[Federal Register Volume 88, Number 224 (Wednesday, November 22, 2023)]
[Notices]
[Pages 81405-81406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25823]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER20-1041-003]


Wabash Valley Power Association, Inc.; Order Establishing 
Additional Briefing Procedures

    Before Commissioners: Willie L. Phillips, Acting Chairman; James P. 
Danly, Allison Clements, and Mark C. Christie.
    1. This order establishes additional briefing procedures following 
the issuance of an Initial Decision on January 28, 2022,\1\ involving 
Wabash Valley Power Association's (Wabash) proposed, unexecuted 
agreement for early termination of two wholesale power supply contracts 
between Wabash (as seller) and Tipmont Rural Electric Membership 
Cooperative (Tipmont) (as buyer). In this order, we establish a 
briefing schedule to develop a more comprehensive record on which to 
make a determination, as discussed below.
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    \1\ Wabash Valley Power Ass'n, Inc., 178 FERC ] 63,005 (2022).
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I. Background

    2. This proceeding concerns Tipmont's desired early termination of 
its membership with Wabash and two of its contracts that are on file 
with the Commission: the 1977 Contract that governs all-requirements 
service from 1977 through until 2028, and the 2006 Contract that 
governs such service from 2006 through 2050 (each a Contract, and 
collectively, Contracts). At issue also in this proceeding is an 
unexecuted 2020 Agreement For Early Termination of Wholesale Power 
Supply Contracts (Termination Agreement).
    3. On October 1, 2018, Tipmont filed a complaint (Complaint) 
against Wabash requesting that the Commission: (1) find that Tipmont 
may terminate its Contracts early, and (2) initiate a proceeding to 
establish the just and reasonable level of stranded costs resulting 
from Tipmont's early departure.\2\ On February 20, 2020, Wabash filed 
the Termination Agreement pursuant to section 205 of the Federal Power 
Act. On April 20, 2020, the Commission concurrently: (1) issued an 
order granting, denying, and dismissing various aspects of the 
Complaint; \3\ and (2) issued an order accepting and suspending 
Wabash's proposed Termination Agreement and established hearing and 
settlement judge procedures.\4\
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    \2\ Timpont Rural Electric Member Cooperative, Complaint, Docket 
No. EL19-2-000, at 1-2 (filed Oct. 1, 2018) (Complaint).
    \3\ Tipmont Rural Elec. Member Coop. v. Wabash Valley Power 
Ass'n, Inc., 171 FERC ] 61,059 (2020).
    \4\ Wabash Valley Power Ass'n, Inc., 171 FERC ] 61,053 (2020).
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    4. On July 30, 2020, after the Settlement Judge declared an 
impasse, the Chief Judge issued an order terminating settlement judge 
procedures and designated Administrative Law Judge Andrea McBarnette as 
the Presiding Judge. The hearing commenced on May 20, 2021, and 
concluded on June 8, 2021. The Presiding Judge issued the Initial 
Decision on January 28, 2022. Subsequently, the participants filed 
Briefs on Exceptions and Briefs Opposing Exceptions on March 31, 2022, 
and April 20, 2022, respectively.

II. Discussion

    5. We establish a briefing schedule to allow the participants to 
address the issues set forth in Appendices A and B. Further briefing on 
these issues will help develop a more comprehensive record for the 
Commission to evaluate the justness and reasonableness of the 
Termination Agreement. Accordingly, we provide questions directed at 
Wabash in Appendix A and one question directed at Tipmont in Appendix 
B. Wabash and Tipmont are required to submit initial briefs within 45 
days of the date of this order. At the initial briefing stage, Wabash 
may address only questions in Appendix A of this order, and Tipmont may 
address only the question in Appendix B of this order. Further, 
participants are permitted to file reply briefs within 30 days of the 
date of filing of initial briefs.\5\ At the reply briefing stage, 
participants may address questions directed at the other party. Briefs 
making any factual assertions must be accompanied by a sworn affidavit 
of one or more witnesses.
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    \5\ As participants in the hearing proceeding, Trial Staff and 
United Power, Inc. may submit reply briefs. This Commission, 
however, is generally less likely to allow new participants to 
intervene after issuance of a merits order. See, e.g., Conn. Yankee 
Atomic Power Co., 92 FERC ] 61,269, at 61,899 (2000) (denying the 
subsidiaries of the Northeast Utilities system's (NU) out-of-time 
motion to intervene because ``[t]o permit NU's late intervention 
after the issuance of the Initial Decision . . . would result in 
undue burden on the active parties to the hearing.'').
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The Commission orders:

    (A) Wabash and Tipmont are hereby required to submit initial briefs 
within 45 days of the date of this order, as discussed in the body of 
this order.
    (B) Participants are hereby permitted to file reply briefs within 
30 days of the date of filing of initial briefs.\6\
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    \6\ See supra note 5.
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    (C) The Secretary is hereby directed to publish this order in the 
Federal Register.

