the Commission established December 19, 2019

as the effective date for SPP’s compliance filing. Id. P 116.

15 Renewable Advocates Protest at 1.


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Docket No. ER19-2522-002 - 5 -

SPP’s proposed language to only include direct costs, expenses, or liabilities incurred to

process or effectuate a member’s termination.16

2. SPP Generation Market Participants Protest

SPP Generation Market Participants state that they are members of Renewable

Advocates and support Renewable Advocates’ comments and proposed reforms in this

proceeding.17 In addition, SPP Generation Market Participants argue that the existing

obligations defined in proposed section 4.3.2(b)(iii) of the Membership Agreement,

which apply to all withdrawing members, create uncertainty for non-transmission-owning

members because SPP could potentially interpret “liabilities incurred by SPP directly

due to the Termination, whenever incurred or payable” to include SPP’s long-term

debts and pensions historically incurred by SPP to support the market in which the

non-transmission-owning member operates.18 According to SPP Generation Market

Participants, this outcome would contravene the Commission’s finding that SPP has no

need to include such liabilities in the exit fee of a non-transmission-owning member.19

SPP Generation Market Participants further argue that SPP has not supported

its proposal to subject all members, rather than transmission-owning members only,

to sections 4.3.2(c) and 4.3.2(f) of the Membership Agreement. According to SPP

Generation Market Participants, the calculation of a member’s net energy for load ratio

described in section 4.3.2(c) should only apply to transmission-owning members. SPP

Generation Market Participants maintain that despite SPP’s proposed “if applicable”

qualifier, this provision suggests that a withdrawing non-transmission-owning member

may be required to pay a share of SPP’s long-term debts, liabilities, and pensions.20 SPP

Generation Market Participants contend that proposed section 4.3.2(f), which provides

that existing member obligations include “amounts that SPP expects to carry between the

date of Member’s Notice of Termination and the Member’s Termination Date,” similarly

suggests that a withdrawing non-transmission-owning member may be required to pay a

share of SPP’s long-term debts, despite SPP’s proposed “if applicable” language. SPP

Generation Market Participants request that the Commission direct SPP to either revise

sections 4.3.2(c) and 4.3.2(f) to provide that these sections only apply to transmission-

owning members, or to revise section 4.3.2(a) to remove the references to sections

16 Renewable Advocates Protest at 4.

17 SPP Generation Market Participants Protest at 1.

18 Id. at 3.

19 Id. at 3-4 (citing Complaint Order, 167 FERC ¶ 61,033 at P 60).

20 Id. at 5.


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Docket No. ER19-2522-002 - 6 -

4.3.2(c) and 4.3.2(f). SPP Generation Market Participants state that they prefer the

former revision because it will add maximum certainty and enable non-transmission

owners to better understand their likely cost exposure if membership were to be

terminated in the future.21

3. SPP Answer

SPP disagrees that proposed section 4.3.2(b)(iii) of the Membership Agreement is

ambiguous. SPP contends that the phrase “incurred by SPP directly due to the

Termination” makes clear that the exit fee for a non-transmission-owning member must

be directly due to its termination. SPP also states that the phrase “regardless of when

incurred or payable” is intended to capture costs that SPP may incur directly due to a

non-transmission-owning member’s termination within the two-year notice period

required by the Membership Agreement. SPP states that it does not disagree with the

conclusions reached by commenters that reinforce the Commission’s directive that SPP’s

withdrawal obligation applicable to non-transmission-owning members should not

include SPP’s long-term financial obligations.22

SPP asserts that the provisions in proposed sections 4.3.2(c)-(f) of the Membership

Agreement need to apply to all members because they contain uniform termination

processes, timing requirements, and other administrative items. SPP contends that

section 4.3.2(c) plainly provides that if a member has no load, its existing obligations

due upon partial termination will not include costs attributable to load. Similarly, SPP

argues that the phrase “if applicable” in proposed section 4.3.2(f) makes clear that non-

transmission-owning members are not responsible for paying a share of SPP’s long-term

financial obligations.23

4. Commission Determination

We find that SPP’s proposed revisions comply with the directives in the December

2019 Order. The proposed revisions ensure that a withdrawing non-transmission-owning

member is only exempt from paying a share of SPP’s long-term financial obligations,

rather than all existing obligations associated with withdrawal.24 Additionally, the

proposed revisions ensure that a withdrawing transmission-owning member’s previous

