Electric Co-ops to FERC: FERC Has No Refund Authority Over Co-ops Under Federal Law

(ARLINGTON, Va.) –The National Rural Electric Cooperative Association (NRECA) today filed objections in two Federal Energy Regulatory Commission (FERC) proceedings, arguing FERC is overstepping its statutory authority by requiring both the Midcontinent Independent System Operator (MISO) and the Southwest Power Pool (SPP) to include broad refund obligations in their tariffs.  NRECA’s consolidated initial brief was filed in FERC dockets EL16-91 and EL-16-99.

While FERC acknowledges the limits of its jurisdiction in these orders, the implications of what it proposes is nothing short of alarming and represents an attempt to alter the federal jurisdictional limitations over electric cooperatives and public power entities.

“Long-standing interpretations of the Federal Power Act confirm that the majority of our members lie outside FERC’s rate-making and refund authority, yet with these proceedings, FERC is working to undermine those interpretations,” said NRECA CEO Jim Matheson.  “By pushing to alter the limits of its jurisdiction over rates for services provided under the tariffs of MISO and SPP, FERC actions could have a chilling effect on efforts to encourage market participation by non-public utility transmission owners.  FERC has long acknowledged co-op and municipal participation as critical to the success of RTOs.”

“It is essential that FERC exercise deliberate and careful statutory interpretation,” Matheson continued.  “The RTOs have already addressed the unique challenges faced by transmission-owning co-ops in RTOs.  And the RTOs are in the best position to partner with stakeholders to develop provisions to achieve FERC’s objective in a manner that will continue to accommodate co-ops’ status as non-jurisdictional FERC entities.”

Background:  In July 2016, FERC initiated Federal Power Act Section 206 proceedings in the MISO and SPP markets, questioning each RTO’s failure to require non-public transmission owners – including co-ops and municipals – to provide refunds in the manner they require for public utility owners.  While FERC cannot directly order refunds from 201(f)-exempt transmission owners that have joined RTOs (such as co-ops), FERC is, in essence, proposing that SPP and MISO can compel such refunds indirectly by having co-ops and municipals “volunteer” to pay appropriate revenue refunds if they want to recover their transmission revenue requirements under an RTO tariff.

The National Rural Electric Cooperative Association is the national service organization that represents the nation’s more than 900 private, not-for-profit, consumer-owned electric cooperatives, which provide service to 42 million people in 47 states.