    By the Commission.
    Issued: November 16, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.

Appendix A

Questions Directed at Wabash

A. Transmission

    1. Section 3 of the 1977 Contract and section 5 of the 2006 
Contract allow Wabash to own transmission in limited 
circumstances.\7\
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    \7\ See e.g., Ex. TIP-0003 at 3 (``It is understood by and 
between the Parties that the express intent of Wabash Valley is to 
not own, operate or maintain any transmission facilities and/or 
substations except as such ownership, operation and maintenance may 
inure to Wabash Valley by reason of Transmission Participation 
Agreements and Transmission, Operation and Maintenance Agreements 
with other suppliers which own and operate bulk transmission 
systems.'').
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    a. For each transmission asset reflected in the Black & Veatch 
Study, please identify the agreements (i.e., Transmission 
Participation Agreements and Transmission, Operation and Maintenance 
Agreements) \8\ that allow(s) Wabash to own said transmission assets 
and explain in each instance how such ownership right is consistent 
with the exception criteria in the Contracts.
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    \8\ See supra n.7.
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    b. For each of the agreements identified in response to part a., 
please state the corresponding amounts of transmission plant and 
transmission capital expenditure balances reflected in the Black & 
Veatch Study for years 2019-2021.
    c. In addition, please identify any transmission assets that 
were excluded from the proposed buyout amount due to limitations set 
forth in the Contracts.

[[Page 81406]]

    2. Wabash's transmission plant in service balance for year 2019 
is $354.9 million in the Black & Veatch Study \9\ and $312.8 million 
in Wabash's annual FERC Form No. 1 filing.\10\ Please explain the 
divergence between these two values. Wabash's transmission plant in 
service balance for year 2020 is $423.1 million in the Black & 
Veatch Study \11\ and $321.2 million in Wabash's 2020 budget 
study.\12\ In addition, Wabash states that this value is $348.9 
million in the Adjusted Black & Veatch Study.\13\
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    \9\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell C28.
    \10\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 207 (Electric 
Plant in Service (Account 101, 102, 103, and 106, line 58(g)) 
(2019).
    \11\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell D28.
    \12\ Ex. TIP-0016 at `BL Pg 20 Cost of Trans' tab, cell I44.
    \13\ Ex. WV-0035 at 35.
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    a. Please explain why Wabash's transmission plant in service 
balance for year 2020 decreased by $74.2 million between the 
original and Adjusted Black & Veatch studies.
    b. Please explain the $27.7 million divergence between Wabash's 
transmission plant in service balance for year 2020 in the Adjusted 
Black & Veatch Study and Wabash's 2020 budget study.
    c. Please provide updated versions of the spreadsheets contained 
in Ex. TIP-0097 and Ex. TIP-0113 that reflect the updated 
transmission plant in service balance for year 2020, and all other 
modified values, used in the Adjusted Black & Veatch Study.
    3. Wabash's annual transmission capital expenditure for year 
2019 is $50.6 million in the Black & Veatch Study,\14\ $41.9 million 
in Wabash's annual FERC Form No. 1 filing,\15\ and $42.2 million 
according to Wabash's work orders.\16\ Please explain the divergence 
among these values.
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    \14\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell C7.
    \15\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 206 (Electric 
Plant in Service (Account 101, 102, 103, and 106, line 58(c)) 
(2019).
    \16\ Ex. WV-0035 at 36 (citing Ex. WV-0049).
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    4. Wabash's annual transmission capital expenditure for year 
2020 is $71.8 million in the Black & Veatch Study,\17\ $41.6 million 
in Wabash's annual FERC Form No. 1 filing,\18\ and $66.5 million 
according to Wabash's work orders.\19\ Please explain the divergence 
among these values.
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    \17\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell D7.
    \18\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 206 (Electric 
Plant in Service (Account 101, 102, 103, and 106, line 58(c)) 
(2020).
    \19\ Ex. WV-0035 at 36 (citing Ex. WV-0049).
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    5. Please explain the transmission service that Wabash takes 
under the MISO Tariff in association with delivery to Tipmont.
    6. Wabash states that the original and Adjusted Black & Veatch 
studies ``make no adjustment to Wabash Valley's forecasted 
transmission revenues.'' \20\
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    \20\ Id. at 44-45.
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    a. Please explain how Wabash estimated the annual transmission 
revenues it would receive if Tipmont remained a member of Wabash and 
describe the source(s) of those revenues. Describe all assumptions 
and provide supporting workpapers.
    b. In addition, please describe how these revenues compare to 
what Wabash would receive if Tipmont departs and procures network 
service for its entire load.