21 Id. at 5-6.

22 SPP Answer at 4-5.

23 Id. at 6-7.

24 See December 2019 Order, 169 FERC ¶ 61,227 at P 114 and supra P 6.


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Docket No. ER19-2522-002 - 7 -

year net energy for load includes the load of all load-serving entities connected to the

withdrawing transmission owner’s system.25

We disagree with Renewable Advocates’ assertion that proposed section

4.3.2(b)(iii) of SPP’s Membership Agreement creates ambiguity as to the costs that will

be borne by withdrawing non-transmission-owning members. We find that the proposed

phrase “incurred by SPP directly due to the Termination” requires a direct connection

between the costs that SPP may recover and the membership termination. It is reasonable

for SPP to recover costs it incurs directly due to a member’s termination of its

membership in SPP.26 Additionally, we note that the language Renewable Advocates

take issue with (“[a]ny costs, expenses or liabilities incurred by SPP directly due to the

Termination, regardless of when incurred or payable”) is existing language in SPP’s

Bylaws and Membership Agreement.27 In the Complaint Order and the December 2019

Order, the Commission only required SPP to eliminate its exit fee for non-transmission

owners, with “exit fee” meaning a member’s share of SPP’s long-term financial

obligations.28 The Commission did not direct any changes related to other obligations

associated with membership withdrawal.29 Accordingly, we decline to direct SPP to

further revise its proposal as requested by Renewable Advocates.

We disagree with SPP Generation Market Participants’ arguments that proposed

sections 4.3.2(b)(iii), 4.3.2(c), and 4.3.2(f) of the Membership Agreement could be

interpreted to provide that withdrawing non-transmission-owning members are subject to

a share of SPP’s long-term financial obligations. We find that it would not be reasonable

to interpret section 4.3.2(b)(iii) to mean that non-transmission-owning members would

be subject to a share of SPP’s long-term financial obligations. First, proposed sections

4.3.2(a) and 4.3.2(b)(iv) of the Membership Agreement, as well as section 8.7.2 of SPP’s

25 See December 2019 Order, 169 FERC ¶ 61,227 at P 115 and supra P 5.

26 December 2019 Order, 169 FERC ¶ 61,227 at P 114 (“Non-transmission owners

should still be responsible for other obligations associated with their membership

withdrawal, such as unpaid membership fees, dues, assessments, or charges, as well as

costs, expenses, or liabilities incurred by SPP directly due to membership termination

(excluding costs, expenses, or liabilities related to SPP’s long-term financial

obligations).”).

27 Compare SPP, Governing Documents Tariff, Membership Agreement,

§ 4.3.2(b)(iii) (3.1.0) with SPP, Governing Documents Tariff, Membership Agreement,

§ 4.3.2(b)(iv) (3.0.0) and SPP, Governing Documents Tariff, Bylaws, § 8.7.1(d) (5.0.0).

28 December 2019 Order, 169 FERC ¶ 61,227 at PP 4, 114.

29 Id. P 114.


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Docket No. ER19-2522-002 - 8 -

Bylaws, establish that only transmission owners will pay a portion of SPP’s long-term

financial obligations.30 In addition, costs related to SPP’s long-term financial obligations

are not incurred “directly due to” any member’s withdrawal and thus cannot be recovered

pursuant to proposed section 4.3.2(b)(iii). SPP explains in its answer that the phrase

“regardless of when incurred or payable” is intended to refer to costs that SPP may incur

directly due to a non-transmission-owning member’s termination within the two-year

notice period required by the Membership Agreement, rather than costs incurred prior to

the notice period.

Further, we find that, to the extent proposed section 4.3.2(c) requires departing

members to pay a share of SPP’s long-term debts in the event of a partial termination, it

does not apply to non-transmission-owning members because such members do not have

load, as reflected by SPP’s proposed “if applicable” language.31 We similarly find that

SPP’s proposed “if applicable” language provides that section 4.3.2(f) does not apply to

non-transmission-owning members to the extent it requires departing members to pay a

share of SPP’s long-term debts. Accordingly, we decline to direct SPP to further revise

its proposal as requested by SPP Generation Market Participants.

