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The Federal Energy Regulatory Commission (FERC) cannot legally justify its about-face on a Southwest Power Pool (SPP) plan to regionally allocate the costs of transmission projects within the grid operator's 14-state footprint, the D.C. Circuit heard on Thursday. The "FERC Grid Plan Backtrack" has spurred a heated legal battle, with critics asserting that the commission’s reversal flouts established energy cost principles.

Electric cooperatives Sunflower Electric Power Corp. and Midwest Energy Inc. argued that FERC's retroactive rejection of SPP’s plan in July 2023—just nine months after approving it—abandoned core cost-causation principles embedded in the Federal Power Act. These principles mandate that the costs charged to transmission customers should align closely with the benefits they receive. By reversing course, the co-ops allege that FERC acted unfairly and inconsistently with federal energy law.

FERC's Mootness Argument Challenged by Co-ops

In its defense, FERC claims that neither cooperative has standing to challenge the decision. It argues that Midwest Energy has not demonstrated that it owns any of the "byway" transmission facilities affected by the decision. As for Sunflower, FERC points to its recent separate approval of four Sunflower projects as a reason to dismiss their challenge. However, the co-ops rebutted this in a Thursday reply brief, asserting that FERC’s argument is more about mootness than standing—and that the agency's reasoning is flawed regardless.

"That recent FERC order remains subject to review by both FERC and this court, which several respondent-intervenors have sought," the co-ops emphasized. "And the order does not come close to granting the full relief petitioners seek here, as the tariff amendment established a waiver process that would govern not just existing facilities, but future facilities."

FERC Grid Plan Backtrack : Co-ops Say FERC’s Concerns Are Unfounded

Once the question of standing is set aside, the co-ops argue that FERC's rationale for reversing the grid plan still falls flat. The agency’s concerns about discriminatory project cost allocation and a lack of transparency, they say, are insufficient to justify a reinstatement of the previous cost allocation structure, which they view as unfair.

"FERC also continues to ignore the fact that it rejected precisely the same discrimination and transparency concerns the first time around — and did so on the basis of modifications that the commission itself directed to address those very concerns," the co-ops wrote.

Background on the FERC Grid Plan Backtrack

The dispute has its roots in SPP’s proposal to create a waiver that would allow its board to decide, on a case-by-case basis, whether to distribute the costs of byway facilities—mutually beneficial transmission projects ranging from 100 kilovolts to 300 kilovolts—across the entire region. This plan was intended to address the increased development of wind energy projects within the wind-rich areas of the SPP grid in the central U.S., with power primarily being sent to areas of higher electricity demand.