Sample of Complaint Filing

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Southwest Power Pool, Inc.,
Complainant,

Midcontinent Independent System
Operator, Inc.,
Respondent.

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Southwest Power Pool, Inc.,

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Docket No. ER14-1174-000

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Docket No. EL11-34-___

v.

Midwest Independent
Transmission System Operator, Inc.,
Complainant,
v.
Southwest Power Pool, Inc.,
Respondent.

Docket No. EL14-___-000

COMPLAINT AND REQUEST FOR FAST TRACK PROCESSING AND
MOTION TO CONSOLIDATE
Pursuant to sections 206 and 306 of the Federal Power Act (“FPA”), 16 U.S.C.
§§ 824e, 825e, and Rule 206 of the Rules of Practice and Procedure of the Federal
Energy Regulatory Commission (“FERC” or “Commission”), 18 C.F.R § 385.206,
Southwest Power Pool, Inc. (“SPP”) submits this Complaint for an order finding that the
Midcontinent Independent System Operator, Inc. (“MISO”) is violating the Joint
Operating Agreement (“JOA”) between SPP and MISO and SPP’s Open Access
Transmission Tariff (“SPP Tariff”), requiring MISO to compensate SPP for use of SPP’s
transmission system in accordance with the SPP Tariff. In the event the Commission

does not so find, SPP alternatively requests that the Commission find (i) that the JOA is
no longer just, reasonable, and not unduly discriminatory to the extent it does not provide
a mechanism by which SPP may assess charges for MISO’s use of the SPP transmission
system to integrate the former Entergy Operating Companies (“Entergy”); and (ii) that
the compensation mechanism set forth herein is the just, reasonable, and not unduly
discriminatory rate for MISO’s use of the SPP transmission system.
I.

INTRODUCTION AND SUMMARY
On December 19, 2013, Entergy formally integrated into MISO, as the newly-

constituted “MISO South” region.1 The former MISO market, as it was constituted prior
to the Entergy integration, was renamed “MISO Midwest.”
Immediately following the December 19, 2013 integration of Entergy, MISO
began sending energy flows between MISO Midwest and MISO South, in both
directions, in excess of the 1,000 megawatt (“MW”) direct physical connection that
MISO has between those regions. Despite requests to stop from several affected systems,
including SPP, MISO continues to dispatch its system at levels far exceeding the 1,000
MW of its direct physical connection. 2 As a result, significant intentional, unscheduled
incremental power flows are crossing SPP’s system without any corresponding

1

The MISO South region includes the Entergy Operating Companies, Cleco
Corporation, Lafayette Utilities System, Louisiana Energy and Power Authority,
Louisiana Generating, South Mississippi Electric Power Association, and East
Texas Electric Cooperative.

2

On December 9, 2013, SPP requested assurances from MISO that MISO not
dispatch flows in excess of MISO’s physical connection. See Attachment A,
Affidavit of Carl A. Monroe (“Monroe Aff.”) at Exh. No. 1 (SPP December 9,
2013 Letter). On December 12, 2013, MISO rejected SPP’s request. See id. at
Exh. No. 2 (MISO December 12, 2013 Letter).

2

reservation, service agreement, or compensation. SPP’s many attempts to negotiate a
resolution with MISO have failed.
As the basis for its unauthorized flows, MISO relies on section 5.2 of the JOA.
MISO initially supported its reliance on section 5.2 by obtaining from the Commission a
declaratory order confirming MISO’s right to use SPP’s system to serve internal load
following the integration of Entergy.3

However, the Commission’s order was

subsequently set aside by the U.S. Court of Appeals for the D.C. Circuit, and the mandate
enforcing the court’s vacatur and remand is expected shortly.4
By this Complaint, SPP seeks to ensure that it is properly compensated for the use
of its transmission system by MISO. The issues presented are framed by the following
facts:
First, SPP and MISO disagree about the meaning of section 5.2 of the JOA and
whether it may be used by MISO in the manner MISO is unilaterally currently using it to
avoid transmission reservations and the rates, terms, and conditions of the SPP Tariff.
Second, the Commission’s order that initially confirmed MISO’s interpretation of
the JOA has been vacated with instructions from the Court that the Commission consider
all relevant evidence.
Third, on several occasions, including in its initial declaratory order, the
Commission has recognized that, irrespective of section 5.2, the JOA must be

3

Midwest Indep. Transmission Sys. Operator, Inc., 136 FERC ¶ 61,010 (2011)
(“EL11-34 Initial Order”), order on reh’g, 138 FERC ¶ 61,055 (2012) (“EL11-34
Rehearing Order”).

4

Sw. Power Pool, Inc. v. FERC, 736 F.3d 994 (D.C. Cir. 2013).

3

renegotiated to account for the significant changes resulting from the MISO-Entergy
integration, but the parties agree that renegotiation has reached impasse.
Fourth, integration has occurred and, beginning December 19, 2013, MISO has
made daily intentional use of the SPP system without reserving capacity or paying for
service.
Finally, because the SPP transmission owners and their customers are suffering
substantial harm due to MISO’s ongoing, intentional, uncompensated use of SPP’s
system, an expedited evidentiary hearing is required to address the issues raised by this
Complaint and implicated by the Court’s remand.
As explained in this Complaint and in the attached affidavit of Carl Monroe,
SPP’s chief negotiator for the JOA, section 5.2 was intended to authorize the use of
shared capacity for the purpose of reaching external third parties, and not as a vehicle for
one party to serve its own, internal load.5 No authority from the Commission or a court
provides otherwise.6 Thus, MISO has no authority to place intentional, unscheduled
flows on SPP’s system without an OASIS reservation and a corresponding transmission
service agreement.
SPP therefore began invoicing MISO under the SPP Tariff for the unauthorized
use of its system, which commenced December 19, 2013. To date, MISO has refused to

5

See Monroe Aff. ¶¶ 6-12.

6

The Commission’s vacated order is null and void. See United States v. Sigma
Int’l Inc., 300 F.3d 1278, 1280 (11th Cir. 2002) (a vacated order has “no legal
effect whatever”); Action on Smoking & Health v. Civil Aeronautics Bd., 713 F.2d
795, 797 (D.C. Cir. 1983) (“To vacate, as the parties should well know, means to
annul; to cancel or rescind; to declare, to make, or to render, void; to defeat; to
deprive of force; to make of no authority or validity; to set aside.”) (citations and
internal quotation marks omitted).

4

pay. In order to ensure an effective means of recovering charges associated with MISO’s
unauthorized use, SPP is submitting contemporaneously with this Complaint an
unexecuted service agreement under the SPP Tariff pursuant to FPA section 205.
Acceptance of that agreement, subject to refund, will ensure that MISO’s use of the SPP
system is treated comparably to service taken by all other customers.
Finally, SPP is including as part of this filing an alternative request pursuant to
FPA section 206 providing for compensation to SPP, should the Commission determine
that section 5.2 of the JOA currently authorizes MISO’s use of the SPP system without
compensation. The requested alternative relief is necessary to ensure that the JOA
operates in a manner that is just, reasonable and not unduly discriminatory, subjecting
MISO’s use of the SPP transmission system to the rates, terms and conditions of a service
agreement under the SPP Tariff.
SPP recognizes that the Commission cannot summarily decide the Complaint
without the benefit of a hearing. There are matters of material fact in dispute, including
the intentions of the parties in agreeing to JOA section 5.2. The court’s remand compels
consideration of evidence going to contractual intent, trade usage, and course of
performance. Accordingly, SPP requests that the Commission:
(1) consolidate this Complaint with the proceeding on remand of the court’s order
in SPP v. FERC and hold hearing and settlement procedures;
(2) place into effect, subject to refund and the outcome of the consolidated
proceeding, the unexecuted service agreement submitted contemporaneously
with this Complaint in Docket No. ER14-1174-000, under which MISO is
required to reserve non-firm point-to-point transmission service and
compensate SPP for MISO’s use of SPP’s transmission system in excess of
5

MISO’s direct physical interconnection capacity between MISO Midwest and
MISO South, and consolidate it with this proceeding;
(3) find that MISO is liable for unreserved use penalties for the unauthorized use
of SPP’s transmission system, beginning December 19, 2013; and,
(4) in the event that the Commission finds that JOA section 5.2 authorizes MISO
to use SPP’s system without compensation, in the alternative find pursuant to
section 206 that the JOA is unjust, unreasonable, and unduly discriminatory,
and grant relief that places into effect the rate for compensation and other
terms of service memorialized in the proposed service agreement.7
One way or another, by accepting the unexecuted service agreement pursuant to
FPA section 205 because the JOA does not permit the usage of SPP’s system as MISO is
currently unilaterally using it, or by amending JOA service to incorporate the service
agreement pursuant to FPA section 206, SPP should be compensated.

Material

circumstantial changes – namely, the MISO-Entergy integration – have occurred since
the JOA was originally executed. As the Commission has expressly found, the changed
circumstances “necessitate” revisions to the JOA.8 An operating agreement that permits
MISO’s free, unlimited use of SPP’s transmission system to serve the vast incremental
load of the Entergy operating companies can no longer be found just, reasonable, and not

7

A copy of the service agreement is enclosed as Attachment B, which is identical
to the service agreement submitted pursuant to section 205 in Docket No. ER141174-000. Through this complaint, SPP alternatively requests the Commission to
accept the service agreement pursuant to section 206 with an effective date of the
day after the filing of this complaint.

8

ITC Holdings Corp., 143 FERC ¶ 61,257, at P 129 (2013).

6

unduly discriminatory.9

MISO and its customers are benefitting from the SPP

transmission system. They should pay for its use like all other users of the system. It
makes no sense for all of the other users of the SPP transmission system to have to pick
up the tab for MISO’s use of the SPP system to integrate Entergy into MISO.
SPP requests that the Commission consider this Complaint under its Fast Track
procedures such that an initial order setting this Complaint for hearing is issued
contemporaneously with an initial hearing order in Docket No. ER14-1174-000 on the
proposed service agreement for MISO to reserve and take service on SPP’s system.
II.

BACKGROUND
A.

The MISO South Integration and the Single Weak Interconnect
Between the Two MISO Regions.

The MISO South region integrated into MISO effective December 19, 2013. It
has approximately 30,000 MW of generation capacity, and approximately 27,000 MW of
load. The MISO Midwest region has approximately 146,000 MW of generation capacity,
and approximately 103,000 MW of load.
Despite the vast size and generation capabilities of the disparate MISO regions,
MISO has but a single interconnection path of only 1,000 MW to connect the MISO
Midwest and MISO South regions. This interconnection path capacity exists pursuant to
an agreement among Ameren Corporation, a MISO transmission-owning member;
Entergy, a MISO-transmission owning member; and Associated Electric Cooperative,
Inc. (“AECI”), which is not a member of MISO or SPP. MISO’s rights to use its 1,000
MW of capacity run in both directions, north-to-south and south-to-north. There are no

9

16 U.S.C. § 824d(b).

7

other MISO owned or controlled interconnections between MISO Midwest and MISO
South.
To serve the new MISO South loads as part of the MISO market, MISO
dispatches significant energy flows, currently predominately from MISO Midwest to
MISO South, but also on occasion in the opposite direction.10 As shown in the below
graph, since December 19, 2013, flows between the two MISO regions have regularly
exceeded MISO’s 1,000 MW path.
Figure 1

Daily Peak of Dispatch Flow
3000

MegaWatts(MW)

2500
2000
1500
Peak
1000

Limit

500

1/26/14

1/24/14

1/22/14

1/20/14

1/18/14

1/16/14

1/14/14

1/12/14

1/10/14

1/8/14

1/6/14

1/4/14

1/2/14

12/31/13

12/29/13

12/27/13

12/25/13

12/23/13

12/21/13

12/19/13

0

Date

10

See Monroe Aff. ¶ 4 and Exh. No. 4 (Daily Peak of Dispatch Flow, which also is
included in this complaint at Figure 1).

8

The flows in excess of 1,000 MW necessarily flow across another transmission system or
systems to reach their designated sinks. MISO has not reserved transmission capacity for
these flows on SPP or any other system.
B.

The SPP-MISO Joint Operating Agreement and the Contract Path
Sharing Provision in Section 5.2.

In April 2011, in Docket No. EL11-34, MISO filed a petition for a declaratory
order requesting that the Commission interpret the contract path sharing provision
(section 5.2) of the JOA between SPP and MISO. That section provides as follows:
Sharing Contract Path Capacity. If the Parties have contract
paths to the same entity, the combined contract path capacity will
be made available for use by both Parties. This will not create new
contract paths for either Party that did not previously exist. SPP
will not be able to deal directly with companies with which it does
not physically or contractually interconnect and the [MISO] will
not be able to deal directly with companies with which it does not
physically or contractually interconnect.
MISO requested that the Commission declare section 5.2 as authorizing MISO to use
SPP’s transmission system to reach and serve the Entergy load as part of the MISOEntergy integration.
SPP protested MISO’s petition and disputed MISO’s interpretation of section 5.2.
SPP presented evidence – in the form of an affidavit of Carl Monroe, SPP’s Executive
Vice-President, Chief Operating Officer, and lead negotiator for the JOA – who testified
that section 5.2 was never envisioned to permit continual, daily use of the other party’s
transmission system to serve internal load, but was instead intended to provide shared use
rights only to external, third-party entities. SPP also offered trade usage and other
evidence to show that MISO’s proposed interpretation was directly at odds with the
commonly understood meaning of “contract path” within the electric industry and even
under MISO’s own business practices.
9

The Commission accepted MISO’s interpretation.11 In an effort to ascertain the
parties’ intentions, the Commission considered certain extrinsic evidence, but “decline[d]
to consider” evidence presented by SPP.12 The Commission also relied on an alleged
incident of course of performance, described in an affidavit accompanying MISO’s
petition, to support its interpretation of section 5.2.13
On appeal, the U.S. Court of Appeals for the District of Columbia Circuit found
“the Commission’s complete failure to consider the evidence proffered renders its orders
arbitrary and capricious.” The court therefore vacated and remanded the Commission’s
orders interpreting section 5.2 of the JOA.14
C.

Attempts at Renegotiation of the JOA.