30 Proposed section 4.3.2(a) of SPP’s Membership Agreement provides that a non-

transmission-owning member’s withdrawal obligations are limited to those defined in

sections 4.3.2(b)(i)-(iii), and none of those provisions contain a requirement to pay a

share of SPP’s long-term financial obligations. Additionally, proposed section

4.3.2(b)(iv), which contains the requirement to pay a share of SPP’s long-term financial

obligations, applies only to transmission owners. Similarly, proposed section 8.7.2 of

SPP’s Bylaws, which describes the calculation of a member’s share of SPP’s long-term

financial obligations, explicitly applies to transmission owners only.

31 We also note that the Membership Agreement provides that partial termination

events, as contemplated in proposed section 4.3.2(c), only apply to transmission-owning

members. SPP, Governing Documents Tariff, Membership Agreement, § 4.1 (1.0.0):

A ‘Partial Termination’ occurs upon a Member’s voluntary

removal of a portion of its transmission facilities or customers

from the SPP Region, including, by way of example and not

limitation, sale of a part of the Member’s distribution or

transmission network or transfer to another service provider

of a portion of its retail load.


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Docket No. ER19-2522-002 - 9 -

The Commission orders:

SPP’s compliance filing is hereby accepted, effective December 19, 2019, as


By the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.


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Document Content(s)

ER19-2522-002.DOCX....................................................1-9


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2019 SPP Board of Directors Evaluation MEMBERS

2. The board has a full and common understanding of the roles and responsibilities of a board.

Strongly Disagree Disagree Neutral Agree Strongly Agree

4. The organization structure is clear (board, officers, committees, executive, and staff).


6. The board attends to policy-related decisions that effectively guide operational activities of staff.


8. The board effectively represents the organization to the stakeholder community.


10. The board regularly monitors and evaluates progress toward strategic goals and objectives.


12. Each member of the board is involved and interested in the board's work.


13. The board considers the diverse positions of the membership in a non-discriminatory manner.


11. The board regularly evaluates and provides development plans for the chief executive officer.


9. Board meetings facilitate focus and progress on important organizational matters.


7. The board receives regular reports on finances/budgets, performance, and other important matters.


5. The board has clear goals and actions resulting from relevant and realistic strategic planning.


3. Board members understand the organization's mission and services.


Member

Board Member

1. I am a:

14. Please list three to five points on which the Board of Directors should focus attention in 2019. Please be as specific as possible in identifying these points.

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2020 Annual Survey Schedule Survey Schedule

i. Organizational Effectiveness (Org Group) Surveys • Launch Date: Monday, September 28 • Close Date: Friday, October 9

ii. Stakeholder Satisfaction Survey • Launch Date: Monday, September 28 • Close Date: Friday, October 30

iii. Board Effectiveness Survey • Launch Date: Monday, October 12 • Close Date: Friday, October 30

iv. Membership/Staff Performance Survey (for HR Committee) • Launch Date: Monday, November 30 • Close Date: Friday, December 11

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SPP Organizational Group Self-Assessment

(August 2019 – July 2020)

GROUP NAME: Corporate Governance Committee (CGC)

THE SCOPE HAS BEEN REVIEWED IN THE PAST YEAR: Yes

MEMBER ROSTER/ATTENDANCE:

Member Company Sector # Present # Absent

*Brown, Nick (C) Director Southwest Power Pool 5/5 0

*Sugg, Barbara © Director Southwest Power Pool 1/1 0

Altenbaumer, Larry Director - 5 1

Buffington, Denise Kansas City Power & Light

Company

Investor-Owned Utility

(TO) 6 0

Fortik, Jason Lincoln Electric System Municipal (TU) 6 0

*Gaw, Steve Advanced Power Alliance Alternate Power/Public

Interest (TU) 1/1 0

Janssen, Rob Dogwood Independent Power

Producer (TU) 5

1

1 Proxy

Leopold, Brett ITC Great Plains Independent Transmission

Company (TU) 6 0

McClure, John Nebraska Public Power

District State Agency (TO) 6 0

Smith, Holly Rachel Walmart, Inc. Large Retail Customer

(TU) 4

2

1 Proxy

Sundsted, Jodi Western Area Power

Administration - UGPR Federal Agency (TO) 6 0

Wise, Mike Golden Spread Cooperative (TU) 6 0

Suskie, Paul Staff Secretary Southwest Power Pool 6 0

*Only on Committee for part of the assessment period.

