[Federal Register Volume 88, Number 224 (Wednesday, November 22, 2023)]
[Notices]
[Pages 81405-81406]
[FR Doc No: 2023-25823]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER20-1041-003]

Wabash Valley Power Association, Inc.; Order Establishing
Additional Briefing Procedures

    Before Commissioners: Willie L. Phillips, Acting Chairman; James P.
Danly, Allison Clements, and Mark C. Christie.
    1. This order establishes additional briefing procedures following
the issuance of an Initial Decision on January 28, 2022,\1\ involving
Wabash Valley Power Association's (Wabash) proposed, unexecuted
agreement for early termination of two wholesale power supply contracts
between Wabash (as seller) and Tipmont Rural Electric Membership
Cooperative (Tipmont) (as buyer). In this order, we establish a
briefing schedule to develop a more comprehensive record on which to
make a determination, as discussed below.
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    \1\ Wabash Valley Power Ass'n, Inc., 178 FERC ] 63,005 (2022).
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I. Background

    2. This proceeding concerns Tipmont's desired early termination of
its membership with Wabash and two of its contracts that are on file
with the Commission: the 1977 Contract that governs all-requirements
service from 1977 through until 2028, and the 2006 Contract that
governs such service from 2006 through 2050 (each a Contract, and
collectively, Contracts). At issue also in this proceeding is an
unexecuted 2020 Agreement For Early Termination of Wholesale Power
Supply Contracts (Termination Agreement).
    3. On October 1, 2018, Tipmont filed a complaint (Complaint)
against Wabash requesting that the Commission: (1) find that Tipmont
may terminate its Contracts early, and (2) initiate a proceeding to
establish the just and reasonable level of stranded costs resulting
from Tipmont's early departure.\2\ On February 20, 2020, Wabash filed
the Termination Agreement pursuant to section 205 of the Federal Power
Act. On April 20, 2020, the Commission concurrently: (1) issued an
order granting, denying, and dismissing various aspects of the
Complaint; \3\ and (2) issued an order accepting and suspending
Wabash's proposed Termination Agreement and established hearing and
settlement judge procedures.\4\
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    \2\ Timpont Rural Electric Member Cooperative, Complaint, Docket
No. EL19-2-000, at 1-2 (filed Oct. 1, 2018) (Complaint).
    \3\ Tipmont Rural Elec. Member Coop. v. Wabash Valley Power
Ass'n, Inc., 171 FERC ] 61,059 (2020).
    \4\ Wabash Valley Power Ass'n, Inc., 171 FERC ] 61,053 (2020).
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    4. On July 30, 2020, after the Settlement Judge declared an
impasse, the Chief Judge issued an order terminating settlement judge
procedures and designated Administrative Law Judge Andrea McBarnette as
the Presiding Judge. The hearing commenced on May 20, 2021, and
concluded on June 8, 2021. The Presiding Judge issued the Initial
Decision on January 28, 2022. Subsequently, the participants filed
Briefs on Exceptions and Briefs Opposing Exceptions on March 31, 2022,
and April 20, 2022, respectively.

II. Discussion

    5. We establish a briefing schedule to allow the participants to
address the issues set forth in Appendices A and B. Further briefing on
these issues will help develop a more comprehensive record for the
Commission to evaluate the justness and reasonableness of the
Termination Agreement. Accordingly, we provide questions directed at
Wabash in Appendix A and one question directed at Tipmont in Appendix
B. Wabash and Tipmont are required to submit initial briefs within 45
days of the date of this order. At the initial briefing stage, Wabash
may address only questions in Appendix A of this order, and Tipmont may
address only the question in Appendix B of this order. Further,
participants are permitted to file reply briefs within 30 days of the
date of filing of initial briefs.\5\ At the reply briefing stage,
participants may address questions directed at the other party. Briefs
making any factual assertions must be accompanied by a sworn affidavit
of one or more witnesses.
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    \5\ As participants in the hearing proceeding, Trial Staff and
United Power, Inc. may submit reply briefs. This Commission,
however, is generally less likely to allow new participants to
intervene after issuance of a merits order. See, e.g., Conn. Yankee
Atomic Power Co., 92 FERC ] 61,269, at 61,899 (2000) (denying the
subsidiaries of the Northeast Utilities system's (NU) out-of-time
motion to intervene because ``[t]o permit NU's late intervention
after the issuance of the Initial Decision . . . would result in
undue burden on the active parties to the hearing.'').
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The Commission orders:

    (A) Wabash and Tipmont are hereby required to submit initial briefs
within 45 days of the date of this order, as discussed in the body of
this order.
    (B) Participants are hereby permitted to file reply briefs within
30 days of the date of filing of initial briefs.\6\
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    \6\ See supra note 5.
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    (C) The Secretary is hereby directed to publish this order in the
Federal Register.