Although the Commission, in Docket No. EL11-34, upheld MISO’s interpretation
of section 5.2, the Commission also held that the “JOA should be renegotiated” in light of
the Entergy integration and that JOA section 3.1 establishes “an obligation to negotiate in
good faith in response to revisions . . . SPP may propose.”15 The Commission affirmed
this obligation on rehearing, stating:
We emphasized in the July 1 Order [that] section 3.1 of the SPP
JOA provides a mechanism to revise the SPP JOA. The July 1
Order further noted that MISO and SPP have an obligation to
negotiate in good faith in response to revisions either MISO or SPP
may propose. We encourage the parties to work together to address

11

EL11-34 Initial Order at P 60.

12

EL11-34 Rehearing Order at PP 21-23.

13

Id. at P 20.

14

Sw. Power Pool, Inc., 736 F.3d at 99.

15

EL11-34 Initial Order at P 64.

10

these issues so that the objectives of the SPP JOA can be fulfilled
efficiently and economically.16
Further, in ITC Holdings Corp.,17 the Commission “strongly encourage[d] [MISO and the
owners of the transmission systems used by MISO to serve MISO South load] to work
together to resolve these issues.”18

As to use of the SPP system in particular, the

Commission explicitly found that the “transfer of control of the Entergy transmission
facilities to MISO necessitates the renegotiation of the MISO-SPP JOA.”19

The

Commission reiterated “that the MISO-SPP JOA should be renegotiated pursuant to its
terms and [] that MISO and SPP are obligated to negotiate in good faith in response to
revisions either party might propose.”20
SPP’s efforts to engage MISO in renegotiation of the JOA proved futile. In the
course of these negotiations, SPP offered several proposals to revise JOA section 5.2 to
address MISO’s use of SPP’s system. MISO rejected each of SPP’s proposals without
offering any counterproposal. Negotiations have reached an impasse.21

16

EL11-34 Rehearing Order at P 30.

17

143 FERC ¶ 61,257 (2013).

18

Id. at P 147. SPP’s rehearing request in that docket seeking resolution of the use
and compensation issues remains pending. Request for Rehearing of Southwest
Power Pool, Inc., Docket No. ER12-2681-000, et al. (July 22, 2013). In addition,
SPP has sought resolution of the use and compensation issues in response to
MISO’s compliance filing of a report on the negotiations between SPP and MISO.
Comments, Protest, and Request for Immediate Action of Southwest Power Pool,
Inc., Docket No. ER12-2681-000, et al. (Nov. 18, 2013).

19

ITC Holdings Corp., 143 FERC ¶ 61,257, at P 129 (emphasis added).

20

Id. at P 150.

21

See generally Monroe Aff. at Exh. No. 2.

11

D.

Post-Court Remand Developments.

After the D.C. Circuit issued its opinion on December 3, 2013, vacating and
remanding the Commission’s orders, SPP sent a letter to MISO seeking assurance that
“MISO will refrain from any flows of energy between the MISO Midwest Region and the
new MISO South Region . . . in excess of MISO’s 1000 megawatt contractual tie between
the two regions.”22 SPP also stated that to the extent MISO’s flows between the regions
exceed 1,000 MW, “SPP will consider MISO to have made unauthorized, unreserved use
of the SPP transmission system subject to all applicable SPP tariff charges and
penalties.”23
MISO responded by letter three days later, stating that “MISO cannot provide the
assurance you request to limit MISO’s directional market flows under the Joint Operating
Agreement to 1,000 MW.”24

MISO recognized that “[a] dispute continues to exist

regarding this issue” and that “both parties acknowledged that we had bargained to an
impasse.”25 On December 19, 2013, MISO began, and has since continued, sending
energy flows between the two regions in excess of its 1,000 MW interconnection
capacity.

22

Id. at Exh. No. 1.

23

Id.

24

Id. at Exh. No. 2.

25

Id.

12

III.

DISCUSSION
A.

Section 5.2 of the JOA Does Not Provide MISO with Authority to
Intentionally Place Flows on SPP’s Transmission System Without
Reservation and Payment.

As discussed, MISO petitioned the Commission for an interpretation of the JOA
to confirm that section 5.2 authorized MISO’s use of SPP’s transmission capacity to
serve internal load following the MISO-Entergy integration. The Commission’s orders
granting MISO’s petition were subsequently vacated and remanded by the court, which
found the Commission’s refusal to consider evidence proffered by SPP to be arbitrary
and capricious.26
Notwithstanding the court’s vacating of the Commission’s order, MISO continues
to rely on its unilateral interpretation of section 5.2 as the basis for using SPP’s system
without reservation or compensation.27 In its December 12, 2013 letter to SPP, MISO
specifically stated that, despite the court’s decision, it viewed section 5.2 to authorize the
energy flows between MISO Midwest and MISO South.
The ostensible regulatory authority that formerly provided a basis for MISO’s
interpretation no longer exists. The Commission’s orders in Docket No. EL11-34 have
been vacated, which is as if they were never issued.28 Moreover, MISO is simply wrong
in its interpretation of section 5.2. Contracts may not be read to produce absurd results.29

26

Sw. Power Pool, Inc., 736 F.3d at 99.

27

See Monroe Aff. at Exh. No. 2.

28

See supra note 6.

29

See Beanstalk Group, Inc. v. AM General Corp., 283 F.3d 856, 860 (7th. Cir.
2002) (“[A] contract will not be interpreted literally if doing so would produce
absurd results, in the sense of results that the parties, presumed to be rational
persons pursuing rational ends, are very unlikely to have agreed to seek.”); United
States v. Irvine, 756 F.2d 708, 710-11 (9th Cir. 1985) (“The language of the
(Cont’d . . . )
13

Yet, as next discussed, MISO’s interpretation of section 5.2 leads to just such absurdity,
by allowing MISO’s unfettered, unreserved, and uncompensated use of SPP’s
transmission system, unlike any other’s use of the system, so that MISO can serve its
weakly-connected, newly-integrated, and substantially increased internal load.
1. It was not the intention of the negotiating parties that JOA section 5.2
be used to accommodate market flows to serve one party’s internal
load on a regular, continuous basis without compensation.
Use of JOA section 5.2 to serve the internal load of either MISO or SPP on a
regular basis could not possibly have been contemplated when the parties entered the
JOA ten years ago. At the time, 75 percent of the approximately 6,500 megawatts of
MISO Midwest to SPP interconnection capacity currently in place did not even exist.
Nearly 5,000 megawatts of the capacity that is present today between the MISO Midwest
and SPP systems exist only because several Nebraska utilities joined SPP, and
MidAmerican joined MISO, years after the JOA was executed. Of course, at the time of
the JOA, there was no expectation that the Entergy operating companies would
subsequently become internal to the MISO system.
The only evidence on the issue of contemporaneous contractual intent has come
from Mr. Monroe, who negotiated the JOA on behalf of SPP. As Mr. Monroe’s attached
affidavit confirms, when section 5.2 was placed in the JOA, SPP understood it to provide
for sharing of contract path capacity for purposes of point-to-point transactions to third
parties interconnected with both MISO and SPP.30 SPP’s understanding is consistent

( . . . cont’d)
contract is to be read as a whole and given a reasonable interpretation, not an
interpretation that would produce absurd results.”) (citations omitted).
30

Monroe Aff. ¶¶ 6-12.

14

with the ordinary usage of the term “contract path,” as discussed in more detail below.
SPP did not understand, and certainly did not agree, that section 5.2 could eventually
serve as the vehicle by which MISO could later expand and integrate approximately
30,000 MW of generation capacity, and approximately 27,000 MW of new internal load,
without reserving capacity or compensating SPP for the vast power transfers crossing
SPP’s system.31
Indeed, it defies logic to presume that SPP would rationally agree to the
interpretation of section 5.2 urged by MISO. As the map below shows, MISO Midwest is
tied to MISO South through a single 1,000 MW interconnection at the southern tip of the
MISO Midwest system, connecting to the northern tip of MISO South.

31

MISO supplied the words for section 5.2. As a general matter, therefore, the
Commission should interpret the words against MISO if there are alternative
readings of them. See Ohio Power Co. v. FERC, 744 F.2d 162, 167 (D.C. Cir.
1984) (“[I]n choosing among reasonable meanings of a contract, the meaning
which operates against the drafter is to be preferred.”); Restatement (Second) of
Contracts § 206 (1981) (“In choosing among the reasonable meanings of a
promise or agreement or a term thereof, that meaning is generally preferred which
operates against the party who supplies the words . . . .”).

15

Figure 2

As actual experience demonstrates,32 the integration of MISO South involves high levels
of energy transfers well beyond the 1,000 MW of capacity held by MISO. These power
flows necessarily and knowingly cross the SPP system, which lies between MISO
Midwest and MISO South. Under MISO’s view of section 5.2, the entirety of SPP’s
interconnection capacity between SPP and MISO South is available for use by MISO,
free of charge, and without any requirement that MISO secure a reservation, schedule its
flows, or execute a service agreement.
Nothing in the history of the MISO/SPP negotiations supports MISO’s
interpretation of section 5.2. While the Commission ordered SPP and MISO to adopt

32

See Monroe Aff. at Exh. No. 4.

16

arrangements similar to the MISO/PJM Interconnection, L.L.C. (“PJM”) seams
arrangements, the focus of the parties’ dispute over the JOA was not about section 5.2,
but rather whether to include a congestion management process in the JOA similar to that
adopted by MISO and PJM.33 As MISO has stated, “[T]he chief difference between the
two versions [of the parties’ drafts of a JOA] was the lack of a Congestion Management
Process (“CMP”) protocol.”34

Section 5.2 was never the subject of any focused

discussions between the parties, and the Commission never ordered the parties to address
the matters covered by section 5.2 in any particular way, much less in a way that would
authorize MISO’s unreserved and uncompensated use of the SPP system in the volumes
now taking place.35
What the Commission actually said at the time was that “[w]e do not require that
all RTOs necessarily must have a uniform practice, but the RTO reliability and market
interface practices must be compatible.”36 The issues here are not about the development
of compatible reliability and interface practices; they concern the justness and
reasonableness of MISO’s claimed interpretation that it is entitled to free, unlimited, and
unreserved use of SPP’s transmission facilities.37

33

Petition for Declaratory Order, Request for Shortened Notice Period, and Request
for Expedited Treatment of Midwest Independent Transmission System Operator,
Inc., Docket No. EL11-34-000, at 18 (Apr. 8, 2011) (“MISO EL11-34 Petition”).

34

Id.

35

See also Monroe Aff. ¶ 10 (SPP was not involved in MISO/PJM discussions).

36

Sw. Power Pool, Inc., 106 FERC ¶ 61,110, at P 202 (2004); MISO EL11-34
Petition at 18 n.61.

37

The Commission’s intentions regarding the adoption of a JOA were not
ambiguous. They were spelled out in significant detail. As to reliability
practices, the Commission said that it expected “coordination of reliability
practices and sharing of reliability data . . . , including procedures that address
(Cont’d . . . )
17

2.

MISO cannot have a “contract path” to itself.

Section 5.2 applies when the two parties, MISO and SPP, have “contract paths to
the same entity.” Given that MISO South is now an embedded part of the integrated
MISO system, neither MISO nor SPP has a contract path to a “same entity” regarding the
flows MISO is placing on SPP’s system. MISO cannot have contract paths “to” itself. A
path from MISO Midwest to MISO South is a path from MISO to MISO, not a path from
MISO “to” another entity. Similarly, all of SPP’s paths to entities now in the MISO
South region (e.g., Entergy, CLECO, etc.) are simply paths “to” MISO. Thus, section 5.2
is inapplicable – it is not the use of contract paths “to” a “same entity” – and cannot
support MISO’s use of SPP’s system to reach MISO’s embedded load in the MISO South
region.
Additionally, and as discussed in detail below, the commonly accepted use of the
term “contract path” refers to a designated path over which parties engage in point-topoint transmission service transactions. This is consistent with the Commission’s own
( . . . cont’d)
parallel path flows [and] ancillary service standards.” Sw. Power Pool, Inc., 106
FERC ¶ 61,110, at P 203 (emphasis added). As to market practices, the
Commission said that it expected “some level of standardization of inter-regional
market standards and practices, including the coordination and sharing of data
necessary for calculation of TTC and ATC, transmission reservation practices,
scheduling practices, and congestion management procedures.” Id. (emphasis
added). In a subsequent order regarding the matter, the Commission provided
even more detailed direction, instructing the parties to: ensure consistency of AFC
and ATC calculations; develop consistent treatments of TRM and CBM; provide
details of procedures regarding the type, and timing, of information exchange
regarding these values; adopt procedures for coordinating emergencies and
restorations; and provide details on notification and coordination of outages
affecting inter-regional transmission organization (“RTO”) transfer capability.
Sw. Power Pool, Inc., 108 FERC ¶ 61,003, at P 53 (2004), order on reh’g, 110
FERC ¶ 61,138 (2005). All of this was accomplished in the JOA. As is apparent,
none of these directions in any way suggested, much less dictated, that the parties
had to share transmission capacity without compensation.

18

view, as described in Order No. 890: “Point-to-point service consists of a contract-path
with a designated point of receipt and point of delivery.”38 In other words, in order to
conduct point-to-point transmission service transactions, the industry has established the
notion of a “contract path” to identify the route from the source to the sink of a particular
point-to-point transaction.
When MISO dispatches its energy market, it manages its system by matching
resources to load in the most efficient, economic, and reliable manner. This market
dispatch does not involve use of “contract paths.” Transmission providers do not have
contract paths to (or more aptly, within) themselves. When entities in the MISO South
region participate in the MISO market, they do so via network transmission service
internal to MISO. “Network service has no identified contract-path.”39 Thus, section
5.2’s reference to “contract paths” should not apply in the context of MISO’s market
dispatch from its own generation to its own load.40

38

Preventing Undue Discrimination and Preference in Transmission Service, Order
No. 890, 2006-2007 FERC Stats. & Regs., Regs. Preambles ¶ 31,241, at P 1612,
order on reh’g, Order No. 890-A, 2006-2007 FERC Stats. & Regs., Regs.
Preambles ¶ 31,261 (2007), order on reh’g and clarification, Order No. 890-B,
123 FERC ¶ 61,299 (2008), order on reh’g and clarification, Order No. 890-C,
126 FERC ¶ 61,228 (2009), order on clarification, Order No. 890-D, 129 FERC
¶ 61,126 (2009).

39

Order No. 890 at P 1612 (emphasis added).

