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

Heading: Existing Relationship of NPPD and Tri-State

Text: Tri-State’s and NPPD’s history as electric transmission providers informs TriState’s placement into Zone 17. NPPD and Tri-State have a relationship that dates back decades before Tri-State joined Zone 17. In 1975, NPPD and Tri-State entered into a Memorandum of Agreement to establish principles for the joint operation and planning of their transmission facilities in Nebraska. Later, on June 8, 1984, the two transmission providers entered into the Western Nebraska Joint Transmission Agreement (“Agreement”) to “establish a joint transmission system for the Parties’ mutual benefit and joint use.” Pet’r’s App. at 62. The Agreement explained that “portions of Tri-State’s electric power transmission facilities in Western Nebraska are interconnected with NPPD’s electric power transmission system and are operated in synchronism with it.” Id. at 61. Further, the Agreement provided that the facilities should use the Single-Entity Concept, which meant that the providers should operate the systems as if they were owned by one provider. And, the Agreement gave NPPD and Tri-State the right to use each other’s transmission systems to serve their own customers. The Agreement also had a Costs and Benefits section, which provided that “[e]ach Party shall receive benefits commensurate with its actual costs. Such benefits shall be in the form of transmission use of [the Agreement] and in the form of Annual Equalization Payments from one Party to the other.” Id. at 66. The Annual Equalization Payment covered interest, an estimated amount for operations and maintenance expense, and administrative and general costs. The Agreement measured the providers’ use of the transmission facilities under the annual coincident peak method, which measured each provider’s use at the time the combined use of the facilities was at its peak for the entire year. Under this method, Tri-State paid NPPD an average of $1 million each year. -4- However, the payments could vary depending upon the peak method employed. For example, using a month coincident peak method, Tri-State averages 41 percent of the use of the facilities and NPPD averages 59 percent. This would result in a benefit of $550,000 a year to NPPD. SPP uses the month coincident peak method to establish transmission rates. After over 40 years of joint use, the transmission facilities of Tri-State and NPPD are now highly integrated. They share at least five points of interconnection. And, NPPD would lack a transmission path to some of its customers if it could not use Tri-State’s facilities. NPPD thus relies on its ability to use Tri-State’s facilities to serve its customers.