Common use of Substantive Matters Clause in Contracts

Substantive Matters. We accept the AEP Agreement, effective August 1, 2019, as requested, subject to the outcome of the pending rehearing in Docket No. ER18-1702-002. We find that SPP’s proposed revisions to the AEP Agreement either conform to SPP’s pro forma NITSA or represent non-conforming terms and conditions that were previously accepted by the Commission.21 Because the AEP Agreement was originally filed within 30 days of the commencement of service, we grant SPP’s request for waiver of prior notice to permit the AEP Agreement to become effective on August 1, 2019, as requested.22 Although AEP protests SPP’s inclusion of Creditable Upgrade information within section 8.13 of Attachment 1 in the NITSA, we find that SPP does not propose to revise that information in this version of the AEP Agreement. Therefore, section 8.13 of Attachment 1 in the NITSA contains the currently-effective language, which the Commission accepted in the October 2018 Order.23 We note, however, that our approval of the AEP Agreement is subject to the outcome of the pending rehearing in Docket No. ER18-1702-002, which involves issues relating to Creditable Upgrade information in section 8.13 of Attachment 1 in the AEP NITSA. Finally, insofar as AEP raises concerns regarding SPP’s administration of its Attachment Z2 revenue crediting process during the period between 2008-2016, we note that the issue in the instant proceeding is whether SPP has appropriately included certain information in its service agreements pursuant to its Tariff, not SPP’s administration of its Attachment Z2 revenue crediting process during a prior period. That latter issue is pending in several proceedings that are before the Commission, including requests for rehearing in Docket Nos. EL17-21-001, EL18-9-001, and ER16-1341-004 and a refund proceeding following the Commission’s order on voluntary remand in Docket No. ER16- 1341-003. The Commission will consider issues pertaining to SPP’s administration of the Attachment Z2 revenue crediting process during the 2008-2016 period in those proceedings.

Substantive Matters. We find the proposed Service Agreement to be just and reasonable, and accordingly accept the AEP Agreementit, effective August 129, 20192021, as requested, subject to the outcome of the pending rehearing in Docket No. ER18-1702-002. We find that, based on the facts and circumstances of this proceeding, it is just and reasonable for ITC Great Plains to recover additional expenses that SPP’s proposed revisions to include an allocated portion of all operations and maintenance expenses incurred by ITC Great Plains from Iron Star beyond the AEP Agreement either conform to SPP’s pro forma NITSA or represent non-conforming terms return of and conditions that were previously accepted by on the Commission.21 Because the AEP Agreement was originally filed within 30 days capital costs of the commencement of servicenetwork upgrades because ITC Great Plains lacks a zonal rate through which it can recover such expenses. Thus, we grant SPP’s request for waiver of prior notice to permit the AEP Agreement to become effective on August 1without zonal customers, 2019ITC Great Plains must, as requested.22 Although AEP protests SPP’s inclusion of Creditable Upgrade information within section 8.13 of Attachment 1 in the NITSAa practical matter, recover such expenses from Iron Star. Moreover, we find that SPP does not propose ITC Great Plains’ proposal to revise recover these additional expenses is consistent with the mechanism it currently employs to charge two of its interconnection customers that information in this version of the AEP Agreement. Therefore, section 8.13 of Attachment 1 in the NITSA contains the currently-effective language, which the Commission accepted in the October 2018 Order.23 We note, however, that our approval of the AEP Agreement is subject to the outcome of the pending rehearing in Docket No. ER18-1702-002, which involves issues relating to Creditable Upgrade information in section 8.13 of Attachment 1 in the AEP NITSAupfront funded their assigned network upgrades. Finally, insofar as AEP raises concerns regarding SPP’s administration of its Attachment Z2 revenue crediting process during the period between 2008-2016, we note that the issue record demonstrates that terms of the agreement are the result of a negotiated compromise and the agreement has been executed by the two parties. The proposed Service Agreement is hereby accepted, effective August 29, 2021, as discussed in the instant proceeding is whether SPP has appropriately included certain information in its service agreements pursuant to its Tariff, not SPP’s administration body of its Attachment Z2 revenue crediting process during a prior periodthis order. That latter issue is pending in several proceedings that are before By the Commission. Commissioner Xxxxx is concurring with a separate statement attached. ( S E A L ) Xxxxxx-Xxxx X. Xxxxx, including requests for rehearing Deputy Secretary. UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Southwest Power Pool, Inc. Docket No. ER21-2238-001 (Issued October 29, 2021) DANLY, Commissioner, concurring: I concur in Docket Nos. EL17-21-001today’s order accepting as just and reasonable the facilities cost recovery service agreement (FSA) between ITC Great Plains, EL18-9-001LLC and Iron Star Wind Project, and ER16-1341-004 and a refund proceeding following LLC.1 I write separately to state that the order should have directly addressed the filing parties’ assertion that: “[U]nder the Commission’s Mobile-Sierra doctrine, this Service Agreement and its terms are a freely-negotiated bilateral contract rate which the Commission must presume is just and reasonable absent a showing that the agreement seriously xxxxx the public interest.”2 The filing parties repeatedly reiterated this point in their deficiency response.3 Yet, the order on voluntary remand in Docket No. ER16- 1341-003merely notes “that the record demonstrates that terms of the agreement are the result of a negotiated compromise and the agreement has been executed by the two parties.”4 The filing parties are correct. The Commission will consider issues pertaining to SPPMobile-Sierra presumption applies, and the public interest standard governs any future changes either by the filing parties or the Commission. The majority’s administration of silence on the Attachment Z2 revenue crediting process during the 2008-2016 period in those proceedingsmatter does not change this result. For these reasons, I respectfully concur. Xxxxx X. Xxxxx Commissioner 1 Sw. Power Pool, Inc., 177 FERC ¶ 61,053 (2021).

