STATE OF MISSOURI
PUBLIC SERVICE
COMMISSION
At a session of
the Public Service Commission held at its office in Jefferson City on the 7th
day of August, 2013.
In the Matter of
the Application of Transource Missouri )
Missouri, LLC for
a Certificate of Convenience )
and Necessity
Authorizing It to Construct, ) File
No. EA-2013-0098
Finance, Own,
Operate, and Maintain the )
Iatan-Nashua and
Sibley-Nebraska City )
Electric
Transmission Projects
)
REPORT AND ORDER
Issue Date: August 7, 2013 Effective
Date: September 6, 2013
The
Missouri Public Service Commission is approving disposition by settlement, granting
the applications,
and incorporating the proposed conditions and terms. The applications relate to
two transmission projects: the Iatan-Nashua line and the Sibley‑Nebraska
City line (“the projects”):
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For
authorization to
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Applicant
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Title
|
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Transfer plant and operating rights for the projects
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Kansas City Power & Light Company (“KCPL”), and
KCP&L Greater Missouri Operations Company (“GMO”)
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Application of
Kansas City Power & Light Company and KCP&L Greater Missouri
Operations Company (“transfer
application”)
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Construct and operate the projects
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Transource Missouri, LLC (“Transource Missouri”)
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Application of Transource
Missouri, LLC for a Certificate of Convenience and Necessity and Request for
Waiver (“CCN
application”)
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Contents
I. Jurisdiction. 4
II. Docket 4
III. Findings, Conclusions,
and Orders. 6
A. Procedure. 6
B. Merits. 8
i. Law.. 8
ii. Fact 9
iii. Ruling. 13
C. Consent Order 13
i.
Authority. 13
ii.
Characteristics. 15
iii. Ruling. 16
Appendix 1: Appearances. 19
Appendix 2: Statutes cited
by the Signatories. 20
Appendix 3: Conditions
Determined on the Merits. 24
Appendix 4: Consent Order 27
The Commission has jurisdiction over
the subject matter because the Commission’s jurisdiction generally includes
electrical corporations.[4] That includes KCPL and GMO,
because KCPL and GMO own electric plant, and will include Transource Missouri
when it owns and operates transmission facilities. [5] The Commission also has
jurisdiction over the disposition of certain utility property,[6] including operating rights,[7] and the construction and
operation of the utility projects[8] proposed by Transource Missouri.
The signatories cite other statutes supporting the Commission’s jurisdiction
over the applications as set forth in Appendix 2 of this report and order.
Therefore, the Commission concludes that it has jurisdiction to rule on the
applications.
KCPL, GMO, and Transource Missouri
(“applicants”) filed the transfer application and the CCN application
(“applications”). The Commission gave notice, and additional notice, of the applications and set a
deadline for filing applications to intervene. The Commission granted an application
to intervene from Missouri Industrial Energy Consumers (“MIEC”). The Commission issued notice of a
contested case.[13]
Applicants,
Staff, and the Office of the Public Counsel (“signatories”) filed a stipulation
and agreement. The signatories also filed an amendment to the
stipulation and agreement. No party filed any objection to the stipulation
and agreement or amendment (“together, “settlement”) within the time provided
by regulation. [16] The Commission convened an evidentiary
hearing. The signatories filed a proposed report and
order, and a supporting memorandum.[19]
The
Commission convened a settlement conference.[20] The signatories filed a proposed report and
order and consent order with supporting suggestions. The Commission ordered the record supplemented with materials that Transource Missouri filed
setting forth the final route for the Sibley-Nebraska City line.
The
Commission’s decision must stand on the law.[25] The Commission must always state its
conclusions of law.[26] The
Commission makes each ruling on consideration of each party’s allegations and
arguments.
In
any Commission proceeding, formalities do not invalidate any order.[27] Specifically in a contested case,
parties may waive any procedural formality up to the final decision.[28] Parties to a contested case may
submit a proposed resolution of this action under the Commission’s regulations:
The parties may at any time file a stipulation and agreement as a proposed
resolution of all or any part of a contested case. A stipulation and agreement
shall be filed as a pleading. [29] A pleading includes the
following.
Each pleading shall include a clear and concise
statement of the relief requested, a specific reference to the statutory
provision or other authority under which relief is requested, and a
concise statement of the facts entitling the party to relief. [[30]]
That
regulation also allows the Commission to treat the settlement as unanimous when no party files an objection.
[31] The Commission is doing so, and for that reason the
signatories refer to the settlement’s components as “Unanimous.” A stipulation of fact eliminates
the need for evidence on the matter stipulated. [33] But that does not end the
Commission’s duty for the following reasons.
First,
while a stipulation of fact conclusively establishes the matter stipulated,[34] no stipulation can control
procedure, bind the Commission to a conclusion of law,[35] or contravene a statute.[36] A remedy statutorily committed to
the commission’s discretion is therefore not subject to stipulation. [37] The Commission must therefore
independently make its conclusions of law and determine the relief that is due.
Second,
the Commission is charged by statute with protecting the public interest. Also,
unlike a private party or State agency, Staff has no authority of its own to
settle an action. Therefore, Commission approval is necessary for Staff’s
participation in the settlement.
Third, the signatories premise their
proposed resolution on a Commission determination that the settlement includes
no term that is contrary to the public interest. The General Assembly has further
specified what the public interest means for certain actions[38] in
the statutes cited in the signatories’ Joint
Suggestions of the Signatories in Support of an Order by the Commission
Approving the Unanimous Stipulation and Agreement, as
set forth in Appendix 2. The
signatories call the determination, that the settlement does not offend those
standards, “approval.”
