Opinion ID: 4530323
Heading Depth: 2
Heading Rank: 3

Heading: Placement of Tri-State into Zone 17

Text: In 2009, NPPD joined SPP, placing Tri-State’s and NPPD’s jointly operated facilities under the functional control of SPP in Zone 17. Around this time, three other entities (Western Area Power Administration–Upper Great Plains Region, Basin Electric Power Cooperative, and Heartland Consumers Power District) also joined SPP. The expansion, in effect, surrounded Tri-State’s facilities with facilities controlled by SPP. In addition to the geographical convenience, Tri-State also saw how joining SPP could potentially lower costs to its customers and enable it to terminate the Agreement with NPPD. Tri-State then decided to join SPP. On October 30, 2015, SPP revised its Open Access Transmission Tariff2 to incorporate Tri-State’s formula rate and make other modifications to accommodate Tri-State as a TO under the SPP Tariff. In the filing, 2 FERC “governs the rates, terms and conditions of SPP through its Open Access Transmission Tariff” and any changes in the Open Access Transmission Tariff “must be approved/accepted by FERC before SPP can operate under the requested changes.” Governance, SPP.org, https://www.spp.org/governance/ (last visited Apr. 24, 2020). -5- SPP proposed to place Tri-State’s transmission facilities and the associated Annual Transmission Revenue Requirement (ATRR)3 into Zone 17. Given Tri-State’s history with NPPD, it was no surprise that NPPD was the dominant TO in Zone 17. SPP followed its established criteria for determining zonal placement. These criteria include: (1) whether the new TO’s ATRR is less than the ATRR of an existing pricing zone with the smallest ATRR; (2) the extent to which a new TO’s facilities are embedded within a pre-existing zone; (3) the extent to which a new TO’s facilities are integrated with (including number of interconnections) an existing TO’s facilities; and, (4) the extent to which the new TO’s facilities substantively increase the SPP footprint. Sw. Power Pool, Inc., 158 FERC ¶ 63,004, at P 74 (2017) (Initial Decision). As applied to Tri-State, SPP explained that: (1) Tri-State’s ATRR is less than the smallest ATRR of an existing SPP TO in a single owner zone; (2) Tri-State has more direct interconnections with the NPPD system than with any other SPP TO, and thus is more integrated with NPPD than any other SPP TO; (3) NPPD and Tri-State have over a 40-year history of coordination regarding the planning and operation of their two systems, due to long-standing contractual relationships; and, (4) the inclusion of the Tri-State facilities only minimally increases the size and scope of the SPP footprint. Id. at P 75. After SPP filed its proposal to place Tri-State in Zone 17 with FERC, NPPD protested the filing. In December 2015, FERC accepted the filing and set a hearing on the issue of whether SPP’s proposal was just and reasonable. 3 The ATRR is the amount of revenue a transmission owner must recover annually to cover the costs associated with its transmission facilities. -6-