40

See Ind. Mich. Power Co., 64 FERC ¶ 61,184, at 62,545 (1993) (“In general,
utilities transact with one another based on a contract path concept.”) (emphasis
added).

19

3.

“Contract path” is well understood throughout the electric
industry to mean the scheduled point-to-point transmission route
for energy as specified pursuant to an agreement.

Reasonable interpretation of commercial agreements requires the Commission to
consider trade usage to discern the meaning of terms.41 As commonly used in the electric
industry, a contract path is a designated path over which parties engage in point-to-point
transmission service transactions.

The North American Electric Reliability Council

(“NERC”), in its Glossary of Terms Used in Reliability Standards, defines “contract
path” as an “agreed upon electrical path for the continuous flow of electrical power
between the parties of an Interchange Transaction.”42 An “Interchange Transaction”
means “[a]n agreement to transfer energy from a seller to a buyer that crosses one or
more Balancing Authority Area boundaries.”43 That is, it is a transfer of energy via a
point-to-point transmission transaction.

In the case of energy dispatch from the

combined resources of the MISO Midwest region to the loads within the MISO South
region, there are no “interchange transactions,” as both MISO Midwest and MISO South
are part of the single MISO balancing authority.44 Because the flow of energy between
41

See Colo. Interstate Gas Co. v. FERC, 599 F.3d 698, 703 (D.C. Cir. 2010)
(“Relying on trade usage of the term is appropriate, as construing terms in light of
their commonly understood meaning is a hallmark of reasonable interpretation.”)
(citations omitted); see also Restatement (Second) of Contracts § 202(5) (1981)
(terms must be interpreted according to trade usage).

42

See North American Electric Reliability Corporation, Glossary of Terms Used in
NERC
Reliability
Standards,
24
(Jan.
2,
2014),
http://www.nerc.com/pa/Stand/Glossary%20of%20Terms/Glossary_of_Terms.pd
f.

43

Id. at 41.

44

MISO established a single balancing authority in 2008. Midwest Indep.
Transmission Sys. Operator, Inc., 122 FERC ¶ 61,172, at P 471, order on reh’g,
123 FERC ¶ 61,297 (2008). MISO South is part of the MISO balancing
authority.

20

MISO Midwest and MISO South does not constitute the “flow of electrical power
between the parties to an Interchange Transaction,” the notion of “contract paths”
existing between the two MISO sub-regions is inapposite.
The North American Energy Standards Board (“NAESB”) similarly defines
“contract path” as “[a] predetermined Transmission Service electrical path between
contiguous Transmission Service Providers established for scheduling and commercial
settlement purposes that represents the continuous flow of electrical energy between the
parties to a transaction.”45 A contract path is “between contiguous Transmission Service
Providers.” It is a path for energy flow “between the parties to a transaction.” Here,
there are no “transactions” between MISO Midwest and MISO South; rather, service is
provided as part of MISO’s single integrated system dispatch. There is only a single
Transmission Provider – MISO.
MISO’s own business practices distinguish between flow based services and
contract path services. MISO applies “contract path” principles only in the context of
transactions involving “non-MISO, External BA Areas that are first-tier BA Areas with
physical connections to the MISO.”46 As the operating entities that compose MISO
South are now embedded within MISO, they are neither “non-MISO” areas nor “External
BA” areas.

45

North American Electric Standards Board, Wholesale Electric Quadrant Business
Practices Standards, Transmission Loading Relief – Eastern Interconnection
Standards – WEQ-008-0.10 (Mar. 11, 2009, with minor corrections applied
through Dec. 14, 2009, Version 002.1).

46

MISO, Business Practices Manual for Module B of the Open Access
Transmission, Energy and Operating Reserve Markets Tariff § 4.3 (Oct. 15,
2013),
https://www.misoenergy.org/_layouts/MISO/ECM/Redirect.aspx?ID=19208.

21

4.

The only prior discussion of section 5.2 involved a theoretical, not
an actual, arrangement that considered possible service to a third
party.

The parties have not had a single occasion to actually share contract path capacity
pursuant to section 5.2 of the JOA. It is unfathomable that a provision that has not been
used for the transmission of a single megawatt in the past ten years could be interpreted
to permit the vast energy flows between MISO Midwest and MISO South that MISO now
relies on section 5.2 to permit.
The “course of conduct” previously described by MISO (submitted by affidavit
attached to MISO’s declaratory order request and relied upon by the Commission in its
prior order) involved discussions regarding the theoretical, future use of section 5.2 under
certain assumed facts. There never was any actual transaction that relied on section 5.2.
Moreover, the theoretical transaction, even if it had later occurred, involved the use of
SPP’s capacity to reach a third-party – Entergy Arkansas.47 This conforms precisely to
SPP’s understanding and interpretation of section 5.2: the use of shared capacity to reach
a third party. Thus, the parties’ own discussion about section 5.2, and how it might be
invoked, after the JOA was signed, involved transmission to a third party, fully
supporting SPP’s interpretation of section 5.2.

47

See Sw. Power Pool, Inc., 736 F.3d at 998; Monroe Aff. ¶ 11. See also MISO
EL11-34 Petition at Exhibit D (Affidavit of Thomas J. Malinger) ¶ 13 (describing
“discussions with SPP” held in late 2009 and early 2010, following an ice storm
in the spring of 2009 which forced a 122 day outage on the interface on which
MISO holds capacity. Mr. Mallinger’s testimony describes the parties’ discussion
regarding the availability of section 5.2 should a similar event occur in the
future).

22

5.

Other transmission providers in the region also believe the
contract path sharing provision does not allow a party to serve its
internal load without compensating the other party for use of its
transmission system.

SPP is not the only MISO counterparty that disagrees with the expansive view of
the section 5.2 language that MISO attributes to it. Tennessee Valley Authority (“TVA”)
had a seams agreement with MISO containing similar language, and MISO and TVA
disputed the meaning of the language. TVA believed that the similar language in its
seams agreement with MISO did “not allow sharing in the manner contemplated by
MISO and that TVA would need to be compensated for the use of its transmission
system.”48 As a result of their dispute, MISO terminated the seams agreement.
Basin Electric Power Cooperative, Western Area Power Administration, and
Heartland Consumers Power District (collectively the “IS Parties”) also disagreed that
MISO should be able to use this type of language in its seams arrangements with them, if
it was to have the meaning that MISO alleges here.49 The IS Parties terminated their use
of the seams arrangements with MISO in light of MISO’s incorporation of this language
into those seams arrangements.50

48

Tennessee Valley Authority’s Motion for Leave to Intervene, Docket No. ER113281-000, at 3 (Apr. 22, 2011).

49

Protest of Basin Electric Power Cooperative, Western Area Power Administration
and Heartland Consumers Power District, Docket No. ER11-3281-000, at 19-22
(May 2, 2011).

50

See Sw. Power Pool, Inc., 140 FERC ¶ 61,199, at P 10 (2012) (noting Western
Area Power Administration’s notification of its intent to terminate); see also
Answer of Southwest Power Pool, Western Area Power Administration, Basin
Electric Power Cooperative and Heartland Consumers Power District to Protests
and Comments, Docket ER12-1586-000, at 4 (May 29, 2012) (“Western
terminated Seams Service on behalf of the IS Parties in order to avoid having to
share its contract path capacity with MISO without compensation.”).

23

Although SPP has seams agreements with other neighboring systems, it has no
arrangements with any of its other neighbors to use transmission capacity without
compensation.51 Indeed, as even the Commission has stated, it “has also accepted seams
coordination arrangements that do not contain a contract path capacity sharing
provision,”52 and “the Commission has not required such provisions to be included in all
seams agreements.”53 Thus, while FERC requires seams coordination, it has never
demanded that parties allow uncompensated use of their transmission facilities.
6.

The context of section 5.2 within the JOA indicates that contract
path refers to point-to-point transmission service.

Confirming the parties’ intended use of the phrase “contract path to the same
entity,” the parties placed section 5.2 in a section of the JOA addressing “available
flowgate capability calculations,” the purpose of which is to forecast “transmission
capability that may be available for use by transmission customers.” Section 5 of the
JOA (“Available Flowgate Capability Calculations”), where this provision resides, is
entirely about coordinated exchanges of data to enable the parties to know how much
capacity is available for selling point-to-point transmission service. It has nothing to do
with the right of a party to place energy market flows on the other party’s system.54

51

Monroe Aff. ¶ 12.

52

Sw. Power Pool, Inc., 140 FERC ¶ 61,199, at P 102.

53

Id.

54

See, e.g., JOA § 5.1 (“The exchange of data related to calculation of AFC is
necessary to assure reliable coordination, and also to permit either Party to
determine if, due to lack of transmission capability, it must refuse a transmission
reservation in order to avoid potential overloading of facilities.”).

24

B.

The Flows Occurring on SPP’s System Cannot Be Defended as
Ordinary “Loop Flows.”

It is undisputed that MISO only has a single interconnection path of 1,000 MW
interconnecting MISO Midwest and MISO South.

Yet, as Figure 1 shows, since

December 19, 2013, MISO has regularly transmitted energy between MISO Midwest and
MISO South well in excess of 1,000 MW.55
MISO has argued that, irrespective of section 5.2, any power transfers crossing
SPP’s system as a consequence of MISO’s dispatch are unavoidable “loop flows,” which
it argues are generally not compensable under Commission policy.56 But MISO has never
confronted the well-understood principle that “[l]oop flow refers to power flow along an
unintended path that loops away from the most direct geographic path or contract path.”57
Here, we are not dealing with “unintended loop flows” and/or “unavoidable
consequence[s] of interconnected utility operations.”58 Those quotes might aptly describe
flows crossing SPP’s system during times when MISO’s dispatch between MISO
Midwest and MISO South is at or below MISO’s interconnection capacity of 1,000 MW.
For example, if MISO were dispatching 500 MW between MISO Midwest and MISO

55

See supra Figure 1 and Monroe Aff. at Exh. No. 4 (documenting MISO’s flows
between MISO Midwest and MISO South).

56

See, e.g., Joint Answer of Entergy Services, Inc. and the Midcontinent
Independent System Operator, Inc., Docket No. ER13-948-000, at 7 (May 8,
2013).

57

PJM Interconnection, L.L.C. v. Pub. Serv. Elec. & Gas Co., 132 FERC ¶ 61,221,
at P 24 n.41 (2010) (emphasis added), order on reh’g, 135 FERC ¶ 61,018 (2011),
aff’d, NRG Power Mktg., LLC v. FERC, 718 F.3d 947 (D.C. Cir. 2013).

58

Am. Elec. Power Serv. Corp., 49 FERC ¶ 61,377, at 62,381 (1989).

25

South and 100 MW unintentionally flowed on SPP’s facilities, then the flows could
properly be considered “loop flows.”59
To be clear, SPP has never contested or sought compensation for “loop flows,” as
conventionally understood. However, when MISO intentionally dispatches more than
1,000 MW between MISO Midwest and MISO South, it is intentionally placing flows on
systems other than its own without authorization or reservation. It is these intentional,
unauthorized flows that MISO must either stop dispatching or start paying for and
reserving transmission service to accommodate. These are not “unintended” loop flows
that are an “unavoidable” consequence of MISO’s use of its own capacity.60
C.

The Commission Should Confirm that MISO Must Pay SPP Tariff
Penalties for Unreserved Use of SPP’s Transmission System.
1.

Commission policy dictates assessment of penalties for all
instances in which parties make unreserved use of a transmission
system.

It is the Commission’s policy to assess penalties for all instances in which parties
make unreserved use of a transmission system.61 In Order Nos. 890 and 890-A,62 the
Commission established a policy authorizing transmission providers to impose penalty
charges for “unreserved use” of the transmission system. A penalty may be imposed
whenever a transmission customer exceeds its reserved capacity or does not reserve
59

See, e.g., Ind. Mich. Power Co., 64 FERC ¶ 61,184, at 62,545 (1993).

60

Indeed, even as the Commission ruled – albeit without proper evidence, as the
court has found – that MISO could use section 5.2 to reach internal MISO load,
the Commission explicitly declined to address whether MISO may exceed its
1,000 MW interconnection path limitation without compensation, leaving the
matter to negotiations, which have failed. See EL11-34 Rehearing Order at P 30
(declining to find whether MISO is limited to 1,000 MW because the petition did
not seek guidance on this issue).

61

Order No. 890 at P 838.

62

Id. at P 847; Order No. 890-A at P 447.

26

capacity for what it then uses. The Commission found the imposition of unreserved use
penalties as necessary to “help discourage disorderly use of transmission service.”63 The
Commission held that “the unreserved penalty regime we articulate in this Final Rule will
provide a reasonable incentive to ensure that transmission customers reserve the
appropriate level of transmission service without unduly charging a transmission
customer for inadvertent unreserved use” and that “penalties are appropriate for all
unreserved uses of the system.”64
While “unreserved use penalties thus work . . . to reduce incentives to take actions
that impair the reliability of the transmission system,”65 the Commission’s policy on
unreserved use penalties is not limited “to instances where the unreserved use jeopardizes
the reliable operation of the transmission system.”66 Rather, the Commission declared
that:
Unreserved use penalties are intended, in part, to give transmission
customers an incentive to reserve and pay for the appropriate level
of transmission service so that transmission service is allocated in
an orderly fashion. A transmission customer that uses unreserved
transmission service requires the transmission provider to take
some action to accommodate the additional use of the system.
Some penalty is warranted even in those instances when the
transmission provider’s accommodations are sufficient to avoid
curtailment of transmission service to other transmission
customers. Absent a penalty in all instances, transmission
customers would have an increased incentive to under-reserve
transmission service, which would lead to an increase in the
likelihood that system reliability would be impaired. In addition, a
transmission customer that uses more transmission service than it
has reserved, even in periods when system reliability has not been
63

Order No. 890 at P 835.

64

Id. at P 847.

65

Id. at P 835 n.513.

66

Id. at P 838.