Neither the Commission’s procedural regulations
in 4 CSR 240-2, nor any statute cited in the applications, define “approval” of
a stipulation and agreement. As
the signatories use that term, they explain, it means reviewing a document to
determine whether it is contrary to the public interest. The signatories are
correct that the public interest is a consideration in every action before the
Commission. Therefore, the Commission rules on the applications accordingly.
The settlement seeks an order granting
the applications subject to the provisions of the settlement.
i. Law
The applications are subject to statutory
standards that describe the Commission’s authority to grant the permissions
sought.
For the CCN application, the standard is public
convenience and necessity, []” which means that an additional
service would be an improvement that justifies the cost, and includes such conditions as
the Commission “may deem reasonable and necessary.”
For
the transfer application, the standard implicit in the applicable statute is the absence of public
detriment. Like the standard, the authority
to condition the transfer is not express. But guarding against public detriment
implicitly includes conditions to that end, which is more efficient than denial
of an imperfect application.
Among
the proposed terms conditions are waivers of specified Commission regulations. For
those regulations, the standard for waiver is good cause. Good cause means a good faith
request for reasonable relief. [48]
The
signatories also ask that no term or condition that is contrary to the
public interest, on its face or as explained in the record, and as gauged by
the standards in Appendix 2, find its way into the Commission’s order.
Meeting those standards requires evidence,
or a substitute for evidence like stipulated facts, on the record. [49] Applicants
have the burden of proof.[50]
The quantum of proof necessary to carry that burden is the preponderance of the
evidence[51]or
reasonable inferences from the evidence. [52]
Generally in any proceeding, technical rules of evidence do not bind the
Commission. [53]
This record includes evidence relevant to
the standards. All findings needed to support this decision stand on the facts
stipulated in the settlement and in the Second
Joint Proposed Order and Joint Proposed Consent Order Approving Unanimous
Stipulation and Agreement, the testimony provided at the evidentiary
hearing, and the
prepared testimony of the parties received into the record. That testimony is
in the record pursuant to the signatories’ waiver of procedural formalities.
The
Commission has considered the substantial and competent evidence on the whole
record. Where the evidence conflicts, the Commission
determines which evidence is the most credible, and this report and order
reflects the Commission’s determinations of credibility implicitly.[56] No
law requires the Commission to make any statement as to what portions of the
record the Commission accepted or rejected.[57] The
Commission need not separately state any finding of fact when a stipulation, agreed
settlement, or a consent order disposes of the case.[58]
Nevertheless, a brief description of the projects illustrates the factual basis
for this report and order.
Transource Missouri is a Delaware limited liability corporation qualified
to conduct business in Missouri, with its principal place of business in
Columbus, Ohio. Transource Missouri is a wholly-owned subsidiary of Transource
Energy, LLC (“Transource”). Transource was established by Great Plains Energy
Incorporated (“GPE”), the Companies’ parent corporation, and American Electric
Power Company, Inc. (“AEP”) to build wholesale regional transmission projects
within SPP, as well as other regional transmission organizations.
The two projects are regional,
high-voltage, wholesale transmission projects approved by Southwest Power Pool,
Inc. (“SPP”) known as the Iatan-Nashua 345kV transmission project
(“Iatan-Nashua Project”) and the Sibley-Nebraska City 345kV transmission
project (“Sibley-Nebraska City Project”) (collectively, the “Projects”).
The plant that the Companies requested
be transferred to Transource Missouri is property of GMO. KCP&L and GMO
previously requested and received authorization from the Commission to transfer
at cost from KCP&L to GMO certain transmission property owned and operated
by KCP&L between GMO’s Alabama Substation and KCP&L’s Nashua Substation
(“Alabama-Nashua Line”). The southern portion of the Alabama-Nashua Line will
be retired and removed, and the corridor will be used to construct the East
Segment of the Iatan-Nashua Project. The remaining portion of this existing
161kV line, which runs to GMO’s Alabama Substation near St. Joseph, Missouri,
will remain the property of GMO and is not to be transferred. This line will
continue intact and energized at 161kV as a radial line and will not be a part
of the new 345kV facilities.
There is a need for the service to be
rendered by the Projects based upon studies performed by SPP in 2009 and 2010.
These studies demonstrated that the Projects will improve electric grid reliability,
minimize transmission congestion effects, bring economic benefits to SPP
members, and help support public policy goals regarding renewable energy. The
studies also demonstrated that the Projects will provide estimated benefits and
savings that exceed the Projects’ estimated costs.
Transource Missouri
is qualified to construct, finance, own, operate, and maintain the Projects
given the support by the transmission and related expertise of KCP&L and of
American Electric Power Company, Inc. (“AEP”). Transource Missouri will have
the financial ability to construct, own, operate and maintain the Projects
given the equity funding that the subsidiaries of Great Plains Energy
Incorporated (“GPE”), the parent corporation of KCP&L and GMO, and AEP will
provide to Transource Missouri, and Transource Missouri’s plan to issue debt.
Furthermore, Transource Missouri will fully recover the cost of the Projects
once completed, as the Projects’ costs are regionally allocated under the
FERC-approved SPP Tariff Schedule 11. Transource Missouri’s construction
of the Projects is economically feasible by virtue of the cost/benefit analysis
conducted by SPP, as well as its FERC-approved cost allocation methodology
under its Tariff Schedule 11.
The Projects as
proposed to be built by Transource Missouri are in the public interest, given
all the above, as well as the agreement of KCP&L, GMO, and Transource
Missouri to follow the provisions of Paragraphs 27, 28, and 29 of the
stipulation and agreement regarding the final route of the Sibley-Nebraska City
Project.
The
record weighs in favor of granting the applications with the provisions
proposed, including the proposed waivers. The Commission finds no term or
condition of the settlement contrary to the public interest. Therefore, the
Commission will grant the applications subject to the settlement’s provisions
as set forth in Appendix 3 and Appendix 4.
