Opinion ID: 187241
Heading Depth: 2
Heading Rank: 3

Heading: Other Challenges to FERC's Order

Text: We next consider various other arguments offered by the petitioners. None of them warrants overturning FERC's decision. First, the petitioners challenge FERC's determination that it was not unfair to deny cost sharing for the excluded projects because they were planned without any assurance that costs would be shared by other transmission providers. In particular, the petitioners object to FERC's statement that the cost responsibility for ATC's planned projects has already been determined. FERC Reh'g Ord. ¶ 97. They contend that, to the contrary, [a]ll parties have been long aware that it is this very proceeding that is to `determine[]' that `cost responsibility.' PSCW Br. 28. PSCW misconstrues FERC's language. What FERC meant was that ATC (and other owners) necessarily undertook financial responsibility for projects they planned before it was known whether any cost sharing policy would be adopted [14]  much less a policy that would spread the costs of projects ATC had planned on its own. [15] Thus, although [g]rid-wide cost recovery is not unexpected in an ISO, id., FERC reasonably determined that the parties had no way of foreseeing how the RECB Task Force negotiations would come out on the cost allocation mechanism and therefore moved forward with [upgrade] projects without any assurance that such projects would be candidates for regional cost sharing. FERC Reh'g Ord. ¶ 96 (emphasis added). The transmission providers therefore were not unduly prejudiced when MISO adopted a policy that did not provide for sharing the projects' costs. The petitioners also assert that FERC mischaracterize[d] the excluded upgrades as `local,' PSCW Br. 36, when it stated that critics of the Midwest ISO's proposal for leaving previously planned projects untouched by the proposed cost sharing, are primarily concerned with their local previously planned project not experiencing the benefits of the proposed cost sharing, FERC Reh'g Ord. ¶ 96. The petitioners argue that FERC's use of local reflects an intent to exclude projects from cost sharing notwithstanding such projects improve regional reliability, the criterion for cost sharing under Attachment FF. FERC never disputed that a planned project, although locally situated, might improve regional reliability or qualify (but for its advanced planning stage) for cost sharing under Attachment FF. Under MISO's cost allocation policy, the regional effect of a project is simply ignored if the project is excluded because of its planning stage. [16] The petitioners next contend FERC deviated from its July 8, 2004 compliance order which required MISO to develop and file a cost recovery policy based on `payment for transmission upgrades by the parties that cause and benefit from them.' PSCW Br. 47 (quoting FERC Tariff Ord. at 61,348, 61,351). [17] But the language of FERC's order was hortatory rather than mandatory, encourag[ing] not requir[ing] MISO to adopt its own cost allocation policy. See Midwest Indep. Transmission System Operator, Inc., 108 F.E.R.C. ¶ 61,027, at 61,147; see id. (noting that, while Order No.2003, supra note 5, allows independent Transmission Providers to propose innovative cost-recovery methods, it does not require them to make such proposals). In any event, MISO did adopt such a policy. That its provisions are not what the petitioners would have chosen does not undermine FERC's approval of it. Nor was it necessary that the cost sharing policy allocate costs with exacting precision. ISO Transmission Owners v. FERC, 373 F.3d 1361, 1369 (D.C.Cir.2004) (citing Sithe/Independence Power Partners, L.P. v. FERC, 285 F.3d 1, 5 (D.C.Cir.2002)). Our precedent requires only that all approved rates reflect to some degree the costs actually caused by the customer who must pay them.' Midwest ISO Transmission Owners v. FERC, 373 F.3d at 1368 (quoting KN Energy, Inc. v. FERC, 968 F.2d 1295, 1300 (D.C.Cir. 1992)) (emphasis added); accord Pac. Gas & Elec. Co. v. FERC, 373 F.3d 1315, 1320 (D.C.Cir.2004); Transmission Access Policy Study Group v. FERC, 225 F.3d 667, 708 (D.C.Cir.2000). And FERC reasonably concluded that MISO's cost allocation policy meets this standard. Moreover, it is consistent with the Cost Causation Rate Principles FERC has embraced in previous decisions, notwithstanding the petitioners' claim to the contrary, see PSCW Br. pt. IV; ISO New England, Inc. v. New England Power Pool, 91 F.E.R.C. ¶ 61,311, at 62,076 (2000) (Our general principle is to assign costs of various upgrades to those who benefit to the extent that they can be identified). Finally, the petitioners contend FERC erred in not adopting as the cost-sharing criterion whether a project's estimated in-service date is after October 7, 2005, the date of MISO's tariff filing. In its order, FERC explained not only why it chose the advanced planning criterion but also why it rejected the in-service date alternative: Using either January 1, 2007 or October 7, 2005 to begin cost sharing for `in-service' projects would ... requir[e] cost-sharing for several advanced stage projects, including one large-scale project that has already received state regulatory approvals for construction. FERC Tariff Ord. at 61,364. This explanation was not arbitrary. The in-service date alternative might well be more precise, as PSCW contends, but we cannot reject FERC's reasonable planned criterion because it may not allocate costs with exacting precision, Midwest ISO Transmission Owners, 373 F.3d at 1369. [18] For the foregoing reasons, we conclude that the petitioners have not shown that either FERC's Tariff Order, Midwest Indep. Transmission Sys. Operator, Inc., 114 F.E.R.C. ¶ 61,106 (Feb. 3, 2006), or its Rehearing Order, Midwest Indep. Transmission Sys. Operator, Inc., 117 F.E.R.C. ¶ 61,241 (Nov. 29, 2006), was arbitrary or capricious or without record support. Accordingly, we deny the petitions for review. So ordered.