27

impaired, has nonetheless disturbed the orderly allocation of
transmission service.67
Thus, to ensure that all instances of unreserved use are penalized, the Commission
modified its pro forma open access tariff to provide that “a customer that takes
unreserved point-to-point transmission service and does not have a service agreement
with the transmission provider is deemed to have executed the transmission provider’s
form of service agreement for point-to-point service.”68 The Commission found that the
penalties should be based on “the period of unreserved use.”69
The Commission affirmed the unreserved use penalty policy in Order No. 890-A
and rejected calls for it “to distinguish between intentional and unintentional unreserved
transmission uses and reiterate[d] that all unreserved uses will be subject to operational
penalties.”70 The Commission held that, while “inadvertent unreserved uses . . . may be
beyond the [load serving entity’s] control at the moment they occur [,] [t]his does not
mean, however, that penalties should not apply to such unreserved uses. Like any
customer, the [load serving entity] is able to protect itself against unreserved use penalties
by reserving sufficient capacity.”71 Accordingly, the Commission held that “[i]t is the
obligation of the transmission customer, not the transmission provider, to ensure that the
customer has reserved the transmission service that it uses.”72
67

Id. at P 838 (emphasis added).

68

Id. at P 840 (emphasis added).

69

Id. at P 840. Of course, the transmission provider may also charge the basic
transmission rate for the unreserved use in addition to the penalties. See SPP
Tariff § 14.5.

70

Order No. 890-A at P 447 (emphasis added).

71

Id. at P 451.

72

Id. at P 452.

28

2.

SPP properly is assessing MISO penalties for taking unreserved
non-firm point-to-point transmission service.

In accordance with Commission policy to “help discourage disorderly use of
transmission service”73 and “to reduce incentives to take actions that impair the reliability
of the transmission system,”74 SPP is assessing MISO penalties for unreserved use of
non-firm point-to-point transmission service.

As explained in the affidavit of Carl

Monroe, on January 10, 2014, SPP invoiced MISO for the unreserved use of the SPP
transmission system beginning with the integration of Entergy on December 19, 2013.75
In determining the level of unreserved usage, SPP assessed MISO only for power
transfers exceeding MISO’s 1,000 MW of interconnection path capacity between MISO
Midwest and MISO South.76
SPP treats MISO’s unauthorized power flows as non-firm point-to-point
transmission service. MISO is not reserving the service that it is taking and has not
applied for firm transmission service. Thus, there is no basis to treat MISO’s excess
power transfers as firm, or to accord them higher curtailment priority than reserved and
contracted non-firm services.
Accordingly, SPP is calculating the penalty in accordance with SPP Tariff section
14.5 (“Classification of Non-Firm Point-To-Point Transmission Service”), which, in part,
provides:

73

Order No. 890 at P 835.

74

Id. at P 835 n.513.

75

Monroe Aff. ¶ 15.

76

Id. at Exh. No. 3 (Letter from C. Monroe to R. Doying Re: Bill for Unreserved
Use of SPP Transmission System).

29

In the event that a Transmission Customer (including Third-Party
Sales by a Transmission Owner) exceeds its non-firm capacity
reservation, the Transmission Customer shall pay the following
penalty (in addition to the charges for all of the non-firm capacity
used): 100% of the Non-Firm Point-To-Point Transmission Service
charges under Schedules 8 and 11 for the duration of the period
when the additional service was used as specified below not to
exceed one month for the amount in excess of such capacity
reservation. An excess of one hour or less shall be billed at the
charge for weekday deliveries, repeated daily use of unreserved
capacity within a seven day period shall increase the duration of
the period to a weekly duration and multiple instances of
unreserved use during more than one seven day period during a
calendar month shall increase the duration of the period to a
monthly duration . . . . For the amounts exceeding the non-firm
capacity reservation, the Transmission Customer must replace
losses as required by this Tariff.77
SPP is assessing MISO for each megawatt of MISO market flows above 1,000 MW in
either direction (e.g., MISO Midwest to MISO South and MISO South to MISO
Midwest). Point-to-point transmission service is uni-directional, and, therefore, MISO is
taking two point-to-point transmission services from SPP.78 Given that this is a violation
of the JOA and the SPP Tariff, penalties may be assessed from the date of the violation.79

77

SPP Tariff § 14.5.

78

SPP is assessing MISO for the full amount of flows in excess of 1,000 MW even
though some of those flows may travel through other neighboring systems (e.g.,
AECI or TVA) to reach their destination. This is appropriate because MISO has
stated that it is relying solely on its 1,000 MW interconnection capacity and SPP’s
transmission system (through the JOA) to serve its loads. However, to the extent
MISO reserves transmission service on other neighboring systems to send market
flows between its two regions, SPP will make a corresponding reduction in the
SPP Tariff assessments. In aggregate, MISO must secure reservations on
neighboring systems sufficient to cover its excess flows – i.e., flows above
MISO’s interconnection path capacity of 1,000 MWs.

79

See 16 U.S.C. § 825h (vesting FERC with authority to “perform any and all
acts . . . it may find necessary or appropriate to carry out the provisions of this
Act”); Idaho Power Co., 145 FERC ¶ 61,122, at P 16 (2013) (“If [a tariff]
violation occurs, the Commission has the tools available to impose remedies, as
necessary and appropriate, from the date on which the tariff violation occurred.”).

30

In accordance with Commission policy, as an entity taking unreserved
transmission service, MISO is a transmission customer under the SPP Tariff. To ensure
that all instances of unreserved use are penalized, SPP is imposing penalties consistent
with the Commission’s finding that “a customer that takes unreserved point-to-point
transmission service and does not have a service agreement with the transmission
provider is deemed to have executed the transmission provider’s form of service
agreement for point-to-point service.”80 SPP has the authority under its Tariff, and under
Commission precedent and policy, to assess MISO penalties for unreserved use of SPP’s
transmission system. Accordingly, the Commission should confirm that MISO must pay
the penalties invoiced by SPP.
3. SPP is contemporaneously proposing a reasonable alternative that
will treat MISO’s excess flows comparably to other non-firm services.
SPP has no interest in denying MISO access to its system, nor does SPP wish to
continue in perpetuity assessing MISO penalties for unreserved use. From an operational
perspective, SPP prefers to know ahead of time the amount of flows MISO plans to place
on SPP’s system so that SPP may ensure orderly use of its transmission system. Thus,
although “[i]t is the obligation of the transmission customer, not the transmission
provider, to ensure that the customer has reserved the transmission service that it uses,”81
SPP is submitting, contemporaneously with this filing in Docket No. ER14-1174-000, an
unexecuted service agreement for non-firm point-to-point transmission service under
which MISO must reserve and pay for transmission service. As explained more fully in

80

Order No. 890 at P 840 (emphasis added).

81

Order No. 890-A at P 452.

31

that filing, the Commission should accept the service agreement, subject to refund and
the outcome of the hearing in this proceeding.82
IV.

IN THE ALTERNATIVE, IF THE COMMISSION DETERMINES THAT
JOA SECTION 5.2 DOES ALLOW MISO TO USE SPP’S TRANSMISSION
SYSTEM WITHOUT COMPENSATION, THEN THE JOA IS NO LONGER
JUST AND REASONABLE AND SHOULD BE AMENDED TO INCLUDE
SPP’S
PROPOSED
SERVICE
AGREEMENT
TO
PROVIDE
COMPENSATION TO SPP
If, after conclusion of the hearing, the Commission determines that JOA section

5.2 currently permits MISO to use SPP’s transmission system, free of charge, to dispatch
market flows between the MISO Midwest and MISO South regions in excess of MISO’s
actual interconnection capacity between the two regions, then the Commission should
find, pursuant to section 206 of the FPA, that the JOA is no longer just and reasonable.
Given the significant circumstantial changes since the JOA was executed, the
Commission can no longer find that section 5.2, so interpreted, is just, reasonable, and
not unduly discriminatory.
A. The JOA Is Unjust, Unreasonable, and Unduly Discriminatory if
Interpreted to Permit Uncompensated, Unreserved Flows Between
MISO Midwest and MISO South.
As the Commission has already determined, “the transfer of control of the
Entergy transmission facilities to MISO necessitates the renegotiation of the MISO-SPP
JOA.”83 This finding strongly supports the notion that the JOA, if interpreted to permit
MISO to send unreserved, uncompensated market flows over SPP’s transmission system
to reach the newly integrated MISO South region, is not just and reasonable. Moreover,
the JOA, so interpreted, is unduly discriminatory. No other entity’s use of the SPP
82

A copy of this agreement is included as Attachment B.

83

ITC Holdings Corp., 143 FERC ¶ 61,257, at P 129 (emphasis added).

32

transmission system, particularly in the volumes that MISO is using, avoids contributing
to the revenue requirements and operating costs of the SPP transmission system.
Fundamental cost-causation principles bear this out. Beneficiaries of a utility’s
facilities or services must shoulder the costs associated with such facilities and services;
the Commission may not approve a pricing structure that does not assess costs based on
the burdens imposed or benefits derived.84 Nor may the Commission, in discharging its
FPA responsibilities, lawfully grant an undue preference to one entity over another.85
Yet that is precisely what MISO would have the Commission do. Clearly, MISO
is benefiting from the use of SPP’s transmission facilities. Indeed, MISO is on record
acknowledging its planned transfers of at least 4,000 megawatts between MISO Midwest
and MISO South, using SPP capacity for the bulk of these transfers, in order to bring the
benefits of MISO’s market to Entergy.86 Every other customer desiring to use SPP’s
transmission system is required to execute a service agreement, secure a transmission
reservation, and schedule and pay for service. Because it is blatantly discriminatory to
have these requirements apply to every other user of the SPP system, while allowing
MISO’s free and unlimited use of SPP’s facilities, any continued reliance on section 5.2
84

Ill. Commerce Comm’n v. FERC, 576 F.3d 470, 476-77 (7th Cir. 2009).

85

See 16 U.S.C. § 824d(b).

86

See In The Matter Of A Show Cause Order Directed To Entergy Arkansas, Inc.
Regarding Its Continued Membership In The Current Entergy System Agreement,
Or Any Successor Agreement Thereto, And Regarding The Future Operation And
Control Of Its Transmission Assets, Docket No. 10-011-U, Transcript at 247
(Ark. PSC, Sept. 14, 2010) (“APSC Transcript”); Entergy-Regional State
Committee (“ERSC”) Meeting, Sept. 9, 2010, Transcript at 156, 187-89 (“ERSC
Transcript”). Excerpts from these transcripts were attached to the Motion to
Intervene and Protest of Southwest Power Pool, Inc., Docket No. EL11-34-000
(May 9, 2011) (“SPP EL11-34 Motion/Protest”), and are again attached hereto as
Attachment C. MISO’s representation of member benefits attributable to the use
of SPP’s system are described in the APSC Transcript at 250.

33

to support MISO’s post-integration power flows is unjust, unreasonable, and unduly
discriminatory.
In this regard, the MISO-Entergy integration constitutes significantly different
and changed circumstances from when the JOA was entered. Recall that, pre-integration,
there was not a single occasion in which either party made use of section 5.2. Now,
however, MISO is making use of SPP’s system on a regular and continuous basis to
transfer significant power flows between MISO Midwest and MISO South well in excess
of MISO’s 1,000 MW of interconnection capacity between those regions.87 Indeed, it
was anticipation of these significant, post-integration changes, and the planned regular
and expanded reliance on section 5.2, that prompted MISO to petition the Commission
for an order confirming MISO’s usage rights.88 The bottom line, as the Commission
itself found, is that the size and scope of the operational changes brought about by the
MISO-Entergy integration require that the terms of the JOA be revisited.89
If the Commission interprets the JOA to permit MISO’s flows between MISO
Midwest and MISO South, the contract path sharing provision unjustly and unreasonably
87

Reported flows have even exceeded the 2000 MW limit prescribed under the
Operational Reliability and Coordination Agreement (“ORCA”) accepted by the
Commission to address reliability issues associated with the MISO South
integration. Midcontinent Indep. Sys. Operator, Inc., 145 FERC ¶ 61,032 (2013).
The ORCA is not the subject of this complaint. That agreement does not address
the legal rights to use SPP’s or others’ transmission systems or compensation
therefore. See ORCA § 1(c).

88

MISO EL11-34 Petition at 3-4 (noting anticipated need to rely on SPP
transmission capacity for purposes of integrating Entergy as a MISO
transmission-owing member).

89

See supra notes 15-20 and accompanying text. As already noted, there is no
requirement that a seams agreement include a contract path sharing provision.
Sw. Power Pool, Inc., 140 FERC ¶ 61,199, at P 102 (“The Commission has []
accepted seams coordination arrangements that do not contain a contract path
capacity sharing provision . . . .”).

34

provides benefits only to MISO to accommodate its integration and operation of the vast
Entergy system. SPP receives no corresponding benefits from a contract path sharing
provision interpreted to allow the type of use MISO is making of the transmission system
because only MISO has weakly interconnected system loads. SPP has its own physical
capacity to serve all of its loads. MISO members get to use SPP’s system without
compensation, while SPP customers obtain no similar benefit. Continuation of contract
path sharing under this provision therefore is unjust and unreasonable.
Even when MISO and PJM included a contract path sharing provision in their
JOA, they specifically reserved on the issue of compensation regarding flows impacting
their respective systems. The transmittal letter accompanying the MISO/PJM JOA filing
made clear that neither MISO nor PJM waived any right to seek compensation for any
incremental flows crossing their systems.90 In that case, the parties reserved their rights
to seek compensation for “loop flow.” As discussed, here we are not dealing with
unintended, unavoidable “loop” flows, but rather intentional, unscheduled placement of
flows on another’s system. Adding a compensation mechanism for such flows is just and
reasonable.
B. Incorporation of a Service Agreement for Reservations and
Compensation for Flows Between MISO Midwest and MISO South is
Just and Reasonable and Not Unduly Discriminatory.
Despite heeding the Commission’s strong encouragement that the parties pursue
renegotiation of the JOA, both parties now recognize that they are at impasse.91
Accordingly, if the Commission declines to grant SPP’s Complaint, and determines that
90

Submittal of Midwest Independent Transmission System Operator, Inc. and PJM
Interconnection, L.L.C., Docket No. ER04-375-000, at 24-25 (Dec. 31, 2003).

91

See Monroe Aff. at Exh. No. 2.

35

the JOA authorizes MISO’s use of SPP’s system without compensation, then, pursuant to
section 206 of the FPA, SPP requests that the Commission amend the JOA to incorporate
the service agreement being filed contemporaneously with this Complaint to provide a
compensation mechanism.