Appendix
4 sets forth the settlement’s provisions
that are outside the Commission’s authority to mandate. The signatories have clarified that they seek no
resolution on the merits for those terms,[59] and the law encourages freedom of contract
and settlements in lieu of litigation.[60] In that
spirit, the statutes provide that any contested case is subject to disposition
by consent order as follows.
i. Authority
The
signatories argue that a consent order is not authorized for any matter except as
described in one statute that does not apply to the Commission. In support, the
signatories rely on a reading of Section 536.060, RSMo 2000. That statute’s
history refutes the signatories’ reading.
Section
536.060’s current language is the result of a 1995 amendment. The amendment
deleted language (in brackets and italics below) and added language
(underscored below) as follows.
[Nothing contained in sections 536.060 to 536.095
shall preclude the informal disposition of] Contested cases and
other matters involving licensees and licensing agencies described in section
621.045, RSMo, may be informally resolved by consent agreement or agreed
settlement or may be resolved by stipulation, consent order, or default, or
by agreed settlement where such settlement is permitted by law. Nothing
contained in sections 536.060 to 536.095 shall be construed (1) to impair the
power of any agency to take lawful summary action in those matters where a
contested case is not required by law, or (2) to prevent any agency authorized
to do so from assisting claimants or other parties in any proper manner, or (3)
to prevent the waiver by the parties (including, in a proper case, the agency)
of procedural requirements which would otherwise be necessary before final
decision, or (4) to prevent stipulations or agreements among the parties
(including, in a proper case, the agency). [[61]]
Informal
disposition of all agencies’ contested cases was the original subject of that
statute as the bracketed and italicized language shows. The
amendment simply added the specified “noncontested cases and other matters [.]”
Section
536.060, original and current, is expansive. It offers remedies in conformance
with the public policy favoring settlement by contractual arrangement. If there
were any ambiguity on this issue, the law would require the Commission to read
the statute generously in the direction of the intended remedy. The signatories’
reading bars resolution by “consent order, or default, or by agreed settlement”
in all contested cases, except the specified matters, which furthers no conceivable
beneficial end. Therefore, the Commission concludes that a contested case
before the Commission is subject to disposition by consent order—just as it is
subject to disposition by stipulation, default, or agreed settlement—under Section
536.060.
The
signatories describe the properties of a consent order by comparison to a
consent judgment. The analogy is correct. The analogous properties, as
described by the signatories, include the following.
Missouri
courts have held that a judgment by consent “is based on an agreement between
the parties as to the terms, amount or conditions of the judgment to be
rendered.” In this context it is important to recognize: “Consent decrees do
not arise from a judicial determination of the rights of the parties or the
merits of the case [.]” It is also important to note: “A consent judgment needs
no cause or consideration other than an adjustment of differences and a desire
to set at rest all possibility of litigation. In exchange for the saving of
cost and elimination of risk, the parties each give up something that they
might have won had they proceeded with litigation.” [[64]]
Also, a
judgment issued pursuant to the parties’ agreement does not aggrieve any such
party so, if aggreivement is necessary for standing to appeal, no appeal is
available to any such party. In
Missouri, a consent judgment has the same force and effect as any other
judgment.
In
Missouri, whenever the issue has arisen, the courts have applied the analogy
between a consent judgment and a consent order. For example, the courts hold
that a consent order does not constitute the agency’s decision on the merits
but, at most, a review as to whether a parties’ agreement comports with the
public policy entrusted to the respective agencies. Further,
where the General Assembly has comprehensively delegated the regulation of a
subject matter to an agency, that agency is the first resort for enforcing
settlement of an action before that agency.
As the
signatories note, chapter 536, RSMo, applies when chapters 386 and 393 provide
nothing to the contrary.[69]
The signatories also note that “approval
of the [settlement] here would not be
inconsistent with
the concept of a consent order [.]” [70]
Therefore, the Commission will order memorialize the proposed provisions that
are beyond the Commission’s authority as a consent order, as set forth in
Appendix 3. As explained in part III.A of this report and order, the approval procedure
that the Commission applies in this action is based on the approval that the
parties asked for, the authorities that they cited, and the documents that they
filed. That procedure does not necessarily apply under any other relief, law,
or facts.
THE COMMISSION ORDERS THAT:
1. Disposition
of the applications by settlement is approved.
2. Transfer
Application. The Application of Kansas
City Power & Light Company and KCP&L Greater Missouri Operations
Company (“transfer application”) is granted. The transfer of the items as
described in the transfer application is authorized. This paragraph includes
the notices to construct as described in the transfer application.
3. The
Application of Transource Missouri, LLC
for a Certificate of Convenience and Necessity and Request for Waiver (“CCN
application”) is granted. A certificate of convenience and necessity for the
projects, as described in the CCN application, shall issue to Transource
Missouri, LLC.
4. The following are incorporated into this
report and order as if fully set:
a. Non-Unanimous
Stipulation and Agreement;
b. First Amendment to Non-Unanimous
Stipulation and Agreement; and
c. Second Joint Proposed Order and
Joint Proposed Consent Order Approving Unanimous Stipulation and Agreement.
5. Ordered paragraphs 1, 2, 3, and 4, are subject to
the provisions of Appendix 3 and Appendix 4.
6. This
order shall become effective on September 6, 2013.
BY THE COMMISSION
Morris
L. Woodruff
Secretary
R. Kenney, Chm., Jarrett, Stoll, and
W. Kenney, CC., concur;
and certify compliance with the
provisions of Section 536.080, RSMo.
Dated at Jefferson City, Missouri,
on this 7th day of August, 2013.