Substantive Matters. For the reasons discussed below, we find that the FSA has not been shown to be just, reasonable, and not unduly discriminatory or preferential, and we reject the FSA without prejudice to SPP and ITC refiling an FSA. We accept provide guidance for such future filing below. As a threshold matter, we disagree with ITC’s assertion that the AEP Agreement, effective August 1, 2019Mobile-Sierra presumption applies to the FSA, as requestedexecuted.34 As the Commission explained in Rail Splitter II and E.ON, the inclusion in a contract of language that allows either party to ask the Commission to change the rate pursuant to sections 205 and 206 of the FPA presumes that the parties agreed that the provisions of the contract, even though executed, are 32 Id. at 10 (citing Proposed FSA, art. X.g). 33 Id. 34 Id. at 1-2 (citing United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332; FPC v. Sierra Pac. Power Co., 350 U.S. 348). subject to change.35 The Commission also has found that the outcome ordinary just and reasonable standard applies when the parties “explicitly reserve their rights to seek modifications to their contracts,” which indicates that they “specifically negotiated and contemplated that their contracts could be modified” based upon the ordinary just and reasonable standard.36 Those findings apply here, as Article X.f of the pending rehearing FSA states that “[n]othing in this Service Agreement shall limit the rights of the Parties or of FERC under Sections 205 and 206 of the [FPA] and FERC’s rules and regulations thereunder.”37 We find that ITC’s recovery of additional expenses that include an allocated portion of its O&M expenses from Pixley through the Distributed Charges line item of the formula rate template included in the FSA has not been justified. The formula contained in Exhibit I includes additional expenses that include an allocated portion of O&M expenses incurred by ITC from Pixley through the Distributed Charge in Line 24 of Exhibit I to the FSA. We note that the proposed formula in Exhibit I to the FSA is similar to the formula approved in Iron Star. In Iron Star, the Commission found that it was just and reasonable for ITC to recover additional expenses that include an allocated portion of all O&M expenses incurred by ITC from Iron Star because ITC lacks a zonal rate through which it can recover such expenses, and, without zonal customers, ITC must, as a practical matter, recover such expenses from the interconnection customer.38 However, since Iron Star, ITC has explained in a deficiency response in Docket No. ER18ER23-1702-002. We find 651 that SPP’s proposed revisions to the AEP Agreement either conform to SPP’s pro forma NITSA or represent non-conforming terms it now understands that O&M expenses and conditions that were previously accepted by the Commission.21 Because the AEP Agreement was originally filed within 30 days of the commencement of service, we grant SPP’s request for waiver of prior notice to permit the AEP Agreement to become effective on August 1, 2019, as requested.22 Although AEP protests SPP’s inclusion of Creditable Upgrade information within section 8.13 of Attachment 1 other variable costs associated with network upgrades can be included in the NITSAzonal annual transmission revenue requirement (ATRR) for ITC’s transmission zone irrespective of whether ITC 35 Rail Splitter Wind Farm, we find that SPP does not propose LLC, 146 FERC ¶ 61,017, at P 22 (2014) (Rail Splitter II); E.ON Climate & Renewables N. Am. LLC, 149 FERC ¶ 61,217 (2014) (E.ON). 36 Midwest Indep. Transmission Sys. Operator, Inc., 111 FERC ¶ 61,042 (2005); see also Rail Splitter II, 146 FERC ¶ 61,017 at P 22 (citing Xxxx Xxxxx, LLC v. Entergy Servs., Inc., 117 FERC ¶ 61,210, at P 28 (2006) (the existence of a reservation of rights to revise that information in this version of the AEP Agreement. Therefore, section 8.13 of Attachment 1 in the NITSA contains the currently-effective language, which the Commission accepted in the October 2018 Order.23 We note, however, that our approval of the AEP Agreement is subject to the outcome of the pending rehearing in Docket No. ER18-1702-002, which involves issues relating to Creditable Upgrade information in section 8.13 of Attachment 1 in the AEP NITSA. Finally, insofar as AEP raises concerns regarding SPP’s administration of its Attachment Z2 revenue crediting process during the period between 2008-2016, we note that the issue in the instant proceeding is whether SPP has appropriately included certain information in its service agreements make changes pursuant to its Tariff, not SPP’s administration of its Attachment Z2 revenue crediting process during sections 205 and 206 allows a prior period. That latter issue is pending in several proceedings that are before contract to be modified under the Commission, including requests for rehearing in Docket Nos. EL17-21-001, EL18-9-001, ordinary just and ER16-1341-004 and a refund proceeding following the Commission’s order on voluntary remand in Docket No. ER16- 1341-003. The Commission will consider issues pertaining to SPP’s administration of the Attachment Z2 revenue crediting process during the 2008-2016 period in those proceedingsreasonable standard even if executed)).