A copy of the service agreement is appended hereto as

Attachment B.
Specifically, SPP proposes to embed the compensation mechanism in a non-firm
point-to-point transmission service agreement that contains terms and conditions
necessary to accommodate the unique circumstances under which MISO will take service
over the SPP system (referred to herein as the “MISO Service Agreement”). The
circumstances are unique in two basic ways. First, because the actual flows for which
MISO will compensate SPP under the service agreement will arise instantaneously in
real-time as MISO dispatches its market resources transferring energy between MISO
Midwest and MISO South, MISO will not schedule transfers of energy. Instead, in lieu
of scheduling service, real-time energy transfers in each direction between MISO
Midwest and MISO South will be monitored and calculated pursuant to the terms of the
MISO Service Agreement.92 Second, the service provided under the MISO Service
Agreement will facilitate energy transfers that cross SPP’s transmission system, but that
both originate and terminate in the MISO balancing authority area.

Therefore, the

standard scheduling protocols for point-to-point through-and-out transmission service

92

Attachment B, MISO Service Agreement § 4.0. While MISO will not be required
to schedule service, it will be required to reserve service. Id. Requiring MISO to
reserve service allows SPP to know ahead of time the amount of flows MISO
plans to place on SPP’s system so that SPP may ensure orderly use of its
transmission system.

36

used for transfers from one balancing authority area to another different balancing
authority area are unusable here.93
Because MISO will not schedule service, the MISO Service Agreement lays out
how real-time energy transfers in each direction between MISO Midwest and MISO
South will be determined. Specifically, SPP proposes that MISO monitor and provide to
SPP “the actual MISO Midwest region to and from the MISO South region real-time
intra-Balancing Authority Area generation to load (and also talking into account export
and import transactions) dispatch flow.”94 The “dispatch flow calculation will be based
on the difference between generation and load in each of the MISO Midwest and MISO
South regions with an adjustment for interchange transactions with the non-MISO
Balancing Authority Areas interconnected to the regions.”95
The dispatch flow methodology proposed in the MISO Service Agreement is just
and reasonable as it is essentially the same methodology for determining dispatch flow
between MISO Midwest and MISO South that MISO proposed in the ORCA, and the
Commission accepted, in Midcontinent Independent System Operator, Inc.96 The words
used in the MISO Service Agreement to describe the Dispatch Flow calculation are
virtually the same as those that are used in the ORCA.97 Because MISO already is

93

See PJM Interconnection, L.L.C., 132 FERC ¶ 61,221 (2010) (accepting nonconforming service agreements for unscheduled energy flows that originated in
one RTO, flowed through another RTO’s balancing authority area, and then back
into the originating RTO’s balancing authority area).

94

Attachment B, MISO Service Agreement § 6.0(A).

95

Id. § 6.0(B).

96

145 FERC ¶ 61,032 (2013).

97

Compare Attachment B, MISO Service Agreement §§ 6.0(A) and 6.0(B) and
ORCA § 2. The MISO Service Agreement also sets forth the assumptions to be
(Cont’d . . . )
37

making the same dispatch flow calculations under the ORCA, the MISO Service
Agreement does not require MISO to make and provide any calculations that it has not
already demonstrated it is capable of making and providing.
The MISO Service Agreement explains how the Assessable Flows (the flows for
which MISO will be charged under the agreement) are determined.98 SPP will identify
when transfers of energy in each direction between MISO Midwest and MISO South
exceed MISO’s Base Transmission Capacity. For each hour, the average amount of
energy transferred in each direction between MISO Midwest and MISO South that
exceeds MISO’s Base Transmission Capacity as expressed in megawatts, shall constitute
the Assessable Flows for the hour in each direction.99
Assessable Flows that exceed MISO’s “Base Transmission Capacity”100 will be
subject to the charges under the MISO Service Agreement. Currently, MISO’s Base
Transmission Capacity is the direct 1,000 MW physical path that connects the MISO
Midwest and MISO South regions. As earlier discussed, when MISO dispatches 1,000
MW or less between MISO Midwest and MISO South, any resulting flows on SPP’s

( . . . cont’d)
used in the Dispatch Flow calculation. See Attachment B, MISO Service
Agreement § 6.0(C). While the assumptions are not specifically included in the
ORCA, the parties to the ORCA have adopted these assumptions and they are
currently used by MISO in the ORCA Dispatch Flow calculations.
98

Id., MISO Service Agreement § 7.0.

99

Id.

100

“Base Transmission Capacity” shall be determined “by summing [MISO’s] right
to transfer energy pursuant to either (i) Transmission Customer’s capacity of a
direct physical connection that is in service between MISO-Midwest and MISOSouth; or (ii) a reservation of a specified amount of Point-To-Point Transmission
Service on a Transmission Provider’s OASIS enabling transfers between MISOMidwest and MISO-South.” Id., MISO Service Agreement § 5.0(B).

38

system properly could be considered loop flows for which MISO should not be
charged.101 However, when MISO dispatches more than 1,000 MW between MISO
Midwest and MISO South, it intentionally is placing unscheduled flows on systems other
than its own for which it must pay and reserve transmission service to accommodate the
use of SPP’s system, like any other user of SPP’s system.102
The MISO Service Agreement specifies that the rate MISO will pay for such
service will be the rate set forth in Schedule 8 (Non-Firm Point-To-Point Transmission
Service) of the SPP Tariff and all other SPP Tariff specified charges for non-firm pointto-point service. The MISO Service Agreement further specifies that the zonal rates that
will apply to service under the agreement will be the rates in the zones interconnected
with MISO Midwest and MISO South with the lowest zonal rates. Using the zones with
the lowest rates is consistent with section 1 of Schedule 8 of the SPP Tariff, which
provides that for non-firm point-to-point transmission service where both the generation
source and the load are located outside of the SPP Region, the lowest zonal rate will
apply where there is more than one zone interconnected to the balancing authority area
external to the SPP Region.103
The MISO Service Agreement also addresses the calculation of losses.

It

specifies that SPP will use the Point of Receipt (“POR”) of Ameren and Point of Delivery
(“POD”) of Entergy for service in the direction of MISO Midwest to MISO South and
101

See supra discussion at Section III.B.

102

As noted earlier, to the extent MISO reserves transmission service on other
neighboring systems to send market flows between its two regions, SPP will make
a corresponding reduction in the SPP Tariff assessments. In aggregate, MISO
must secure reservations on neighboring systems sufficient to cover its excess
flows – i.e., flows above MISO’s interconnection path capacity of 1,000 MWs.

103

See SPP Tariff, Schedule 8 § 1.

39

POR of Entergy and POD of Ameren for service in the direction of MISO South to MISO
Midwest.104 Ordinarily point-to-point service is scheduled with a POR and POD, but, as
noted, here the service will not be scheduled but rather simply will be calculated in realtime; therefore, to determine losses, a specified POR and POD are needed and the
Entergy and Ameren points best correspond to the service being provided.
Finally, the MISO Service Agreement specifies that Assessable Flows in each
direction in excess of transmission customer’s OASIS reservation(s) will be subject to
penalties under section 14.5 of the SPP Tariff.105

While under the MISO Service

Agreement, MISO will not schedule service, like all other customers it still will need to
reserve the service it intends to use. If it does not, charging penalties for unreserved use
is fully consistent with Commission policy under Order Nos. 890 and 890-A.106
MISO should not be allowed unfettered unauthorized use of SPP’s system to
facilitate its transfer of energy to reach internal MISO load without compensating SPP for
such usage. Therefore, if the Commission finds that the JOA currently authorizes MISO
to use SPP’s system without compensation as MISO claims, then, pursuant to section 206
of the FPA, SPP requests that the Commission find that the JOA is unjust and
unreasonable and further find that an amendment to the JOA to incorporate the MISO
Service Agreement is just and reasonable and not unduly discriminatory. The MISO
Service Agreement will provide an appropriate mechanism for MISO to take and pay for
transmission service to integrate the Entergy companies and is just and reasonable.

104

Attachment B, MISO Service Agreement § 9.0.

105

Id., MISO Service Agreement § 8.0. Section 14.5 of the Tariff specifies the
penalties that apply to all non-firm point-to-point transmission customers.

106

See supra discussion at Section III.B.

40

Pending its investigation in this docket, the Commission should accept the MISO
Service Agreement, subject to refund, and with a refund effective date of the day after
this filing.107
V.

MOTION TO CONSOLIDATE
PROCEDURES

AND

REQUEST

FOR

HEARING

The Commission should consolidate: (1) this Complaint; (2) the remand of SPP v.
FERC; and (3) the proceedings concerning the proposed MISO Service Agreement for
MISO to reserve and take service on SPP’s system. Each of these proceedings concerns
the same underlying issue – the interpretation of JOA section 5.2. Resolution of this
issue in a single proceeding would “promote efficient use of the resources of the
Commission and the parties.”108 Accordingly, given the common questions of law and
fact, it would be in the public interest to consolidate these proceedings and hold
settlement and hearing procedures to take evidence, as directed by the court in SPP v.
FERC.109
In this regard, the Commission should set for hearing, and evaluate the extrinsic
evidence regarding, the parties’ intentions in using the term “contract path” and the
commercial context in which the JOA was negotiated. The Commission must consider
the testimony of the parties’ negotiating principals as well as “all relevant course of
dealing and usage of trade evidence.”110 Evidence regarding the parties’ negotiating

107

16 U.S.C. § 824e(b).

108

Big West Oil Co. v. Frontier Pipeline Co., 95 FERC ¶ 61,229, at 61,794 (2001).

109

Columbus S. Power Co., 45 FERC ¶ 61,152, at 61,463 (1988).

110

Chase Manhattan Bank v. First Marion Bank, 437 F.2d 1040, 1048 (5th Cir.
1971). See also Colo. Interstate Gas Co. v. FERC, 599 F.3d 698, 703 (D.C. Cir.
2010) (“Relying on the trade usage of the term is appropriate, as construing terms
(Cont’d . . . )
41

intentions is highly probative when considering the meaning of an ambiguous contract,111
and evidence of course of dealing and usage of trade is useful “to permit analysis of the
written agreement in the proper commercial setting.”112

A proper and thorough

investigation of these matters requires an on-the-record evidentiary hearing so that the
parties’ positions can be explored through discovery and the credibility of witnesses can
be examined, particularly with regard to testimony concerning contractual intent and
course of conduct.113
Notwithstanding the foregoing, the Commission may consider referring the
disputed issues to settlement judge proceedings. Under this approach, which would entail
holding formal hearing procedures in abeyance, all affected parties would be provided an
opportunity to participate. The Commission has clearly indicated that the JOA must be
re-examined and has signaled a strong preference for a negotiated resolution. While it is
true that MISO and SPP have been unable to resolve their differences through
negotiation, the vetting of positions before an impartial settlement judge, in a structured,
neutral environment, could promote more productive exchanges between the parties.

( . . . cont’d)
in light of their commonly understood meaning is a hallmark of reasonable
interpretation.”) (citations omitted).
111

See Sw. Elec. Coop. v. FERC, 347 F.3d 975, 983 (D.C. Cir. 2003); see also Cajun
Elec. Power Coop. v. FERC, 924 F.2d 1132, 1137 (D.C. Cir. 1991).

112

Chase Manhattan Bank, 437 F.2d at 1047. See also Colo. Interstate Gas Co., 599
F.3d at 703.

113

See, e.g., Doswell Ltd. P’ship, 113 FERC ¶ 61,003 (2005) (consideration of
matters involving contractual intent necessitates initiation of formal evidentiary
hearings).

42

VI.

REQUEST FOR FAST TRACK TREATMENT
Given the significant intertwining of issues requiring prompt attention, SPP

requests that the Commission consider this Complaint under its fast track procedures, 18
C.F.R. § 385.206(h). SPP requests fast track treatment to enable the Commission to issue
an order setting this Complaint for hearing contemporaneously with an order accepting,
subject to refund, the transmission service agreement under which MISO may properly
reserve and take service on SPP’s system.

Further, MISO already is using SPP’s

transmission system based on its unilateral interpretation of the JOA and has refused
SPP’s request that it cease its unlawful dispatch. Fairness to all others that use and pay
for the use of the SPP transmission system compels a need for fast track processing of
this complaint.
VII.

RULE 206 REQUIREMENTS
A.

Rule 206(b)(1): Clearly identify the action or inaction which is alleged
to violate applicable statutory standards or regulatory requirements;

As discussed, MISO is intentionally and regularly violating SPP’s Tariff and the
JOA through its unauthorized and unreserved use of SPP’s transmission system. If the
Commission determines that MISO’s actions do not violate the SPP Tariff and JOA, then
the JOA is unjust, unreasonable and unduly discriminatory by failing to provide SPP
compensation for the use of SPP’s system.
B.

Rule 206(b)(2): Explain how the action or inaction violates applicable
statutory standards or regulatory requirements;

The legal bases for this Complaint are set forth in detail in sections III and IV
above.

43

C.

Rule 206(b)(3): Set forth the business, commercial, economic or other
issues presented by the action or inaction as such relate to or affect
the complainant;

MISO’s failure to compensate SPP for use of SPP’s transmission system on terms
and conditions comparable to service taken by other users of the SPP system unjustly
deprives SPP (and its transmission owners) of transmission revenues and provides MISO
with an undue preference and advantage over other entities using SPP’s transmission
system.
D.

Rule 206(b)(4): Make a good faith effort to quantify the financial
impact or burden (if any) created for the complainant as a result of
the action or inaction;

SPP complies with this requirement by measuring the energy transfers resulting
from MISO’s improper action and assessing penalties for MISO’s unreserved use of
SPP’s transmission system.
E.

Rule 206(b)(5): Indicate the practical, operational, or other
nonfinancial impacts imposed as a result of the action or inaction,
including, where applicable, the environmental, safety or reliability
impacts of the action or inaction;

As discussed in Section III.C, MISO’s unauthorized and unreserved use of SPP’s
transmission system prevents SPP from orderly use of its transmission system.
F.

Rule 206(b)(6): State whether the issues presented are pending in an
existing Commission proceeding or a proceeding in any other forum
in which the complainant is a party, and if so, provide an explanation
why timely resolution cannot be achieved in that forum;

The issues presented in this Complaint are also at the heart of the proceedings on
remand of SPP v. FERC, in Docket No. EL11-34, and provide the foundation for the
unexecuted MISO Service Agreement that SPP is filing contemporaneously with this
Complaint in Docket No. ER14-1174-000, which requires MISO to reserve transmission
capacity and compensate SPP for the use of SPP transmission system.