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Party
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Counsel
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Counsel’s Address
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A. Applicants
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Kansas City Power
& Light Company
KCP&L Greater Missouri Operations Company
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Roger W. Steiner
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1200 Main, PO Box
418679, Kansas City, MO 64141-9679
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Transource Missouri, LLC
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Karl Zobrist
Lisa A. Gilbreath
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4520 Main, Suite
1100, Kansas City, MO 64111
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Larry W. Brewer
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400 West 15th
Street, Suite 1500, Austin, TX 78701
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B. Parties
under 4 CSR 240-2.010(10)
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Staff of the
Commission
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Steven Dottheim
Nathan Williams
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200 Madison Street,
Suite 800, Jefferson City, MO 65102
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Office of the
Public Counsel
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Lewis Mills
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P.O. Box 2230,
200 Madison Street, Suite 650, Jefferson City, MO 65102
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C. Intervenors
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AG Processing, Inc. a
Cooperative and Midwest Energy Users'
Group
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Stuart Conrad
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3100 Broadway,
Suite 1209, Kansas City, MO 64111
|
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Midwest Energy Consumers Group
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David Woodsmall
|
807 Winston
Court, Jefferson City, MO 65101
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Missouri Department of Natural Resources
|
Jessica L. Blome
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221 W. High
Street P.O. Box 899 Jefferson City, MO 65102
|
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Missouri Industrial Energy Consumers
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Diana M.
Vuylsteke
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211 N. Broadway,
Suite 3600 St. Louis, MO 63102
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386.250.
The jurisdiction, supervision, powers and duties of the public service
commission herein created and established shall extend under this chapter:
(1) [To] electric plants, and to
[entities] owning, leasing, operating or controlling the same;
* * *
(7) To such other and further extent,
and to all such other and additional matters and things, and in such further
respects as may herein appear, either expressly or impliedly.
386.310.
1. The commission shall have power, after a hearing . . . to require every . .
. public utility to maintain and operate its . . . plant . . . in such manner as
to promote and safeguard the health and safety of its employees, customers, and
the public, and to this end to prescribe . . . appropriate safety and other
devices or appliances, to establish uniform or other standards of equipment,
and to require the performance of any other act which the health or safety of
its employees, customers or the public may demand [.]
386.610.
. . . The provisions of this chapter shall be liberally construed with a view
to the public welfare, efficient facilities and substantial justice between
patrons and public utilities.
393.130.
1. [E]very electrical corporation . . . shall furnish and provide such service
instrumentalities and facilities as shall be safe and adequate and in all
respects just and reasonable. All charges made or demanded by any such . . .
electrical corporation . . . for . . . electricity . . . rendered or to be
rendered shall be just and reasonable and not more than allowed by law or by
order or decision of the commission. Every unjust or unreasonable charge made
or demanded for . . . electricity . . . or in connection therewith, or in
excess of that allowed by law or by order or decision of the commission is
prohibited.
2.
No . . . electrical corporation . . . shall directly or indirectly by any
special rate, rebate, drawback or other device or method, charge, demand,
collect or receive from any person or corporation a greater or less
compensation for . . . electricity . . . or for any service rendered or to be
rendered or in connection therewith, except as authorized in this chapter, than
it charges, demands, collects or receives from any other person or corporation
for doing a like and contemporaneous service with respect thereto under the
same or substantially similar circumstances or conditions.
3.
No . . . electrical corporation . . . shall make or grant any undue or
unreasonable preference or advantage to any person, corporation or locality, or
to any particular description of service in any respect whatsoever, or subject
any particular person, corporation or locality or any particular description of
service to any undue or unreasonable prejudice or disadvantage in any respect
whatsoever [.]
393.140.
The commission shall:
(1) Have general supervision of all .
. . electrical corporations . . . having authority under any special or general
law or under any charter or franchise to lay down, erect or maintain wires,
pipes, conduits, ducts or other fixtures in, over or under the streets,
highways and public places of any municipality, for the purpose of . . .
transmitting electricity for light, heat or power, or maintaining underground
conduits or ducts for electrical conductors, . . . , and all . . . electric
plants . . . owned, leased or operated by any . . . electrical corporation [.]
(2)
[E]xamine or investigate the methods employed by such
persons and corporations in manufacturing, distributing and supplying . . .
electricity for light, heat or power and in transmitting the same, . . , and
have power to order such reasonable improvements as will best promote the
public interest, preserve the public health and protect those using such . . .
electricity, . . . and those employed in the manufacture and distribution
thereof, and have power to order reasonable improvements and extensions of the
works, wires, poles, pipes, lines, conduits, ducts and other reasonable
devices, apparatus and property of . . . electrical corporations [.]
(3)
Have power . . . to prescribe from time to time the efficiency of the electric
supply system, of the current supplied and of the lamps furnished by the
persons or corporations generating and selling electric current [.]
(4) Have power, in its discretion, to
prescribe uniform methods of keeping accounts, records and books, to be
observed by . . . electrical corporations . . . engaged in the manufacture,
sale or distribution of . . . electricity for light, heat or power [.]
(5) [To determine whether] rates or
charges or the acts or regulations of any such persons or corporations are
unjust, unreasonable, unjustly discriminatory or unduly preferential or in any
wise in violation of any provision of law, [and] determine and prescribe the
just and reasonable rates and charges thereafter to be in force for the service
to be furnished, notwithstanding that a higher rate or charge has heretofore
been authorized by statute, and the just and reasonable acts and regulations to
be done and observed; and whenever the commission shall be of the opinion,
after a hearing had upon its own motion or upon complaints, that the property,
equipment or appliances of any such person or corporation are unsafe,
insufficient or inadequate, the commission shall determine and prescribe the
safe, efficient and adequate property, equipment and appliances thereafter to
be used, maintained and operated for the security and accommodation of the
public and in compliance with the provisions of law and of their franchises and
charters.