List the number of members represented in the following areas:

Transmission/Owners Transmission/Users Director(s)

3 6 2

Sectors Investor

Owned

Utility

Cooperative

Municipal

State

Federal

Independent

Power

Producer/

Marketer

Independent

Transmission

Company

Alt

Power/

Public

Interest

Large

Retail

Small

Retail

1 1 1 1 1 1 1 1 1

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AVERAGE OVERALL ATTENDANCE (INCLUDING NON-GROUP MEMBERS): 23

MEETINGS HELD TO DATE: Live: 3 Teleconference: 3

AVERAGE LENGTH OF MEETINGS: 4:23

NUMBER OF VOTES TAKEN: 17

MEETING COST(S): $5896.86

- Meeting costs include hotel expenses (room rental, A/V, food and beverage), estimate of

teleconference expenses, and Director fees for attendance.

MAJOR ACCOMPLISHMENTS/ISSUES ADDRESSED BY THE GROUP:

1. Completed clean-up of the SPP Bylaws. FERC approved clean-up.

2. Completed work on Exit fee complaint. FERC accepted compliance filing.

3. Decided to assess membership changes (if any) in light of exit fee changes. Upon assessment, to

evaluate whether any membership changes (voting/representation, etc.) are needed.

MAJOR ISSUES PENDING BEFORE THE GROUP:

1. New Board member vacancy.

2. Clarification on withdrawing member sections of governing documents.

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Southwest Power Pool, Inc. CORPORATE GOVERNANCE COMMITTEE

Organizational Group Scope Statement

April 28, 2020

Purpose The Corporate Governance Committee is responsible for the overall governance structure, including nominations, for the company in accordance with its scope as approved by the Board of Directors.

Scope of Activities

a) Seek input from the Board of Directors and/or the Members Committee as to the skills needed to fill any vacancy under consideration;

b) In the event of a vacancy or the replacement of an existing director, the CGC

will use an independent executive search firm, unless otherwise agreed by the CGC, to provide candidates for consideration to the Membership for election to the Board of Directors;

c) In the event of a vacancy or the replacement of an existing Members

Committee representative, provide candidates for consideration to the Membership for election to the Members Committee;

d) Fill vacancies for Organizational Groups in accordance with the Bylaws;

e) Monitor the composition of the Board of Directors to ensure balance,

independence, maintenance of qualifications under any applicable laws, avoidance of conflicts of interest, and periodic review of the criteria for independence set out in the Bylaws and appropriate regulatory bodies, recommending changes, as appropriate;

f) Recommend to the Board of Directors the appointment of Organizational

Group representatives and leadership except for the Corporate Governance Committee, whose representatives are elected by Members in each category; the Members Committee, whose representatives are elected by the Membership, and the Markets and Operations Policy Committee, whose representatives are appointed by the Members;

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g) Develop criteria governing the overall composition of the Board of Directors for recommendation to the Membership;

h) Coordinate an annual review and assessment of the effectiveness of the Board

of Directors, its structure, and process;

i) Review annually the structure of the Organizational Groups, and together with

the Organizational Group Chairs, the charters of each Organizational Group, and recommend changes to the Board of Directors, as appropriate;

j) Review the self-assessments of the Organizational Groups to assure that they

are being done on a consistent basis;

k) Develop recommendations for the Board of Directors regarding a Chair/Vice

Chair succession policy;

l) Recommend compensation levels for the Board of Directors to the Membership;

m) Complete a self-assessment annually to determine how effectively the CGC is

meeting its responsibilities

n) Have on-boarding training and education for new CGC members; and

o) Perform such other functions as the Board of Directors may delegate or direct.