44

G.

Rule 206(b)(7): State the specific relief or remedy requested, including
any request for stay or extension of time, and the basis for that relief;

SPP requests that the Commission find that JOA section 5.2 does not permit
MISO to use SPP’s transmission system to reach internal MISO load without
compensating SPP for such usage. SPP recognizes that the Commission will initiate
formal evidentiary hearings to ascertain the intentions of the parties. Despite failed
attempts to reach a negotiated resolution, SPP is amenable to engaging in formal
Commission settlement procedures while the hearings are held in abeyance.
H.

Rule 206(b)(8): Include all documents that support the facts in the
complaint in possession of, or otherwise attainable by, the
complainant, including, but not limited to, contracts and affidavits;

See attachments and exhibits.
I.

Rule 206(b)(9): State whether the Enforcement Hotline, Dispute
Resolution Service, tariff-based dispute resolution mechanisms, or
other informal dispute resolution procedures were used, or why these
procedures were not used;

As discussed, SPP attempted to engage MISO in negotiations regarding
compensation for MISO’s use of SPP’s transmission system. MISO rejected all SPP
proposals and did not offer a counterproposal. Negotiations then reached impasse. In the
circumstances, the Commission’s various informal dispute resolution services would not
assist in remedying the situation, but SPP believes settlement judge procedures could be
helpful.
J.

Rule 206(b)(10): State whether the issues presented are pending in an
existing Commission proceeding or a proceeding in any other forum
in which the complainant is a party, and if so, provide an explanation
why timely resolution cannot be achieved in that forum; and

Many of the issues presented in this Complaint are present before the Commission
on remand of SPP v. FERC in Docket No. EL11-34.

SPP is requesting that the

Commission institute hearing procedures on remand, as directed by the court, and
45

consolidate that proceeding with this Complaint and the unexecuted MISO Service
Agreement filed in Docket No. ER14-1174-000.
K.

Rule 206(b)(11): Explain with respect to requests for Fast Track
processing pursuant to section 385.206(h), why the standard processes
will not be adequate for expeditiously resolving the complaint.

Given that the issues presented in this Complaint are so intertwined with the
issues providing a foundation for the unexecuted MISO Service Agreement filed under
section 205 of the Federal Power Act in Docket No. ER14-1174-000, SPP requests fast
track treatment so that the Commission may issue an order setting this Complaint for
hearing contemporaneously with an order accepting, subject to refund, the transmission
service agreement under which MISO may properly reserve and take service on SPP’s
system. Standard processes also would not timely resolve MISO’s uncompensated and
unauthorized use of SPP’s transmission system, which commenced unilaterally by MISO
on December 19, 2013.
VIII. COMMUNICATIONS
All correspondence and other communications regarding this Complaint should
be directed to:
Barry S. Spector*
Jeffrey G. DiSciullo
Wright & Talisman, P.C.
1200 G Street, N.W., Suite 600
Washington, DC 20005-3802
Telephone: (202) 393-1200
Fax: (202) 393-1240
[email protected]
[email protected]

Michael B. Riley*
Associate General Counsel
Nicole Wagner
Manager, Regulatory Policy
Southwest Power Pool, Inc.
415 North McKinley, #140 Plaza West
Little Rock, AR 72205
Telephone: 501-688-3372
501-688-1642
Fax:
501-482-2022
[email protected]
[email protected]

* Designated for inclusion on the Commission’s official service list for this docket.

46

IX.

CONCLUSION
For the foregoing reasons, the Commission should grant the Complaint in its

entirety and consolidate the Complaint with the proceeding on remand of SPP v. FERC
and

the

proceeding

concerning

the

unexecuted

service

agreement

contemporaneously with this Complaint in Docket No. ER14-1174-000.
Respectfully submitted,
/s/ Barry S. Spector
Barry S. Spector
Wright & Talisman, P.C.
1200 G Street, N.W., Suite 600
Washington, DC 20005-3802
Telephone: (202) 393-1200
Fax: (202) 393-1240
[email protected]

Counsel for
Southwest Power Pool, Inc.

January 28, 2014

47

filed

UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Southwest Power Pool, Inc.,
Complainants
v.
Midcontinent Independent System
Operator, Inc.,
Respondents

Docket No. EL14-_

NOTICE OF COMPLAINT
(

)

Take notice that on January 28, 2014, Southwest Power Pool, Inc. (“SPP”) filed a
formal complaint against Midcontinent Independent System Operator, Inc. (“MISO”)
pursuant to sections 206 and 306 of the Federal Power Act alleging that MISO is
violating the Joint Operating Agreement (“JOA”) between SPP and MISO and SPP’s
Open Access Transmission Tariff. Alternatively, SPP requests that the Commission find
that the JOA is not longer just, reasonable, and not unduly discriminatory to the extent it
does not provide a mechanism by which SPP may assess charges for MISO’s use of the
SPP transmission system.
SPP certifies that copies of the complaint were served on the contacts for
Midcontinent Independent System Operator, Inc. as listed on the Commission’s list of
Corporate Officials.
Any person desiring to intervene or to protest this filing must file in accordance
with Rules 211 and 214 of the Commission’s Rules of Practice and Procedure (18 C.F.R.
385.211 and 385.214). Protests will be considered by the Commission in determining the
appropriate action to be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of intervention or
motion to intervene, as appropriate. The Respondent’s answer and all interventions, or
protests must be filed on or before the comment date. The Respondent’s answer, motions
to intervene, and protests must be served on the Complainants.
The Commission encourages electronic submission of protests and interventions
in lieu of paper using the “eFiling” link at http://www.ferc.gov. Persons unable to file
electronically should submit an original and 14 copies of the protest or intervention to the
Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426.
This filing is accessible on-line at http://www.ferc.gov, using the “eLibrary” link
and is available for review in the Commission’s Public Reference Room in Washington,
D.C. There is an “eSubscription” link on the web site that enables subscribers to receive
email notification when a document is added to a subscribed docket(s). For assistance

with any FERC Online service, please email [email protected], or call
(866) 208-3676 (toll free). For TTY, call (202) 502-8659.
Comment Date: 5:00 pm Eastern Time on (insert date).
Kimberly D. Bose
Secretary

49

Attachments

Attachment A

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Southwest Power Pool, Inc.

)

Docket No. _____

AFFIDAVIT OF CARL A. MONROE
ON BEHALF OF
SOUTHWEST POWER POOL, INC.
I.

BACKGROUND AND QUALIFICATIONS
1.

My name is Carl A. Monroe. I am employed by Southwest Power Pool,

Inc. (“SPP”) as Executive Vice President and Chief Operating Officer. My business
address is 201 Worthen Drive, Little Rock, AR 72223.
2.

I am responsible for the implementation and management of a regional

operations center (including oversight of engineering, information technology, and
security operation); for regional transmission tariff administration for the SPP Open
Access Transmission Tariff; for transmission planning; and for the development,
analysis, and operation of all markets.

Among other things, these duties include

responsibility for the negotiation and implementation of seams agreements with
neighboring utility systems, including the Joint Operating Agreement (“JOA”) between
the Midcontinent Independent System Operator, Inc. (“MISO”) and SPP. I was actively
involved in the negotiation of the JOA between MISO and SPP.
3.

I earned a Bachelor’s Degree in Electrical Engineering from Auburn

University. Prior to being named Executive Vice President and COO of SPP, I served as
SPP’s Executive Vice President of Operations and, before that, as Director of Operations

and Manager of Information Technology. I am a professional engineer registered in the
State of Missouri.
4.

The purpose of my affidavit is to provide information relevant to the

complaint filed by SPP in this proceeding seeking compensation for MISO’s
unauthorized use of SPP’s transmission system. I will explain, contrary to MISO’s stated
position, that section 5.2 of the JOA provides no authority for these flows.
II.

ACCOUNT OF THE SECTION 5.2 DISPUTE
5.

The background of the section 5.2 dispute is set forth in SPP’s complaint.

As relevant here, MISO, in 2011, petitioned the Federal Energy Regulatory Commission
(“Commission”) for a declaratory order confirming MISO’s right to rely on section 5.2 of
the JOA to integrate anticipated new load resulting from the planned integration of
Entergy into MISO. The Commission granted MISO’s petition, but recognized the need
for the JOA to be renegotiated in light of Entergy’s planned integration. The U.S. Court
of Appeals for the D.C. Circuit has since vacated and remanded the Commission’s orders.
On December 19, 2013, the Entergy operating companies were integrated into MISO as
the newly-constituted “MISO South” region. Since that time, MISO has been dispatching
its market to serve the incremental load in MISO South by imposing significant power
flows on SPP’s transmission system.

Notwithstanding the court’s decision, MISO

maintains that these flows are authorized pursuant to section 5.2, without limitation,
without compensation to SPP, without any requirement of MISO to secure a reservation,
and without the need to enter into a service agreement with SPP.

2

III.

NEGOTIATION OF THE JOA AND THE MEANING OF SECTION 5.2
6.

As I previously explained in the affidavit that accompanied SPP’s Answer

to the MISO Petition for Declaratory Order, MISO is interconnected with Entergy only
via an Interchange Agreement governing the shared use of a single transmission line and
a set of transformers between the systems of Ameren Corporation (“Ameren”), a MISO
transmission owner, Associated Electric Cooperative, Inc. (“AECI”), and Entergy. As a
result solely of this Interchange Agreement, MISO currently has the right to use 1,000
megawatts of the capacity of these facilities to reach Entergy. Effective December 19,
2013, MISO integrated the approximately 27,000 megawatts of load now in MISO South,
making use of the SPP system – and its interconnections with Entergy – in a manner
never contemplated by SPP.
7.

At the time of the execution of the JOA, SPP had no intention or idea

whatsoever of allowing MISO to integrate a distant, large utility system like Entergy’s
using SPP’s transmission capacity and interconnections to that distant system. In fact, at
the time of the execution of the JOA, MISO had only approximately 1,600 megawatts of
interconnections with SPP. The current, approximately 4,900 megawatts of additional
capacity between MISO and SPP exists only because of the subsequent addition of
Nebraska utilities to SPP and the addition of MidAmerican Energy to MISO, which
occurred years after the JOA was executed. SPP could not have expected thousands of
megawatts of energy from MISO market flows to traverse the SPP system based on the
signing of the JOA, when there was only a limited 1,600 megawatt interconnection with
MISO at the time. Equally obvious is that neither party could have had in mind the
addition of the approximately 27,000 megawatt MISO South system at the time of the
execution of the JOA.
3

8.

MISO cites to section 5.2 of the JOA as permitting the use of the SPP

system to integrate Entergy. It provides:
If the Parties have contract paths to the same entity, the
combined contract path capacity will be made available for
use by both Parties. This will not create new contract paths
for either Party that did not previously exist. SPP will not
be able to deal directly with companies with which it does
not physically or contractually interconnect and the
Midwest ISO will not be able to deal directly with
companies with which it does not physically or
contractually interconnect.
9.

I recall internal discussions at SPP about the language of section 5.2, and

the import of the term “contract paths to the same entity.” Based on those discussions,
SPP understood that “contract paths” from MISO and SPP “to other entities” was
intended to describe the ability of either party to conduct point-to-point transmission
transactions to and from third-party systems that were not a part of either MISO or SPP.
In other words, we viewed this provision as enabling the parties to provide transmission
service to third-party systems based on the combined contract path limits of the MISO
and SPP systems to that third-party system, rather than the individual contract path limit
of a party. We certainly had no idea that MISO understood, and would later claim, that
the provision could serve as the basis of allowing MISO unlimited, unreserved use of
SPP’s transmission capacity to operate a market including both MISO’s existing system
and a large new member like Entergy, without compensation, without reserved capacity,
and without a service agreement.
10.

In the litigation that ensued in Docket No. EL11-34, MISO argued that its

interpretation of section 5.2 was consistent with how MISO and PJM implemented a
similar provision of the JOA between MISO and PJM. I cannot speak to that agreement.
SPP was not a party to the negotiations between MISO and PJM, nor was it involved in
4

any decisions between MISO and PJM about how to implement their agreement. Having
not been privy to those discussions, they did not contribute to SPP’s understanding of
section 5.2.
11.

I was also made aware, in the Docket No. EL11-34 proceedings, of

MISO’s reference to discussions between MISO and SPP regarding the possible use of
section 5.2 following an ice storm in early 2009 that caused an outage on the interface on
which MISO holds its 1,000 MWs of capacity pursuant to the Interchange Agreement
described above. I should emphasize that these discussions concerned the possible future
invocation of section 5.2 under theoretical assumptions and that no actual prior use of
section 5.2 ever took place. Moreover, the theoretical arrangements discussed at the time
involved potential use of section 5.2 to deliver energy to Entergy Arkansas (a third-party
entity system at the time), consistent with SPP’s understanding of the import of section
5.2. The theoretical arrangements did not involve, and could not have involved, use of
shared contract path capacity to reach MISO’s designated internal load (Ameren)
connected to the Entergy Arkansas system, inasmuch as SPP’s contract path terminated at
the interconnection with Entergy Arkansas; how the energy might get delivered to the
MISO load would necessarily be under other arrangements by and between MISO and
Entergy Arkansas and not pursuant to section 5.2.
12.

Although SPP has seams agreements with two other neighboring systems,

it has no arrangements with any of its neighbors to use each other’s transmission capacity
without compensation.

5

IV.

ATTEMPTS TO RENEGOTIATE
UNAUTHORIZED USE
13.

THE JOA

AND NOTICE

OF

On several occasions the Commission has instructed SPP and MISO to

renegotiate the JOA in the wake of the MISO-Entergy integration.

SPP’s multiple

attempts to engage MISO in such renegotiations have failed and the parties agree that
they are at impasse.
14.

Following the court’s vacating of the Commission’s interpretation of

section 5.2, and in anticipation of the MISO-Entergy integration becoming effective
December 19, 2013, SPP contacted MISO seeking assurance that MISO would refrain
from any flows of energy between the MISO Midwest region and the new MISO South
region in excess of MISO’s 1,000 MW contractual tie capacity between the two regions.1
SPP also informed MISO that in the event MISO’s flows between the regions exceeded
1,000 MW, “SPP will consider MISO to have made unauthorized, unreserved use of the
SPP transmission system subject to all applicable SPP tariff charges and penalties.”2 In a
letter dated December 12, 2013, MISO replied by indicating that it would not provide the
assurance requested by SPP and that it did not agree that its market dispatch was subject
to the 1,000 MW limitation claimed by SPP.3

MISO recognized that “[a] dispute

continues to exist regarding this issue” and that “both parties acknowledged that we had
bargained to impasse.”4

1

See Exh. No. 1 (SPP December 9, 2013 Letter).