* * *
(8) Have power . . . after hearing, to
prescribe by order the accounts in which particular outlays and receipts shall
be entered, charged or credited.
* * *
(11) Have power to require every . . .
electrical corporation . . . to file with the commission and to print and keep
open to public inspection schedules showing all rates and charges made,
established or enforced or to be charged or enforced, all forms of contract or
agreement and all rules and regulations relating to rates, charges or service
used or to be used, and all general privileges and facilities granted or
allowed by such . . . electrical corporation [.] The commission shall have
power to prescribe the form of every such schedule, and from time to time
prescribe by order such changes in the form thereof as may be deemed wise [.]
The Commission
grants the CCN application and the transfer application subject to the
following provisions, as drawn verbatim from the Second Joint Proposed Order and Joint Proposed Consent Order Approving
Unanimous Stipulation and Agreement, which are subject to the report and order. The
parties refer to the settlement, defined in the body of this report and order, as
the “Unanimous Stipulation and Agreement” the “Unanimous First
Amendment [.]”
1.
The Unanimous
Stipulation and Agreement, attached hereto as Attachment 1, and the Unanimous First
Amendment to that Stipulation, attached hereto as Attachment 2, are approved
and adopted, and the signatory parties are ordered to comply with their terms.
The Commission is not a party to the Stipulation and only approves the
agreements that have been entered into by the Signatories.
2.
KCP&L and GMO’s Transfer Application is granted conditioned
upon the terms of the Unanimous Stipulation and Agreement and the Unanimous
First Amendment, including the Commission making specific findings after the
final selection of the Sibley-Nebraska City route.
3.
KCP&L and/or GMO shall file a copy of the final purchase
agreement, detail of the costs included in CWIP, and detail of the property to
be transferred at the time of transfer of the Projects’ facilities.
4.
To the extent that the SPP NTCs regarding the Projects are assets,
the Commission approves KCP&L and GMO’s plans to novate
those NTCs.
5.
The Commission’s Affiliate Transactions Rule sections 4 CSR 240-
20.015(2)(A)2, 4 CSR 240-20.015(2)(B), and 4 CSR 240-20.015(3)(C)4 are waived
with respect to:
a.
The transfer, license, or assignment of transmission assets,
easements, or right of ways (or use thereof) owned by GMO or KCP&L
associated with the Projects;
b.
Materials and services provided by KCP&L or GMO to Transource,
Transource Missouri, or a subsidiary for the Projects prior to novation or
transfer of the cost of the Projects to Transource Missouri; and
c.
Information, assets, goods, and services provided by KCP&L or
GMO to Transource, Transource Missouri, or a subsidiary until the Projects are
in service.
6.
The Commission’s Affiliate Transactions Rule sections 4 CSR
240-20.015(2)(A)2, 4 CSR 240-20.015(2)(B), and 4 CSR 240-20.015(3)(C)4 are
waived to the extent necessary to allow KCP&L and GMO to use a 20% markup
to their fully distributed cost methodology in lieu of using the fair market
value under the Rule with respect to:
a.
Non-Project goods and services (if the Signatories cannot agree
regarding the reasonableness of these charges, this matter shall be taken to
the Commission for resolution); and
b.
Information, assets, goods, and services provided by KCP&L or
GMO to Transource, Transource Missouri, or a subsidiary for the Projects after
they are in service.
7.
KCP&L and GMO shall file for Commission approval of their cost
allocation manuals (“CAMs”) before providing any
information, assets, goods, and services to Transource or Transource Missouri
after either the novation or transfer of the cost of the Projects, whichever
occurs first, but KCP&L and GMO may provide to Transource or Transource
Missouri information, assets, goods, and services in a manner consistent with
the provisions of the Stipulation prior to Commission approval of their CAMs. .
8.
Transource Missouri’s
CCN Application is granted conditioned upon the terms of the Unanimous
Stipulation and Agreement and the Unanimous First Amendment, including the
Commission making specific findings after the final selection of the
Sibley-Nebraska City route.
9.
Transource Missouri
shall provide the Commission with the 4 CSR 240-3.105 information for the
Sibley-Nebraska City route as soon as that information is available.
10.
The reporting
requirements of 4 CSR 240-3.175, Submission Requirements For Electric Utility
Depreciation Studies, are waived subject to the Stipulation’s provision regarding
Staff’s and OPC’s access to documents.
11.
Subsections 4 CSR
240-3.190 (1), (2), and (3)(A)-(D), Reporting Requirements For Electric
Utilities And Rural Electric Cooperatives, are waived for Transource Missouri.
The Signatories
agree to a grant of the CCN application and the transfer application subject to
the following provisions, drawn verbatim from the Second Joint Proposed Order and Joint Proposed Consent Order Approving
Unanimous Stipulation and Agreement, and the settlement, which are subject to
the provisions of the report and order.
1.
The
Stipulation contains a series of agreements among the Signatories that, among
other things, require them (particularly the Applicants) to fulfill certain
obligations. The Stipulation also specifies the establishment of certain
regulatory liabilities and the manner of their future treatments. The
Stipulation provides a process for administering affiliate transactions between
the Signatories and related parties.
2.
In
particular, Section II(A) of the Stipulation provides for certain rate
treatment respecting costs allocated to KCP&L or GMO by SPP involving FERC
items such as authorized return on equity (“ROE”), capital structure,
construction work in progress (“CWIP”), or other FERC transmission rate
incentives for the Iatan-Nashua Project and the Sibley-Nebraska City Project
facilities located in KCP&L’s and GMO’s respective service territories that
are constructed by Transource Missouri. KCP&L and GMO have agreed to make
these adjustments in all rate cases so long as the transmission facilities are
in service.