B. Capacity Price Forecast

    7. Please identify the source of the $22.34/MW-day initial value 
used in forecasting the Black & Veatch Study's capacity price for 
years 2020-2025.\21\
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    \21\ Ex. WV-0014 at 15 (``For the years 2020 through 2025, Black 
& Veatch increased the capacity prices from the recent capacity 
price level of $22.34/MW-day observed in the MISO market.'').
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    8. Please explain how the Black & Veatch Study determined the 
annual growth rate for its forecasted capacity prices for years 
2021-2025.\22\
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    \22\ Id. at 30.
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    9. Please explain why the Black & Veatch Study switches from 
using the recent capacity price level observed in the MISO market as 
a starting point for the capacity price forecast for years 2020-2025 
to using weighted average solar power purchase agreement costs 
beginning in year 2026 specifically.\23\
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    \23\ Id. at 15, 30.
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C. Energy Price Forecast

    10. Please explain how the Black & Veatch Study selects the New 
York Mercantile Exchange Henry Hub forward price curve dated October 
2, 2019, as the basis for the projected natural gas prices used in 
years 2021-2031 of its energy price forecast.\24\ In addition, 
please explain why the Black & Veatch Study uses a single forward 
curve instead of averaging over multiple forward curves.
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    \24\ Id. at 15.
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    11. Please explain why the Black & Veatch Study assumes that the 
five-year compound annual growth rate implied in the natural gas 
forward prices for 2027-2031 will persist through 2050.\25\
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    \25\ Id.
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D. Miscellaneous Issues

    12. Wabash proposes a 10-year buyout period, arguing that for 
any termination initiated prior to April 14, 2028, Tipmont agreed to 
a ten-year notice and buyout period during which Tipmont remains a 
member, continues to purchase all-requirements service, and makes 
additional monthly escrow payments based on the rate set by the 
Wabash board of directors.\26\ In contrast, Tipmont argues that the 
10-year buyout period has not been found to be just and reasonable; 
that, as long as Tipmont pays the verifiable stranded costs 
associated with Tipmont's exit,\27\ Wabash and its members are 
protected from any financial impacts associated with such exit, 
whether Tipmont leaves immediately or in 10 years; and that 
Tipmont's continued membership in Wabash is causing harm to 
Tipmont.\28\ Tipmont requests that the Commission direct Wabash to 
make a compliance filing that sets the date of Tipmont's exit as 
``the first day of the month one year after the date of that 
Commission order.'' \29\
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    \26\ Wabash Br. Opposing Exceptions 13-14.
    \27\ Tipmont Br. Opposing Exceptions 2.
    \28\ Id. at 1 (citing Ex. TIP-0001 at 25).
    \29\ Tipmont Br. on Exceptions 13.
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    Please address the manner in which an immediate buyout scenario 
should be effectuated in the event the Commission finds the 10-year 
buyout period is not required by the parties' contracts and 
otherwise has not been shown to be just and reasonable.\30\
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    \30\ Id.
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    13. Wabash's property insurance costs for year 2019 are $1.5 
million in the Black & Veatch Study \31\ and $169,871 in Wabash's 
annual FERC Form No. 1 filing.\32\ Please explain the divergence 
between these values.
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    \31\ Ex. TIP-0097; Ex. TIP-0113 at `Prop Ins' tab, cell E14.
    \32\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 323 (Electric 
Operation and Maintenance Expenses (line 185(d)) (2019).
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    14. Wabash's property tax costs for year 2019 are $5.57 million in 
the Black & Veatch Study and $5.37 million in Wabash's Trial Balance 
workpaper.\33\ Please explain the divergence between these values.
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    \33\ Ex. WV-0035 (citing Ex. TIP-0082).
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Appendix B

Question Directed at Tipmont

    15. According to Trial Staff, the London Economics International 
(LEI) Study's energy price forecast projects an approximate $3/MMBtu 
seasonal spread in intra-year natural gas prices beginning in 
2030.\34\ Please explain how the seasonal natural gas price spreads 
observed in the LEI Study's energy price forecast are consistent 
with current and expected natural gas market dynamics in MISO.
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    \34\ Trial Staff Initial Br. 40 (citing Tr. 528:23-529:22, 
531:4-22).

[FR Doc. 2023-25823 Filed 11-21-23; 8:45 am]
BILLING CODE 6717-01-P