Representation To the extent that the membership allows, the CGC shall be comprised of eleven members. One representative shall be the President of SPP who will serve as the Chair; one representative shall be the Chairman of the Board, unless his/her position is under consideration, in which case the Vice Chairman of the Board; one representative shall be representative of and selected by investor owned utilities Members; one representative shall be representative of and selected by co-operatives Members; one representative shall be representative of and selected by municipals Members; one representative shall be representative of and selected by independent power producers/marketers Members; one representative shall be representative of and

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selected by state power agencies Members; one representative shall be representative of and selected by alternative power/public interest Members; one representative shall be from an independent transmission company Member, defined as having assets under the OATT and no Affiliate Relationships in other categories of Membership; one representative shall be representative of and selected by large/small retail Members; and one representative shall be representative of and selected by a Federal Power Marketing Agency Member(s).

Reporting The Corporate Governance Committee reports directly to the Board of Directors.

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Day 8:00 AM 9:00 AM 10:00 AM 11:00 AM 1:00 PM 3:00 PM

Tuesday

Thursday


Sunday

Tuesday


Tuesday

Thursday


Sunday

MondayFC

HRC

OCWednesday

CGC (board nominations))

FC

MOPC

WednesdayMOPC SPC Bus. Mtg

OCSPC Strat Session

April-2021

6:00 p.m. - BOD Dinner w/ Officers

5:30 p.m. - BOD/RSC Reception/Dinner

5:30 p.m. - BOD Debrief/DinnerBOD/MC Exec Session Board Debrief

Monday

April-20215:30 p.m. - BOD/RSC Reception/Dinner

5:30 p.m. - BOD Debrief/DinnerTuesday

January-2021

January-2021

12 n

12 n

12 n

12 n

BOD/MC Exec Session

COMMITTEE WEEK - APRIL 12 - 16, 2021 - VIRTUAL MEETINGS2:00 PM 4:00 PM

6:00 p.m. - BOD Dinner w/ RSC

MondayRSC Education

BOD/MC Business Meeting

CGC (as needed)

HRCMonday

COMMITTEE WEEK - JANUARY 11 - 15, 2021 - IN LITTLE ROCK2:00 PM


SPC Strat Session

Joint Presentations

4:00 PM

4:00 PM

RSC Business MtgExec

Session

RSC/BOD/MC WEEK - JANUARY 25 - 26, 2021 - IN LITTLE ROCK

RSC EducationBOD/MC Development

2:00 PM

MOPC MOPC SPC Bus. Mtg

Joint Presentations


SessionBOD/MC Development

RSC/BOD/MC WEEK - APRIL 26 - 27, 2021 - IN LITTLE ROCK2:00 PM 4:00 PM

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Tuesday

Thursday


Tuesday


MondayTuesday

Thursday


Sunday

SPC Strat Session CGC (Committee nominations)

HRCMOPC


OC

FC*HRC

MOPC


OC

RSC/BOD/MC WEEK - JULY 26 - 27, 2021 - VIRTUAL MEETINGS

BOD/MC Exec Session Board Debrief

BOD/MC Exec Session

Joint Presentations


Session


SPC Strat Session CGC (As needed)* FC Meeting to be held face-to-face in October, but not in conflict with other SPP meetings

July-2021

* Joint FC/SPC session to review Operating Plan to be held in August, via Webex* FC may opt to meet virtually in July since October meeting is to be held in person

BOD/MC DevelopmentRSC Education Joint

PresentationsRSC Business Mtg

ExecSession

12 n

12 n

12 n 2:00 PM 4:00 PM

COMMITTEE WEEK - OCTOBER 11 - 15, 2021 - VIRTUAL MEETINGS2:00 PM 4:00 PM

October-2021

October-2021

COMMITTEE WEEK - JULY 12 - 15, 2021 - IN OKLAHOMA CITY2:00 PM 4:00 PM

Monday

July-2021

Monday

December Board and OC meetings to be held virtuallyconsistent with past years

SEPTEMBER DATED TBD - Strategic Planning RetreatIncludes Board, Officers, SPC, and MC, plus RSC president

12 n

BOD/MC Development5:30 p.m. - BOD/RSC Reception/Dinner

TuesdayBOD/MC Business Meeting

5:30 p.m. - BOD Debrief/Dinner

RSC/BOD/MC WEEK - OCTOBER 25 - 26, 2021 - IN LITTLE ROCK2:00 PM 4:00 PM

6:00 p.m. - BOD Dinner w/ Members Committee

MondayRSC Education

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