A. Rate
Treatment – Affiliate Owned Transmission
1. With respect to transmission facilities
located in KCP&L certificated territory that are constructed by Transource
Missouri that are part of the Iatan-Nashua and Sibley-Nebraska City Projects,
KCP&L agrees that for ratemaking purposes in Missouri the costs allocated
to KCP&L by SPP will be adjusted by an amount equal to the difference
between: (a) the SPP load ratio share of the annual revenue requirement for
such facilities that would have resulted if KCP&L’s authorized ROE and
capital structure had been applied and there had been no Construction Work in
Progress (“CWIP”) (if applicable) or other FERC Transmission Rate Incentives, including
but not limited to Abandoned Plant Recovery, recovery on a current basis
instead of capitalizing pre-commercial operations expenses and accelerated
depreciation, applied to such facilities; and (b) the SPP load ratio share of
the annual FERC-authorized revenue requirement for such facilities. KCP&L
will make this adjustment in all rate cases so long as these transmission
facilities are in service.
2. With respect to transmission facilities
located in GMO certificated territory that are constructed by Transource
Missouri that are part of the Iatan-Nashua and Sibley-Nebraska City Projects,
GMO agrees that for ratemaking purposes in Missouri the costs allocated to GMO
by SPP will be adjusted by an amount equal to the difference between: (a) the
SPP load ratio share of the annual revenue requirement for such facilities that
would have resulted if GMO’s authorized ROE and capital structure had been
applied and there had been no CWIP (if applicable) or other FERC Transmission
Rate Incentives, including but not limited to Abandoned Plant Recovery,
recovery on a current basis instead of capitalizing pre-commercial operations
expenses and accelerated depreciation, applied to such facilities; and (b) the
SPP load ratio share of the annual FERC-authorized revenue requirement for such
facilities. GMO will make this adjustment in all rate cases so long as these
transmission facilities are in service.
3.
Sections
II(B) and II(D) address issues under the Commission’s Affiliate Transactions
Rule, 4 CSR 240-20.015 (“Rule”). The Signatories agreed that provisions of the
Affiliate Transactions Rule, 4 CSR 240-20.015, should apply to transactions
between KCP&L and GMO on the one hand, and GPE, Transource, and
Transource’s utility subsidiaries on the other hand, except for the waivers as
provided for in Paragraphs 4 through 6, and 11 through 13 of the Stipulation.
All Signatories reserved the right to seek or oppose additional waivers for
other projects (i.e., projects other than the Iatan-Nashua Project and the
Sibley-Nebraska City Project) from the Affiliate Transactions Rule in the
future.
B.
Affiliate Transactions Rule
3. The provisions of the Affiliate Transactions
Rule, 4 CSR 240-20.015, shall apply to transactions between KCP&L and GMO
on the one hand, and GPE, Transource Missouri, and Transource Missouri’s
utility subsidiaries on the other hand, except for the waivers as provided for
in paragraphs 4 through 6, and 11 through 13. All Signatories reserve the right
to seek or oppose additional waivers for other projects (i.e., projects other
than the Projects) from the Affiliate Transactions Rule in the future.
4. The Signatories request that the Commission
waive 4 CSR 240-20.015(2)(A)2, 4 CSR 240-20.015(2)(B), and 4 CSR
240-20.015(3)(C)4 with respect to transfer, license, or assignment of easements
or right of ways (or use thereof, including joint usage where KCP&L/GMO are
using the easement or right of way and permit Transource Missouri to use the
same easement or right of way) owned by GMO or KCP&L associated with the
Projects. The affiliate transactions referenced in this paragraph are subject
to the provisions of paragraph 7.
5. The Signatories request that the Commission
waive 4 CSR 240-20.015(2)(A)2, 4 CSR 240-20.015(2)(B), and 4 CSR
240-20.015(3)(C)4 with respect to materials and services (including, but not
limited to, usage of KCP&L/GMO employees, contracted labor/services,
vehicles, equipment, and facilities) provided by KCP&L or GMO to Transource
Missouri, Transource Missouri, or a subsidiary for the Projects prior to
novation or transfer of the cost of the Projects to Transource Missouri. The
providing entity shall be compensated for these materials and services
including Allowance for Funds Used During Construction (“AFUDC”) and
capitalized property taxes at its fully distributed cost at the time of
transfer of the cost of the Projects.
6. The Signatories agree that non-Project goods
and services (defined as goods and services that are not directly related to
the Projects) were to be provided and are to be provided at the higher of fair
market value or fully distributed cost by KCP&L to Transource Missouri,
Transource Missouri, and GPE prior to the novation or transfer of the cost of
the Projects. KCP&L and GMO will, by June 1, 2013, ensure that charges to
Transource Missouri, Transource Missouri, and GPE regarding the development and
formation of Transource Missouri and Transource Missouri reflect the higher of
fair market value or the fully distributed cost. The Signatories agree that
KCP&L and GMO can use a 20% markup to their fully distributed cost
methodology for such goods and services in lieu of using the fair market value.
If the Signatories cannot agree regarding the reasonableness of these charges,
this matter will be taken to the Commission for resolution. In support of the
resolution of the treatment for non-Project goods and services provided prior
to the novation or transfer of the cost of the Projects, KCP&L and GMO will
contribute a total of $50,000 to the State School Fund or a mutually agreeable
organization. This contribution will not be recovered from KCP&L and GMO
customers. The Signatories agree that all outstanding issues related to the
provision of non-Project goods and services to Transource Missouri, Transource
Missouri, and GPE prior to the novation or transfer of the cost of the Projects
are resolved, except as provided in this paragraph.