Substantive Matters. We accept the AEP Agreement, effective August 1, 2019, as requested, subject to the outcome of the pending rehearing in Docket No. ER18-1702-002. We find that SPPthe proposed SAA Agreement is just and reasonable and not unduly discriminatory or preferential. The State Agreement Approach in PJM’s Operating Agreement permits states, either individually or jointly, to “agree voluntarily to be responsible for the allocation of all costs of a proposed revisions to the AEP Agreement either conform to SPP’s pro forma NITSA transmission expansion or represent non-conforming terms and conditions enhancement that were previously addresses state Public Policy Requirements identified or accepted by the Commission.21 Because state(s) in the AEP PJM Region.”68 The State Agreement was originally filed within 30 days Approach also requires that “[a]ll costs related to a state public policy project or Supplemental Project included in the Regional Transmission Expansion Plan to address state Public Policy Requirements pursuant to this Section shall be recovered from customers in a state(s) in the PJM Region that agrees to be responsible for the projects.”69 66 Id. (citing PJM Answer at 7 n.26). 67 Id. at 5-6. 68 State Agreement Approach, OA Schedule 6 Sec 1.5, § 1.5.9(a). 69 Id. Sections 5.1 and 5.4 of the commencement SAA Agreement make clear that NJ BPU would be committing New Jersey customers for the cost of serviceany SAA Projects that NJ BPU elects to sponsor.70 Nevertheless, we grant SPPsection 6.2(g) introduces the concept of a future allocation of costs to potential users other than New Jersey customers. The parties in this proceeding debate the weight and significance of this cost sharing provision, with some parties arguing that the provision establishes a cost allocation method for future users, whereas other parties maintain that the provision identifies that there could be a future agreement to address such hypothetical scenarios. We agree with PJM and NJ BPU that, although section 6.2(g) mentions a pro rata allocation to potential future users, approval by the Commission of a subsequent cost allocation filing is necessary to implement such an allocation. Indeed, both PJM’s request for waiver and NJ BPU’s answers71 and the SAA Agreement itself72 explain that no costs will be allocated to customers outside of prior notice to permit New Jersey unless and until the AEP Agreement to become effective Commission accepts a future cost allocation filing as just and reasonable.73 Based on August 1, 2019, as requested.22 Although AEP protests SPPPJM’s inclusion and NJ BPU’s representations and the text of Creditable Upgrade information within section 8.13 of Attachment 1 in the NITSASAA Agreement, we find that SPP does not propose to revise the cost sharing provision “merely contemplates that information in this version future users of the AEP Agreement. Therefore, section 8.13 SAA Project could be asked to pay their fair share of Attachment 1 costs...[that] will be defined in a future filing with the Commission”74 and provides that the “[NJ BPU] is able to commit to partnering with all other states or entities in the NITSA contains the currently-effective language, which the Commission accepted future”75 in the October 2018 Order.23 We note, however, a future cost allocation filing that our approval will consider allocation to “future users” not contemplated by sections 5.1 and 5.4 of the AEP Agreement is subject SAA Agreement, with the important limitation set forth in P 43 below. Further, while the cost sharing provision states “PJM shall allocate” costs to the outcome future users, this provision, in light of the pending rehearing in Docket No. ER18-1702-002, which involves issues relating to Creditable Upgrade information in section 8.13 of Attachment 1 in the AEP NITSA. Finally, insofar as AEP raises concerns regarding SPP’s administration of its Attachment Z2 revenue crediting process during the period between 2008-2016, we note that the issue in the instant proceeding is whether SPP has appropriately included certain information in its service agreements pursuant to its Tariff, not SPP’s administration of its Attachment Z2 revenue crediting process during a prior period. That latter issue is pending in several proceedings that are before the Commission, including requests for rehearing in Docket Nos. EL17-21-001, EL18-9-001, and ER16-1341-004 and a refund proceeding following the Commission’s order on voluntary remand in Docket No. ER16- 1341-003. The Commission will consider issues pertaining to SPP’s administration entirety of the Attachment Z2 revenue crediting process during the 2008-2016 period in those proceedings.agreement, does