2

See id.

3

See Exh. No. 2 (MISO December 12, 2013 Letter)

4

See id.

6

V.

POST-INTEGRATION FLOWS ON SPP
14.

Immediately following the December 19, 2013 integration of Entergy,

MISO began sending energy flows between MISO Midwest (i.e., the original MISO
region, pre-Entergy integration) and MISO South, in both directions, in excess of the
1,000 MW direct physical connection that MISO has between those regions. Despite
requests to curb these flows from several affected systems, including SPP, MISO
continues to dispatch its system at levels far exceeding the 1,000 MW of its direct
physical connection.

The level of these intentional, unscheduled flows are easily

verified, since they are reported to SPP by MISO in accordance with the terms of
Operational Reliability and Coordination Agreement (“ORCA”) among MISO, SPP,
AECI, Louisville Gas and Electric Company; Kentucky Utilities Company; PowerSouth
Energy Cooperative; Alabama Power, Georgia Power Company, Gulf Power Company
and Mississippi Power Company by and through their agent Southern Company Services,
Inc.; and Tennessee Valley Authority (“TVA”), which the Commission has accepted.
Midcontinent Indep. Sys. Operator, Inc., 145 FERC ¶ 61,032 (2013). A graph showing
the peak usage by MISO each day for the period December 19, 2013 through January 26,
2014, is attached as Exh. No. 4.
15.

Inasmuch as MISO has failed to reserve capacity for these intentional,

unscheduled flows, and because no authority exists under the JOA permitting these flows,
SPP has invoiced MISO for the unauthorized, unreserved use of the SPP transmission
system subject to all applicable SPP tariff charges and penalties. A copy of that invoice
is attached as Exh. No. 3. To date, MISO has refused to pay the invoice.
16.

This concludes my affidavit.

7

Exhibit No. 1

Exhibit No. 1
Page 1 of 1

Exhibit No. 2

Exhibit No. 2
Page 1 of 2

MIS@~~
Richard Doying
Midcontinent ISO
P.O. Box 4202
Carmel, Indiana 46082-4202
December 12,2013
Carl Monroe
Executive Vice President and COO
Southwest Power Pool
201 Worthen Drive,
Little Rock, AR 72223-4936
Dear Carl:
I am responding to your letter of December 9,2013.
MISO cannot provide the assurance you request to limit MISO's directional market flows under
the Joint Operating Agreement to 1,000 MW. It is not clear why you believe the Court of
Appeals decision, vacating FERC's 2011 order, leads to this result. The court avoided ruling on
the merits of either RTO's substantive position, and vacated the order on procedural grounds
only.
As our respective attorneys agreed during last Friday's conference call, the court merely left the
parties in their original position with regard to the scope of Section 5.2 capacity sharing under
our JOA. A dispute continues to exist regarding this issue and, although vacated if and when the
court's opinion takes effect at a future date, FERC initially agreed that MISO's interpretation is
correct. Your letter appears to suggest that SPP can impose a contrary interpretation unilaterally
before FERC has even had an opportunity to consider the matter. We doubt that FERC would
consider that position an appropriate use of the procedures that apply to this situation. If SPP
wishes to request that FERC act on the remand once the court order takes effect, you have every
right to do, but you have no right to impose your own interpretation - which conflicts with
FERC's initial view - unilaterally on MISO and affected customers.
With regard to the Operational Reliability Coordination Agreement (ORCA), your letter
selectively omits complementary provisions with regard to each of our rights under the JOA the ORCA provides that neither MISO nor SPP's rights are expanded or restricted by the ORCA,
and that the ORCA cannot be used to support an argument regarding our JOA dispute, as you
have done in your letter. The operative ORCA language is as follows:
Nothing in this Agreement shall be construed as diminishing or enhancing
MISO's or SPP's rights to flow energy on the other's system pursuant to the JOA,
or shall be deemed to amend or otherwise modify the JOA. Nothing in this

P.O. Box 4202
Carmel, Indiana 46082-4202

1125 Energy Park Drive
St. Paul, Minnesota 55108

www.misoenergy.org
317-249-5400

Exhibit No. 2
Page 2 of 2

~'~
MIS ~.~
•••
Agreement shall be deemed a concession or admission by SPP or MISO regarding
any issue concerning the lOA. This Agreement shall not be used by MISO or SPP
as evidence regarding, or to support or contest the validity of any issue pending in
the D.C. Circuit Court of Appeals in Case No. 12-1158, any remand proceeding
or other derivative FERC proceeding.
MISO's response last Friday to your demand that MISO limit its market dispatch had nothing to
do with the ORCA and is not based on the tenns and conditions ofthe 2013 ORCA, but is based
solely on the tenns of the lOA, an agreement between the two RTOs dating to 2004.
While MISO is always willing and prepared to meet with SPP to discuss lOA matters, the
demand you continue to make for loop flow compensation under the lOA was rejected during
our call for several reasons. Our rejection was based on our consumer benefits and equity
principles (a copy of the MISO document we discussed on our call is enclosed). The existing
lOA congestion management process and the impending market-to-market congestion
management process make the type of compensation you seek unnecessary, inefficient and
inequitable unless MISO's flows impair SPP's ability to use its transmission system-the very
outcome the lOA is designed to avoid. Your ongoing demand for compensation is not tied to
economic harm, nor does it square with the previous FERC orders we have cited that explain the
many benefits of operating interconnected transmission networks.
Even though both parties acknowledged that we had bargained to impasse, at the conclusion of
our call I invited SPP to provide its own version of equity principles to justify a reciprocal
compensation system. I am of course discouraged that your letter contained no such principles,
but MISO is still prepared to discuss that issue and any others you think would be beneficial to
our respective transmission customers and the ultimate retail customers they serve.

Thank you.
Sincerely

';:/•.A/ ~""
.Richard
~ - ::=>
Doying
Enclosure: (1)

P.O. Box 4202
Carmel, Indiana 46082-4202

1125 Energy Park Drive
8t. Paul, Minnesota 55108

www.misoenergy.org
317 -249-5400

Exhibit No. 3

Exhibit No. 3
Page 1 of 2

Exhibit No. 3
Page 2 of 2
TRANSMISSION CHARGES FOR MISO USAGE FOR DECEMBER 2013

SCHEDULE 1

OPERATING DAY
12/18/2013
12/19/2013
12/20/2013
12/21/2013
12/22/2013
12/23/2013
12/24/2013
12/25/2013
12/26/2013
12/27/2013
12/28/2013
12/29/2013
12/30/2013
12/31/2013

DIRECTION
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M
M to South
South to M

BILLABLE MW
0
0
1,277
0
1,087
0
1,391
0
1,599
0
1,296
0
1,302
0
1,440
0
1,237
357
1,800
0
1,413
0
1,466
0
1,122
0
1,254
0

MONTHLY RATE
DAILY 
COMPONENT OF 
RATE
MW/HR VALUES
0
0
12,377
0
8,023
0
16,229
0
23,530
0
19,837
0
17,177
0
23,660
0
11,598
357
24,175
0
24,220
0
17,109
0
6,289
0
20,139
0

79.3391

BILLABLE MW VALUES EXCEED 1000 MW ALLOWANCE
SCHEDULE 11  SCHEDULE 11 
SCHEDULE 1A
SCHEDULE 8
REGIONAL
ZONAL
1024
0.315
865
551.4046
307.4219
33.03225806

2.559325806

0.315

$                 ‐
$                 ‐
$       3,268.26
$                 ‐
$       2,781.99
$                 ‐
$       3,560.02
$                 ‐
$       4,092.36
$                 ‐
$       3,316.89
$                 ‐
$       3,332.24
$                 ‐
$       3,685.43
$                 ‐
$       3,165.89
$           913.68
$       4,606.79
$                 ‐
$       3,616.33
$                 ‐
$       3,751.97
$                 ‐
$       2,871.56
$                 ‐
$       3,209.39
$                 ‐

$                      ‐
$                      ‐
$             3,898.76
$                      ‐
$             2,527.25
$                      ‐
$             5,112.14
$                      ‐
$             7,411.95
$                      ‐
$             6,248.66
$                      ‐
$             5,410.76
$                      ‐
$             7,452.90
$                      ‐
$             3,653.37
$                112.46
$             7,615.13
$                      ‐
$             7,629.30
$                      ‐
$             5,389.34
$                      ‐
$             1,981.04
$                      ‐
$             6,343.79
$                      ‐

27.903
17.78724516
DAILY CHARGES PER SCHEDULE
$                         ‐
$                 ‐
$                         ‐
$                 ‐
$             42,182.19 $    22,714.31
$                         ‐
$                 ‐
$             35,906.06 $    19,334.74
$                         ‐
$                 ‐
$             45,947.87 $    24,742.06
$                         ‐
$                 ‐
$             52,818.58 $    28,441.81
$                         ‐
$                 ‐
$             42,809.81 $    23,052.27
$                         ‐
$                 ‐
$             43,008.00 $    23,158.99
$                         ‐
$                 ‐
$             47,566.45 $    25,613.63
$                         ‐
$                 ‐
$             40,860.90 $    22,002.82
$               9,961.37 $       6,350.05
$             59,458.06 $    32,017.04
$                         ‐
$                 ‐
$             46,674.58 $    25,133.38
$                         ‐
$                 ‐
$             48,425.29 $    26,076.10
$                         ‐
$                 ‐
$             37,062.19 $    19,957.29
$                         ‐
$                 ‐
$             41,422.45 $    22,305.21
$                         ‐
$                 ‐

SCHEDULE 12
0.06397666

9.916835484

0.06397666

TOTAL CHARGE

$                        ‐
$                        ‐
$            12,663.80
$                        ‐
$            10,779.60
$                        ‐
$            13,794.32
$                        ‐
$            15,857.02
$                        ‐
$            12,852.22
$                        ‐
$            12,911.72
$                        ‐
$            14,280.24
$                        ‐
$            12,267.13
$              3,540.31
$            17,850.30
$                        ‐
$            14,012.49
$                        ‐
$            14,538.08
$                        ‐
$            11,126.69
$                        ‐
$            12,435.71
$                        ‐

$                  ‐
$                  ‐
$           791.84
$                  ‐
$           513.28
$                  ‐
$        1,038.28
$                  ‐
$        1,505.37
$                  ‐
$        1,269.11
$                  ‐
$        1,098.93
$                  ‐
$        1,513.69
$                  ‐
$           742.00
$              22.84
$        1,546.64
$                  ‐
$        1,549.51
$                  ‐
$        1,094.58
$                  ‐
$           402.35
$                  ‐
$        1,288.43
$                  ‐

$                     ‐
$                     ‐
$         85,519.16
$                     ‐
$         71,842.92
$                     ‐
$         94,194.68
$                     ‐
$      110,127.09
$                     ‐
$         89,548.94
$                     ‐
$         88,920.64
$                     ‐
$      100,112.34
$                     ‐
$         82,692.11
$         20,900.70
$      123,093.96
$                     ‐
$         98,615.59
$                     ‐
$         99,275.36
$                     ‐
$         73,401.12
$                     ‐
$         87,004.97
$                     ‐
$   1,225,249.57

MONTHLY TOTAL
TOTALS PER SCHEDULE
PENALIZED AMOUNT
LOSSES M TO SOUTH
LOSSES SOUTH TO M
GRAND TOTAL FOR MONTH
NOTES:

$     46,172.80 $          70,786.80 $          594,103.82 $  320,899.69 $         178,909.63 $      14,376.84 $   1,225,249.57
$                 ‐
$                      ‐
$          594,103.82 $  320,899.69 $         178,909.63 $                  ‐
$   1,093,913.14
$      154,452.99
$              300.34
$     46,172.80 $          70,786.80 $       1,188,207.65 $  641,799.38 $         357,819.26 $      14,376.84 $   2,473,916.04

1)  Used MONTHLY rate to benefit customer per tariff Section 14.5
2)   * Flow from MISO Midwest to MISO South (M to South), priced as Through/Out service to Entergy (EES); using SPA rate via LCI for Schedule 8
3)   * Flow from MISO South to MISO Midwest (South to M), priced as Through/Out service to Ameren (AMRN); using KCPL LV rate via LCI for Schedule 8
4)  Daily flow variable:  Negative value would be flow from MISO Midwest to MISO South, Positive flow would be MISO South to MISO Midwest
5)  Charges for Schedules 1, 8, 11 REGIONAL and 11 ZONAL were calculated by taking the MAX MW value/day (with 1000 MW offset applied) and multiplying by 
the corresponding Through/Out or Regionwide rate.
6)  Charges for Schedules 1A and 12 were calculated by taking the MAX MW value / interval of each day (with 1000 MW offset applied), summing all interval MAX 
values for the day, and multiplying by the corresponding Schedule rate per MWHr.
7)  Current rates used per the Rates & Revenue Requirements (RRR) file from SPP.ORG, and are subject to change.
8)  Losses were calculated by using POR(SOURCE)/POD(SINK) of AMRN/EES for M to South directional flow, and EES/AMRN for South to M directional flow. 
(calculated Dec 19 ‐ 29)

RUNNING TOTAL 
PER DIRECTION
$                        ‐
$                        ‐
$            85,519.16
$                        ‐
$          157,362.07
$                        ‐
$          251,556.76
$                        ‐
$          361,683.84
$                        ‐
$          451,232.79
$                        ‐
$          540,153.42
$                        ‐
$          640,265.77
$                        ‐
$          722,957.88
$            20,900.70
$          846,051.83
$            20,900.70
$          944,667.42
$            20,900.70
$       1,043,942.78
$            20,900.70
$       1,117,343.90
$            20,900.70
$       1,204,348.87
$            20,900.70

Exhibit No. 4

Exhibit No. 4
Page 1 of 1

Daily Peak of Dispatch Flow
3000

2500

MegaWatts(MW
W)

2000

1500
Peak
Limit
1000

500

0

Date

Attachment B

Southwest Power Pool, Inc.
Original Service Agreement No. 2794
SERVICE AGREEMENT FOR NON-FIRM TRANSMISSION SERVICE
1.0

This Service Agreement, dated as of _______________, is entered into, by and between
Southwest Power Pool, Inc. ("Transmission Provider"), and the Midcontinent Independent
Transmission System Operator, Inc. (“Transmission Customer”).