7. Transource Missouri will pay GMO the higher of
$5.9 million or net book value for transferred transmission assets, easements,
and right-of-ways that have been previously included in the rate base and
reflected in the retail rates of KCP&L and GMO customers. KCP&L and GMO
agree to book a regulatory liability reflecting the value of this payment to
the extent it exceeds net book value. This regulatory liability shall be
amortized over three years beginning with the effective date of new rates in
KCP&L’s and GMO’s next retail rate cases.
D.
KCP&L Operations Specific to the Projects
11. If KCP&L assists Transource Missouri for
the Projects in communicating with local landowners in the KCP&L and GMO
certificated service territories, with local governmental authorities, and with
other members of the public, or if KCP&L continues to provide ongoing
construction management, cost control management, engineering services,
construction services, procurement of materials, and related services for the
Projects, the Signatories request that the Commission waive 4 CSR
240-20.015(2)(A)2, 4 CSR 240- 20.015(2)(B), and 4 CSR 240-20.015(3)(C)4 with
respect to information, assets, goods, and services (including, but not limited
to, usage of KCP&L or GMO employees, contracted labor/services, vehicles,
equipment, and facilities) provided by KCP&L or GMO to Transource Missouri,
Transource Missouri, or a subsidiary until the Projects are in service. These
materials and services will be provided at fully distributed cost until the
Projects are in service. For the purposes of this paragraph and paragraph 12,
“in service” is defined as the commercial operation date for each of the Projects.
12. If KCP&L provides operations and
maintenance services and related capital for the Projects after they are in
service, it will do so in a manner consistent with the application of the
Commission’s Affiliate Transactions Rule, except that the Signatories request
that the Commission waive 4 CSR 240-20.015(2)(A)2, 4 CSR 240-20.015(2)(B), and
4 CSR 240- 20.015(3)(C)4 with respect to information, assets, goods, and
services (including, but not limited to, usage of KCP&L or GMO employees,
contracted labor/services, vehicles, equipment, and facilities) provided by
KCP&L or GMO to Transource Missouri, Transource Missouri, or a subsidiary
to the extent necessary to allow KCP&L and GMO to use a 20% markup to their
fully distributed cost methodology in lieu of using the fair market value.
13. KCP&L and GMO shall file for Commission
approval of their Cost Allocation Manuals (“CAM”) before providing any
information, assets, goods, and services to Transource Missouri or Transource
Missouri after either the novation or transfer of the cost of the Projects,
whichever occurs first. The Signatories agree that KCP&L and GMO can
provide information, assets, goods, and services to Transource Missouri or
Transource Missouri in a manner consistent with the provisions of this
Stipulation prior to Commission approval of the CAM.
4.
The
Signatories have agreed to certain payments to be made by Transource Missouri,
KCP&L and GMO, including their regulatory treatment. The Signatories have also agreed to other
procedures that KCP&L, GMO, Transource Missouri, and their affiliates will
follow with regard to the Projects.
5.
The
Stipulation contains provisions regarding the future operations of the
Applicants in Section II(C), reporting requirements in Section II(E), and
access by Staff and OPC to the books and records of Transource Missouri and
Transource Energy in Section II(F). There are additional conditions in Section
II(G) regarding the final selection of the route of the Sibley-Nebraska City
Project, as well as public outreach efforts related to the siting, routing,
easement acquisition and right-of-way acquisition for the Projects.
C. Transource
Missouri Operations/Future Transfer
8. Transource Missouri will not pursue future
transmission projects that are subject to a right of first refusal (“ROFR”) in
the KCP&L and GMO respective certificated service territories.
9. KCP&L and GMO will pursue future
transmission projects subject to ROFR in their respective certificated service
territories. KCP&L or GMO may seek a waiver from the provisions of this
paragraph from the Commission for good cause.
10. Transource Missouri agrees to seek approval
from the Commission for any subsequent transfer of the Projects’ facilities.
E.
Additional Reporting and Provision of Information Regarding the Projects
14. KCP&L will file a copy of the final
purchase agreement, detail of the costs included in CWIP, and detail of the
property to be transferred at the time of transfer of the Projects’ facilities.
15. KCP&L, GMO, and/or Transource Missouri will
continue coordinated efforts with Omaha Public Power District until the details
of the routing and interception point for the Sibley-Nebraska City line are
finalized.
16. KCP&L, GMO, and/or Transource Missouri will
provide to Staff and OPC the Sibley-Nebraska City Project cost control budget
estimate in the fourth Quarter of 2013.
17. KCP&L, GMO, and/or Transource Missouri will
continue to file quarterly status reports on the Iatan-Nashua Project to the
Commission, as KCP&L and GMO are doing in File No. EO-2012-0271.
18. KCP&L, GMO, and/or Transource Missouri will
file in File No. EA-2013-0098, or other case as designated by the Commission,
quarterly status reports on the Sibley-Nebraska City Project to the Commission
consistent with those provided by KCP&L and GMO in File No. EO-2012-0271.
19. Updates to SPP regarding the Projects are now
being entered on a quarterly basis directly into SPP’s Transmission and
Generation Interconnection Tracking (“TAGIT”) project tracking database through
a secure interface. SPP reviews the updates and includes them in its quarterly
Project Tracking Reports, which are publicly available on SPP’s website.
Transource Missouri will provide to Staff and OPC any other periodic updates
required by SPP regarding the Projects that are not included in the publicly
available quarterly Project Tracking Reports.
F. Access
to Books and Records Necessary for the Commission to Perform Its Statutory
Duties
20. Transource Missouri will produce in Missouri,
upon reasonable notice, duplicate copies of Transource Missouri’s and
Transource Missouri’s books and records.
