Opinion ID: 4530323
Heading Depth: 2
Heading Rank: 4

Heading: Cost Impact Testimony

Text: In its opposition, NPPD emphasized the cost impact of adding Tri-State to Zone 17. NPPD asserted that a cost shift occurs when a portion of a new TO’s ATRR associated with its transmission facilities is not paid by that new TO’s own load. NPPD calculated that Tri-State’s ATRR would be $7.2 million and explained that the ATRR was 11.2 percent of the combined total ATRR in Zone 17 but that Tri-State’s load was only 4.4 percent of the total load. Therefore, NPPD concluded that adding this ATRR to Zone 17 would increase the annual per megawatt (MW) cost of serving the Zone 17 load by 8 percent. Further, NPPD stated, that by joining Zone 17, Tri-State would reduce its responsibility for paying its own costs by 60 percent by shifting $4.3 million of its $7.2 million ATRR to other Zone 17 customers. Tri-State disputed NPPD’s calculations. Specifically, Tri-State testified that instead of NPPD’s calculated $4.3 million cost shift, the actual cost shift to NPPD would be between $1.2 million to $2 million per year. Tri-State adjusted NPPD’s estimate to (1) exclude revenue associated with the Agreement, (2) add costs that NPPD would incur if Tri-State were in another zone, and (3) adjust based on measurable future changes. First, Tri-State noted that its termination of the Agreement will decrease its ATRR by $1 million when the Agreement ends in 2020. Second, the relationship between the two is not reciprocal. Tri-State explained that while 21.5 MW of NPPD’s load is connected to Tri-State’s facilities, only 8.2 MW of Tri-State’s load is connected to NPPD’s facilities. If Tri-State were not in Zone 17, Tri-State estimated that NPPD would have to pay around $1.2 million in a zone other than Zone 17. In contrast, if Tri-State remained in Zone 17, NPPD would benefit about $200,000. Third, SPP’s data showed that Tri-State would pay future regional costs of around $700,000 that would otherwise fall onto NPPD. In total, Tri-State estimated a 1.8 percent increase in cost shift to NPPD. NPPD responded to Tri-State’s calculation by stating that the cost shift should be based on the effective date of Tri-State’s membership in SPP and not account for -7- future elements. Further, NPPD contended that cost impacts that would occur if Tri-State were in another zone should not be taken into account. Finally, NPPD stated that Tri-State would be a better fit in Zone 19 because there would only be a .2 percent increase in cost shift in Zone 19.