2.0

Service under this Agreement shall be provided by the Transmission Provider on behalf of
the Transmission Customer in accordance with this Service Agreement.

3.0

The purpose of this Service Agreement is to assess charges for Transmission Customer’s
use of the Transmission Provider’s Transmission System when Transmission Customer
places certain flows on the Transmission Provider’s Transmission System as a result of
Transmission Customer’s transfers of real-time energy in each direction between MISO
Midwest and MISO South. Such flows shall be subject to the terms and conditions of Part
II of the Transmission Provider’s Tariff, except as provided herein.

4.0

The Transmission Provider, as agent for the Transmission Owners, agrees to provide and
the Transmission Customer agrees to take and pay for Non-Firm Point-To-Point
Transmission Service in accordance with the provisions of the Tariff and this Service
Agreement.

Transmission Customer shall secure reservations via Transmission

Provider’s OASIS sufficient to meet anticipated Assessable Flows. In lieu of scheduling
service under the reservations, real-time energy transfers in each direction between MISO
Midwest and MISO South will be monitored and calculated, as more fully described
below.
5.0

For purposes of this Service Agreement, the definitions of the Tariff as well as the
following definitions shall apply:
A. Assessable Flows.

Assessable Flows are defined as Transmission

Customer’s intentional, hourly unscheduled real-time energy transfers
in each direction between MISO Midwest and MISO South
(irrespective of the direction of flow) that exceed the Base Transmission
Capacity between the MISO Midwest and MISO South regions.
Assessable flows shall not include flows that occur with respect to

1

Transmission Customer’s transfers of energy between MISO Midwest
and MISO South (irrespective of the direction of flow) when the
transfers are less than or equal to the Base Transmission Capacity
between the MISO Midwest and MISO South regions.
B. Base Transmission Capacity. “Base Transmission Capacity” shall be
determined by summing Transmission Customer’s right to transfer energy
pursuant to either (i) Transmission Customer’s capacity of a direct physical
connection that is in service between MISO Midwest and MISO South; or
(ii) a reservation of a specified amount of Point-To-Point Transmission
Service on a Transmission Provider’s OASIS enabling transfers between
MISO Midwest and MISO South.

6.0

Real-time energy transfers shall be determined as follows:
A. Provision of Dispatch Flow. Transmission Customer will monitor and
provide to Transmission Provider the actual MISO Midwest region to and
from the MISO South region real-time intra-Balancing Authority Area
generation to load (and also taking into account export and import
transactions) dispatch flow (the “Dispatch Flow”) as calculated below.

B. Calculation of Dispatch. A dispatch flow calculation will be used to
determine the real-time transfers of energy in each direction between
MISO Midwest and MISO South. The dispatch flow calculation will
be based on the difference between generation and load in each of the
MISO Midwest and MISO South regions with an adjustment for
interchange transactions with the non-MISO Balancing Authority Areas
interconnected to the regions.
C. Dispatch Flow Assumptions.

To account for interchange transactions

in the dispatch flow, net schedule interchange with the singularly
connected non-MISO Balancing Authority Areas is assumed to source
(for export transactions) or sink (for import transactions) in the MISO
region to which the non-MISO Balancing Authority Area is singularly
connected. To account for interchange transactions with dually
connected non-MISO Balancing Authority Areas, the net schedule
interchange with an entity will be split between MISO Midwest and
2

MISO South based on the impedance of the system and the relative
distribution of total MISO load or generation. Powerflow modeling
will determine the transfer distribution factor impact of a transaction on
both MISO regions; source impacts will be determined by the
generation and sink impacts determined by the load.

Powerflow

models will be run at least monthly.
7.0

Assessable Flows shall be determined as follows: For each hour, the largest amount of
energy transferred in each direction between MISO Midwest and MISO South that exceeds
MISO’s Base Transmission Capacity as expressed in megawatts, shall constitute the
Assessable Flows for the hour in each direction.

8.0

The rate for the Non-Firm Point-To-Point Service provided under this Service Agreement
shall be the rate set forth in Schedule 8 of the Tariff and all other Tariff specified charges
for such Non-Firm Point-To-Point Service. The rate shall be applied to the Assessable
Flows in each direction for which Transmission Customer has reserved service in
accordance with the Tariff. Assessable Flows in each direction in excess of Transmission
Customer’s OASIS reservation(s) will be subject to penalties under section 14.5 of the
Tariff.

9.0

For purposes of the application of Schedule 8, the rate for service in the direction of MISO
Midwest to MISO South initially shall be the zonal rate for Zone 10 and the rate for service
in the direction of MISO South to MISO Midwest shall be the zonal rate for Zone 6, which
are the zones interconnected with MISO Midwest and MISO South with the lowest zonal
rates. If the zonal rates change such that the lowest zonal rate is a different zone, the then
prevailing lowest zonal rate will apply. Loss calculations shall use Point of Receipt
(POR) of Ameren and Point of Delivery (POD) of Entergy for service in the direction of
MISO Midwest to MISO South and POR of Entergy and POD of Ameren for service in the
direction of MISO South to MISO Midwest.

10.0

The Transmission Customer agrees to supply information that Transmission Provider
deems reasonably necessary in order for it to provide service under this Service
Agreement.

3

11.0

Any notice or request made to or by either Party regarding this Service Agreement shall be
made to the representative of the other Party as indicated below.

Transmission Provider:

Southwest Power Pool
Carl A. Monroe
201 Worthen Drive
Little Rock, AR 72223-4936

Transmission Customer:

Midcontinent Independent System Operator, Inc.
Richard Doying
720 City Center Drive
Carmel, IN 46032

12.0

The Tariff is incorporated herein and made a part hereof.

IN WITNESS WHEREOF, the Parties have caused this Service Agreement to be executed
by their respective authorized officials.

Transmission Provider:
By:______________________
Name

_____________________
Title

_____________________
Date

_____________________
Title

_____________________
Date

Transmission Customer:
By:______________________
Name

4

Attachment C

190

ORIGINAL
ARKANSAS PUBLIC SERVICE COMMISSION

1
2

3

4
5

6

I N THE MATTER OF A SHOW CAUSE
ORDER DIRECTED TO ENTERGY
ARKANSAS, INC. REGARDING ITS
CONTINUED MEMBERSHIP IN THE
CURRENT ENTERGY SYSTEM AGREEMENT,
OR ANY SUCCESSOR AGREEMENT
THERETO, AND REGARDING THE FUTURE
OPERATION AND CONTROL OF I T S
TRANSMISSION ASSETS

DOCKET NO. 10-011-U
ORDER NO. 19
VOLUME I1

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BEFORE:

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PAUL SWSKIE, Chairman
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COLETTE D. HONORABLE, Commissioner
OLAN W. REEVES, Commissioner

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THE ABOVE-STYLED MATTER came on for h e a r i n g before
G a r o l d W. Pritsch, Certified Court Reporter, LS
C e r t i f i c a t e No. 329, a Notary Public in a n d f o r Garland
C o u n t y , Arkansas, in Hearing R o o m Number 1 at t h e

Arkansas Public S e r v i c e Commission, 1000 Center S t r e e t ,
Little Rock, Arkansas on September 14th, 2010 commencin
a t 9:09 a.m. a s Eollows:
GAROLD W. PRITSCH
BUSHMAN COURT REPORTING
(501) 372-5115

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t h e Midwest IS0 w i t h only about a 2 1 5 m e g a w a t t contract

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p a t h , but, a g a i n , those c o n t r a c t provisions allow

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thousands of megawatts to flow north and s o u t h between

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M i c h i g a n and t h e main body of Midwest I S 0 on a d a i l y

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basis.

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sees from a n operational perspective, b u t this is a

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normal course of business t y p e of operation in both of

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these instances.

It's j u s t a

--

J o e can t a l k about t h e

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what he

And we s e e in Entergy, Entergy Arkansas or Entergy

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whole, very similar situation.

There's c u r r e n t l y a

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as a

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t h o u s a n d MVA p a t h

--

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t h e Midwest ISO.

We've l o o k e d at t h e contract path

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sharing that would go on between us a n d S P P , a s well a s

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t h e flows that can actually physically occur over those,

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and based on o u r early modeling, we believe there's well

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over 4,000 megawatts of flow capability between o u r

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system and t h e E n t e r g y system.

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f o r t h a t path to g e t stronger as transmission

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construction and transmission planning looked at what

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needed to be strengthened for t h o s e north/south flows.

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contract p a t h between Entergy a n d

W e would expect over t i m e

Yes, sir.

MR. BITTLE:

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Ricky B i t t l e with A r k a n s a s

Would you explain t h a t ?

I mean,

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Electric Co-op.

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basically, from a physical standpoint, it appears that

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you're saying t h a t even though E n t e r g y h a s g o t a thousand
GAROLD W. PRITSCH
3USHMAN COURT REPORTING
(501) 372-5115

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allows t h e parties t o u s e it u n d e r m a r k e t flow.

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to g o through t h a t discussion to understand w h e t h e r that

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is allowed under the contract or not.

MR. SCHUG:

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MR. K O Z E Y :

W e l l , we t h i n k we know where

t h e outcome is, but C a r l and I don't have to d e b a t e .

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Steve, do you want to

address t h a t a t a l l ?

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Okay.

W e have

MR. SCHUG:
that d e b a t e here s o

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--

Yeah, we don't have to have

noted.

This is T e r r i Gallup with

MS. GALLUP:

Just to add on t o t h a t discussion and t h e next

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AEP.

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slide where you h a d the 4,000 megawatts, e a r l i e r you said

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your agreements with S P P s a y s t h e p a t h s a r e available f o r

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both parties, but if this were used t o i n t e g r a t e Arkansas

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or Entergy A r k a n s a s , wouldn't that be j u s t taken up by

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t h e i r u s e to t r y to connect to M I S O t o get t h e b e n e f i t s

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of t h e MISO market and S P P members w o u l d no l o n g e r have

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t h a t capability?

MR. SCHUG:

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The answer is, y e s I

t h a t would

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be used f o r t h a t flow, j u s t l i k e it is in those t w o cases

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we have now,

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that operates t h e other w a y I a n d SPP would be utilizing

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it, would be utilizing Midwest IS0 c o n t r a c t path f o r t h e

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b e n e f i t of t h e i r membership.

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and in t h e f u t u r e , t h e r e may well be a case

Y e s r sir.

GAROLD W. PRITSCH
BUSHMAN COURT REPORTING
(501) 372-5115

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E-RSC MEETING

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Meeting held at The Sheraton

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Hotel, 500 Canal Street, New Orleans,

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Louisiana, 70130, commencing at 9:12 a.m.,

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on Thursday, the 9th of September, 2010.

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they choose to look to the midwest ISO.

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There's about a 1,000-megawatt physical

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path.

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4,000 megawatts of capability.

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most of the economics of joining the

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market is inside that plus or minus

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4,000 megawatts capability, so we think

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that it is technically feasible, should

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they include, it would be a good idea for

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There's on the order of
The --

them.

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So on to slide 6.

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Talk a little bit about QFs.

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read this slide this morning, doing my

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homework, and I recognized that there's a

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lot of words here, but it doesn't say

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anything.

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little bit.

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I

So I'll attempt to embellish a

Inside an organized market, for

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new qualifying facilities, there's a

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possibility upon request that a utility

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gets an exemption from those QF rules

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because the QF can sell right into the

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transparent wholesale market.

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for a going-forward kind of relationship

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that the QFs upon request essentially

So that's

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of these questions.

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that, too.

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So we're happy to do

MR. MONROE:

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President, I'd like to -- this

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is Carl Monroe -- I'd like to ask:

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it be okay, Clair, if you could clarify

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where that 4,000 comes from?

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think that 4,000 -- we can't come up with

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that value through either using contract

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path.

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analysis to come up with that.

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Would

Because I

I know we haven't done the transfer

MR. MOELLER:

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Yeah.

It was a transfer

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analysis; it wasn't a contract path.

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was based on the flowgate representations

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in our pro mod production cost models and

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what those limits are that I presume we

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share.

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I'll need a contact, then, from
y'all's to discuss that.
MR. MOELLER:

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I think you guys use that same --

MR. MONROE:

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It

Yeah.
the guy.
MR. MONROE:

John Longhern would be

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Okay.

Yeah.

I think there is

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a -- there's probably a difference in the

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way that we interpret the things that are

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in that joint operating agreement.

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part of the issue that we would have is

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that those -- that portion of the joint

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operating agreement really deals with new

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transmission service, how you allocate new

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transmission service, that those

And

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facilities are available, as long as

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they're available for new transmission

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service.

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with MISO whether that would be an

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applicable way of using it when you're

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integrating a new member, particularly

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because that -- it does impact a

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significant amount of our system, and I'm

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sure AECI would have something to say

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about the use of their system to do the

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transfers between the two.

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And we would have to discuss

And, also, you have to recognize

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that there are a significant amount of

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grandfathered transactions that go across

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that interfa -- just that particular

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interface in and of itself where the

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limitation on that transfer may be already

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taken up by existing transmission service

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that has to be maintained through the --

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that transition of integration.

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need to have more discussion around

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whether, first of all, that joint

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operating agreement really supports this

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type of use of the SPP facilities and the

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AECI facilities and then also, you know,

So we

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how we would go about representing the

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existing transmission service that is used

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over that facility.

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MR. MOELLER:
We don't disagree there's more

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discussion required there.

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interpretation is premised on -- it's the

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same words that we used with PJM, and

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that's how we've used that agreement in

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other litigation, so...

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Our

VICE-PRESIDENT FIELD:
This is just a comment.

On --

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when you talk about this free wind energy

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Michigan is going to install, I guess -- I

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guess the ratepayers don't take advantage

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of the fact that they are to pay subsidies

CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document upon MISO
and each person designated on the official service list compiled by the Secretary in these
proceedings.
Dated at Washington, D.C., this 28th day of January, 2014.

/s/ Barry S. Spector
Barry S. Spector
Counsel for
Southwest Power Pool, Inc.