21. Transource Missouri will provide Staff and OPC
access to the following documents, including but not limited to: (a) Meeting
Minutes of, and Materials distributed at, the Transource Missouri Board of
Managers and Members (including Committee Minutes and Materials); (b) Meeting
Minutes of, and Materials distributed at, the Transource Missouri Board of
Managers and Members (including Committee Minutes and Materials); (c) Workpapers
of the external auditors of Transource Missouri; (d) Workpapers of the external
auditors of Transource Missouri; (e) General Ledger (provided electronically)
of Transource Missouri; (f) General Ledger (provided electronically) of
Transource Missouri; (g) Chart of Accounts and Written Accounting Policies of
Transource Missouri; (h) Chart of Accounts and Written Accounting Policies of
Transource Missouri; (i) Organizational Charts of
Transource Missouri; (j) Organizational Charts of Transource Missouri; (k)
Total Company and Missouri Jurisdictional Financial Statements (Income
Statement, Balance Sheet, Statement of Cash Flows) on a Quarterly Basis of
Transource Missouri; (l) Total Company and Missouri Jurisdictional Financial
Statements (Income Statement, Balance Sheet, Statement of Cash Flows) on a
Quarterly Basis of Transource Missouri; (m) Monthly Operating/Financial Reports
of Transource Missouri (used for internal reporting of the utility ongoing
operations and earnings results); (n) Monthly Operating/Financial Reports of
Transource Missouri (used for internal reporting of the utility ongoing
operations and earnings results); (o) Construction and Operating Budgets for
the Current and Succeeding Three Years of Transource Missouri; (p) Construction
and Operating Budgets for the Current and Succeeding Three Years of Transource
Missouri; (q) Federal and Missouri Income Tax Returns of Transource Missouri;
and (r) Federal and Missouri Income Tax Returns of Transource Missouri.
22. Transource Missouri will work with Staff to
provide office space in Columbus, Ohio if it is more efficient for the Staff to
perform its duties in Columbus, rather than by reviewing copies of books and
records provided in Missouri.
23. New or updated agreements between the Applicants
that are executed after the approval of the settlement agreement in this case
will be provided to the Signatories as they become available.
G.
Additional Conditions Agreed to for Approval of Applications
24. GMO agrees to establish a regulatory liability
reflecting the amount collected in retail customer rates for the transferred
property from the date of the novation or transfer of the costs of the Projects
until new GMO rates are established. The treatment of the regulatory liability
will be determined in GMO’s next retail rate case.
25. Transource Missouri requested that the
Commission grant approval of the CCN Application conditioned upon: (a) PSC
approval of the transfer requests in File No. EO-2012- 0367; (b) SPP’s approval
of Transource Missouri as a transmission owning member; (c) novation of the
NTCs to Transource Missouri; and (d) FERC’s acceptance of the novation
agreements.
26. KCP&L and GMO requested that the Commission
grant approval of the Transfer Application conditioned upon: (a) Transource
Missouri obtaining the necessary approvals to construct the Projects; (b)
Transource Missouri executing the SPP Membership Agreement as a Transmission
Owner; (c) SPP’s approval of the novation of the NTCs to Transource Missouri;
and (d) FERC’s acceptance of the novation agreements.
27. The Signatories agree that it would be
reasonable for the Commission to grant conditional approval of KCP&L and
GMO’s Transfer Application and Transource Missouri’s CCN Application prior to
the final selection of route for the Sibley-Nebraska City Project. The
Signatories request that the Commission grant approval conditioned upon the
Commission making specific findings, through means determined at the
Commission’s discretion, after the final selection of the Sibley-Nebraska City
route has been made, that the Transfer Application is not detrimental to the
public interest and that the CCN Application is necessary and convenient for
the public service. Transource Missouri shall provide the Commission with the 4
CSR 240-3.105 information for the Sibley-Nebraska City route as soon as that
information is available.
28. Nothing in this Stipulation restricts any
Signatory’s right to request reasonable additional notice, local public
hearings, or additional processes in these cases. No Signatory is restricted
from opposing such request to the Commission.
29. KCP&L and GMO will provide the Commission
with a report and information in File No. EA-2013-0098 within 90 days of the
effective date of a Commission order approving this Stipulation outlining its
public outreach efforts for siting, routing, easement acquisition and
right-of-way acquisition for the Projects. KCP&L and GMO will update the
report at least quarterly thereafter.
6.
The
Commission has thoroughly reviewed the terms of the Stipulation, as well as the
Signatories’ Joint Memorandum in Support of the Stipulation and other
submissions which they have submitted jointly and individually. The Commission
has also reviewed the hearing exhibits that have been entered into the record
in this case. Based upon its review of the record and the Stipulation, the
Commission independently finds and concludes that the Stipulation’s proposed terms are in the public interest,
and that they are necessary and convenient for the public service.
7.
Although
the Commission’s review and approval of the Stipulation does not mean that it is issuing a decision on the merits
of each of the individual elements of the Stipulation, the Commission finds
that the agreement entered into by the Signatories is fair and reasonable, is
not detrimental to the public interest, and
serves the necessity and convenience of the public.
8.
The
Commission finds that the actions that the Stipulation requires the Applicants to take, and the process and procedures that
the Signatories have agreed to follow as the Projects are constructed and operated all relate to
the promotion of efficient facilities to serve the public, and they achieve substantial justice between
patrons and public utilities. PSC v. Missouri Gas Energy, 388 S.W.3d 221, 228 (Mo. App. W.D. 2012), citing Section
386.610. Consequently, it is
in the public interest for the Commission to approve the Stipulation as
submitted by the Signatories.