    By the Commission.
    Issued: November 16, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.

Appendix A

Questions Directed at Wabash

A. Transmission

    1. Section 3 of the 1977 Contract and section 5 of the 2006
Contract allow Wabash to own transmission in limited
circumstances.\7\
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    \7\ See e.g., Ex. TIP-0003 at 3 (``It is understood by and
between the Parties that the express intent of Wabash Valley is to
not own, operate or maintain any transmission facilities and/or
substations except as such ownership, operation and maintenance may
inure to Wabash Valley by reason of Transmission Participation
Agreements and Transmission, Operation and Maintenance Agreements
with other suppliers which own and operate bulk transmission
systems.'').
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    a. For each transmission asset reflected in the Black & Veatch
Study, please identify the agreements (i.e., Transmission
Participation Agreements and Transmission, Operation and Maintenance
Agreements) \8\ that allow(s) Wabash to own said transmission assets
and explain in each instance how such ownership right is consistent
with the exception criteria in the Contracts.
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    \8\ See supra n.7.
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    b. For each of the agreements identified in response to part a.,
please state the corresponding amounts of transmission plant and
transmission capital expenditure balances reflected in the Black &
Veatch Study for years 2019-2021.
    c. In addition, please identify any transmission assets that
were excluded from the proposed buyout amount due to limitations set
forth in the Contracts.

    2. Wabash's transmission plant in service balance for year 2019
is $354.9 million in the Black & Veatch Study \9\ and $312.8 million
in Wabash's annual FERC Form No. 1 filing.\10\ Please explain the
divergence between these two values. Wabash's transmission plant in
service balance for year 2020 is $423.1 million in the Black &
Veatch Study \11\ and $321.2 million in Wabash's 2020 budget
study.\12\ In addition, Wabash states that this value is $348.9
million in the Adjusted Black & Veatch Study.\13\
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    \9\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell C28.
    \10\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 207 (Electric
Plant in Service (Account 101, 102, 103, and 106, line 58(g))
(2019).
    \11\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell D28.
    \12\ Ex. TIP-0016 at `BL Pg 20 Cost of Trans' tab, cell I44.
    \13\ Ex. WV-0035 at 35.
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    a. Please explain why Wabash's transmission plant in service
balance for year 2020 decreased by $74.2 million between the
original and Adjusted Black & Veatch studies.
    b. Please explain the $27.7 million divergence between Wabash's
transmission plant in service balance for year 2020 in the Adjusted
Black & Veatch Study and Wabash's 2020 budget study.
    c. Please provide updated versions of the spreadsheets contained
in Ex. TIP-0097 and Ex. TIP-0113 that reflect the updated
transmission plant in service balance for year 2020, and all other
modified values, used in the Adjusted Black & Veatch Study.
    3. Wabash's annual transmission capital expenditure for year
2019 is $50.6 million in the Black & Veatch Study,\14\ $41.9 million
in Wabash's annual FERC Form No. 1 filing,\15\ and $42.2 million
according to Wabash's work orders.\16\ Please explain the divergence
among these values.
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    \14\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell C7.
    \15\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 206 (Electric
Plant in Service (Account 101, 102, 103, and 106, line 58(c))
(2019).
    \16\ Ex. WV-0035 at 36 (citing Ex. WV-0049).
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    4. Wabash's annual transmission capital expenditure for year
2020 is $71.8 million in the Black & Veatch Study,\17\ $41.6 million
in Wabash's annual FERC Form No. 1 filing,\18\ and $66.5 million
according to Wabash's work orders.\19\ Please explain the divergence
among these values.
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    \17\ Ex. TIP-0097; Ex. TIP-0113 at `Depreciation' tab, cell D7.
    \18\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 206 (Electric
Plant in Service (Account 101, 102, 103, and 106, line 58(c))
(2020).
    \19\ Ex. WV-0035 at 36 (citing Ex. WV-0049).
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    5. Please explain the transmission service that Wabash takes
under the MISO Tariff in association with delivery to Tipmont.
    6. Wabash states that the original and Adjusted Black & Veatch
studies ``make no adjustment to Wabash Valley's forecasted
transmission revenues.'' \20\
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    \20\ Id. at 44-45.
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    a. Please explain how Wabash estimated the annual transmission
revenues it would receive if Tipmont remained a member of Wabash and
describe the source(s) of those revenues. Describe all assumptions
and provide supporting workpapers.
    b. In addition, please describe how these revenues compare to
what Wabash would receive if Tipmont departs and procures network
service for its entire load.

