Commissioner Christie’s Dissent to SPP Highway/Byway Cost Allocation Exception in Docket No. ER22-1846-001

Docket No. ER22-1846-001

Earlier this year Midcontinent Independent System Operator, Inc. (MISO) proposed to modify its cost allocation method for Multi-Value Projects (MVPs) to allow the costs of new MVP portfolios to be allocated on a subregional basis, which permitted a “postage stamp” cost allocation in MISO Midwest for its upcoming tranche of transmission projects.[1]  Several protestors objected to such a full socialization of costs across all of MISO Midwest (MISO South was excluded), and I also expressed my concern about the use of the postage stamp method.[2]  Ultimately, I concurred in approving the MISO filing because of the robust involvement in its development, and formal endorsement of the proposal, by the Organization of MISO States, Inc. (OMS),[3] all of which was documented in the record.  I also noted that not a single OMS state opposed the proposal.[4]

Herein, SPP proposes a fundamental change to the “Highway/Byway” cost allocation methodology that has been used in SPP for well over a decade.[5]  The states in SPP played a major role in the original development of this methodology, acting through the SPP Regional State Committee (RSC).[6]  The RSC and the “Highway/Byway” methodology have been hallmarks of the exceptionally strong role that the states have played in cost allocation in SPP for many years.  Notably, the “Highway/Byway” methodology, by definition, has from its very inception been used to cost-allocate projects that are designed to fulfill state public policies,[7] and the states in SPP have accepted this methodology as a fair compromise formula to use in allocating the costs of such policy-driven projects.  Thus, it is absolutely essential that any fundamental change to this cost-allocation methodology — one that would shift costs to consumers in different states — represents a strong consensus, clearly expressed, among the SPP states.

Such a strong consensus is not evident on this record.  In contrast to OMS in the MISO case noted above, the RSC did not file comments in this record in support of SPP’s proposal.  Further, only one state commission, the Kansas Corporation Commission, filed comments in the proceeding to support the proposal.  SPP provides in its filing a web link to Minutes of a January 24, 2022 RSC meeting, which reflect that the proposal was discussed and approved by those participating in that meeting;[8] however, the RSC Minutes clearly indicate that only a portion of the state commissions participating in that meeting “approved” SPP’s proposal.  Specifically, the RSC Minutes explicitly indicate that four of the 11 state commissions participating in the January 24, 2022 RSC meeting opposed the proposal.[9]  Indeed, Commissioner Will McAdams of the Public Utility Commission of Texas provided comments to be included in the RSC Minutes expressing opposition, arguing that, inter alia, “this policy will shift more costs to Texas customers without any benefits.”

Commissioner McAdams’s comments echo concerns I have previously expressed regarding any proposals to change fundamentally the “Highway/Byway” methodology that has long been used, if the effect would be to shift costs to unwilling states.  As SPP acknowledges in its filing, in my concurrence to the 2021 Commission order rejecting SPP’s original iteration of its proposal, I stated that “it would be helpful and relevant to know whether any such waiver process ensures that states and [load serving entities] whose consumers would be re-designated as ‘beneficiaries’ have an opportunity to review and consent/dissent affirmatively to the re-designation and to the new costs that go along with it”[10] because “approval of a cost-allocation waiver would result in costs being re-allocated to consumers in states and to [load serving entities] that would not otherwise bear those costs under SPP’s existing Highway/Byway methodology.”[11]  I had hoped that SPP would amend its original proposal in such a way as to achieve a consensus in the RSC on a waiver process or, alternatively, provide a mechanism for states to consent to bear the costs of individual waiver projects, but SPP’s instant filing does neither and thus does not adequately address my concerns, nor apparently, those of several SPP states. 

The Order does note that under SPP’s proposal the RSC may vote to recommend approval or denial of the cost allocation waiver request for an individual project and will provide such recommendation to the SPP Board and Members Committee.[12]  But this provision has no teeth.  Even if the RSC were to recommend denying a waiver request of the longstanding Highway/Byway cost allocation methodology for a costly project, the SPP Board could approve it anyway, despite the states’ opposition, with the result that consumers in unwilling states would be forced to bear the costs of another state’s public policies.  Such a result could not only produce rates that are unjust and unreasonable, but would fly in the face of the principle that has distinguished the “Highway/Byway” methodology since the beginning; the states developed it, the states have been willing to live with it for more than a decade, and the states must clearly consent to any changes to the long agreed-upon methodology that re-allocate costs of policy-driven projects to their consumers.[13]

For these reasons, I respectfully dissent.