FACTS: On January 17, 2012, FERC approved a Stipulation and Consent Agreement between the FERC Enforcement Staff and Xcel Energy Inc. (Xcel). The settlement resolves the investigation by Enforcement Staff into whether Xcel committed violations of its open access transmission tariff (Xcel OATT) and the Southwest Power Pool, Inc.’s (SPP) open access transmission tariff (SPP OATT) by the use of firm network integrated transmission service (NITS) in connection with the purchase and sale of electricity over the Lamar Tie Line between two Xcel Energy subsidiaries, Public Service Company of Colorado (PSCo) and Southwestern Public Service (SPS). The two utilities are interconnected through the Lamar Tie Line, which has a capacity of 210 MW. After the tie line was declared commercially available to provide transmission services in 2005, both SPS and PSCo reserved the full capacity of the tie line through long-term firm network transmission service reservations. From time to time, PSCo and SPS have purchased capacity and energy from one another. However, no compensation for transmission service for such exchanges was paid until March 1, 2007, when SPS and PSCo executed with one another Network Integration Transmission Service (NITS) Agreements, which provide for compensation between the two companies for network transmission service across the tie line. During the period relevant to the investigation, Schedule E of the Xcel Energy Joint Operating Agreement and the Network Integration Transmission Service Agreements between PSCo and SPS were not listed as grandfathered agreements in the SPP OATT.
INVESTIGATION: Enforcement Staff concluded that Xcel violated both the Xcel OATT and the SPP OATT by using firm NITS for its purchase and sale transactions between PSCo and SPS when those transactions were not eligible for use of that service. According to both the Xcel OATT and the SPP OATT, for an entity to use firm network service to serve loads on its own system the resources providing the energy must be network resources. Network resources include owned, purchased and leased generation designated by the customer to serve network load. In addition to the requirements regarding designated network resources, there are requirements under the Xcel and SPP OATTs regarding designated network load. First, a utility purchasing power from another utility can only request network service across that other utility’s system if the load to be served is a designated network load. Second, a utility selling power can only authorize network service across its own system if the load to be served is a designated network load. Moreover, in order for load on another utility’s transmission system to qualify as designated network load, the transmitting utility must elect to include that utility’s entire load as network load and designate network resources to serve it.
VIOLATIONS: Enforcement Staff concluded: (i) that the resources used in the transactions between SPS and PSCo do not qualify as designated network resources, and (ii) that the load to be served does not qualify as designated network load. For those reasons, Enforcement Staff determined that SPS and PSCo should have used point-to-point transmission service to bring energy across the other’s system and secondary network service to bring energy across its own system, not NITS. In the case of energy transfers from SPS to PSCo, Enforcement Staff concluded further that PSCo was obligated to seek point-to-point transmission service from SPP, using SPP’s OASIS and compensating SPP in accordance with SPP’s tariff requirements, because SPS is a member of SPP and is obligated to operate under the SPP OATT. Such point-to-point revenues are distributed by SPP to SPP’s transmission owning members, in accordance with tariff-approved allocation formulas.
REMEDY: While Xcel accepted the facts stipulated in the settlement, it neither admit nor denied that those facts constitute violations by Xcel of the Federal Power Act (FPA), Commission rules or regulations, or the Xcel or SPP OATTs. Xcel agreed to pay a civil penalty of $2 million and to submit semi-annual compliance monitoring reports to Enforcement Staff for one year, with the option of a second year at Enforcement Staff’s discretion. Finally, in order to remedy its violations on a prospective basis, Xcel, in cooperation with SPP, will file under FPA §205 for revisions to the Xcel and SPP OATTs that would provide for NITS transmission service over the Lamar Tie Line.