B. Capacity Price Forecast

    7. Please identify the source of the $22.34/MW-day initial value
used in forecasting the Black & Veatch Study's capacity price for
years 2020-2025.\21\
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    \21\ Ex. WV-0014 at 15 (``For the years 2020 through 2025, Black
& Veatch increased the capacity prices from the recent capacity
price level of $22.34/MW-day observed in the MISO market.'').
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    8. Please explain how the Black & Veatch Study determined the
annual growth rate for its forecasted capacity prices for years
2021-2025.\22\
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    \22\ Id. at 30.
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    9. Please explain why the Black & Veatch Study switches from
using the recent capacity price level observed in the MISO market as
a starting point for the capacity price forecast for years 2020-2025
to using weighted average solar power purchase agreement costs
beginning in year 2026 specifically.\23\
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    \23\ Id. at 15, 30.
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C. Energy Price Forecast

    10. Please explain how the Black & Veatch Study selects the New
York Mercantile Exchange Henry Hub forward price curve dated October
2, 2019, as the basis for the projected natural gas prices used in
years 2021-2031 of its energy price forecast.\24\ In addition,
please explain why the Black & Veatch Study uses a single forward
curve instead of averaging over multiple forward curves.
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    \24\ Id. at 15.
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    11. Please explain why the Black & Veatch Study assumes that the
five-year compound annual growth rate implied in the natural gas
forward prices for 2027-2031 will persist through 2050.\25\
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    \25\ Id.
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D. Miscellaneous Issues

    12. Wabash proposes a 10-year buyout period, arguing that for
any termination initiated prior to April 14, 2028, Tipmont agreed to
a ten-year notice and buyout period during which Tipmont remains a
member, continues to purchase all-requirements service, and makes
additional monthly escrow payments based on the rate set by the
Wabash board of directors.\26\ In contrast, Tipmont argues that the
10-year buyout period has not been found to be just and reasonable;
that, as long as Tipmont pays the verifiable stranded costs
associated with Tipmont's exit,\27\ Wabash and its members are
protected from any financial impacts associated with such exit,
whether Tipmont leaves immediately or in 10 years; and that
Tipmont's continued membership in Wabash is causing harm to
Tipmont.\28\ Tipmont requests that the Commission direct Wabash to
make a compliance filing that sets the date of Tipmont's exit as
``the first day of the month one year after the date of that
Commission order.'' \29\
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    \26\ Wabash Br. Opposing Exceptions 13-14.
    \27\ Tipmont Br. Opposing Exceptions 2.
    \28\ Id. at 1 (citing Ex. TIP-0001 at 25).
    \29\ Tipmont Br. on Exceptions 13.
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    Please address the manner in which an immediate buyout scenario
should be effectuated in the event the Commission finds the 10-year
buyout period is not required by the parties' contracts and
otherwise has not been shown to be just and reasonable.\30\
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    \30\ Id.
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    13. Wabash's property insurance costs for year 2019 are $1.5
million in the Black & Veatch Study \31\ and $169,871 in Wabash's
annual FERC Form No. 1 filing.\32\ Please explain the divergence
between these values.
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    \31\ Ex. TIP-0097; Ex. TIP-0113 at `Prop Ins' tab, cell E14.
    \32\ Wabash, FERC Form No. 1/3-Q, Rev. 02-04, at 323 (Electric
Operation and Maintenance Expenses (line 185(d)) (2019).
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    14. Wabash's property tax costs for year 2019 are $5.57 million in
the Black & Veatch Study and $5.37 million in Wabash's Trial Balance
workpaper.\33\ Please explain the divergence between these values.
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    \33\ Ex. WV-0035 (citing Ex. TIP-0082).
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Appendix B

Question Directed at Tipmont

    15. According to Trial Staff, the London Economics International
(LEI) Study's energy price forecast projects an approximate $3/MMBtu
seasonal spread in intra-year natural gas prices beginning in
2030.\34\ Please explain how the seasonal natural gas price spreads
observed in the LEI Study's energy price forecast are consistent
with current and expected natural gas market dynamics in MISO.
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    \34\ Trial Staff Initial Br. 40 (citing Tr. 528:23-529:22,
531:4-22).

[FR Doc. 2023-25823 Filed 11-21-23; 8:45 am]
BILLING CODE 6717-01-P