[00:00:04] Speaker 00:
Case number 16-1150, Amaran Services Company as agent for Union Electric Company, DBA, Amaran, Missouri, Amaran, Illinois Company, DBA, Amaran, Illinois, and Amaran Transmission Company of Illinois, NL of Petitioners versus Federal Energy Regulatory Commission.

[00:00:22] Speaker 00:
Mr. Thompson for the petitioners, Mr. Glad for the respondent.

[00:00:49] Speaker 03:
Good morning.

[00:00:50] Speaker 03:
Good morning.

[00:00:52] Speaker 03:
May it please the court, I'm Michael Thompson, representing the petitioners, a group of utilities generally referred to as the MISO transmission order, and the intervener supporting them, the Mid-Continent Independent System Operator, generally referred to as MISO.

[00:01:07] Speaker 03:
I'm reserving five minutes of my time for rebuttal, if I may.

[00:01:11] Speaker 03:
In the orders under review in this case, the FERC ordered MISO to modify its tariff

[00:01:17] Speaker 03:
which was filed pursuant to Section 206 of the Federal Power Act to comply with certain elements of FERC's Order 1000.

[00:01:25] Speaker 03:
Order 1000 in turn was issued pursuant to Section 206 also and directed the utilities under FERC's jurisdiction to follow certain principles related to the planning of transmission expansions and upgrades on their facilities across the nation.

[00:01:44] Speaker 03:
The transmission owners in MISO contend that the FERC's orders in this case should be vacated and remanded, because the agency did not adequately confront arguments that we made in our request for rehearing of its initial order on the compliance filing before it, and because FERC did not, as the statute requires, make the findings that its imposed solution to the problem it perceived with the MISO tariff was just and reasonable itself.

[00:02:14] Speaker 03:
This case arises from the filing of a revised tariff to comply with the portions of Order 1000 that relate to interregional coordination of planning.

[00:02:26] Speaker 03:
Specifically, it arose from an agreement between MISO and a neighboring region called the Southeast Regional Transmission Planning Region.

[00:02:34] Speaker 03:
related to the development and how costs will be allocated for inter-regional projects, that is, projects that would entail facilities to be located in both MISO and the southeastern region.

[00:02:46] Speaker 05:
Can I ask you a background, factual question, which is the MISO and the southeastern regionals, is it, I don't know how, what the... Certify, I think is the way people say it.

[00:02:58] Speaker 05:
So MISO and Certify, they both submit

[00:03:03] Speaker 05:
a proposal as to how they're going to account for costs in the event that an interregional project is approved so that you have to come up with some system for allocating costs between the two of them.

[00:03:13] Speaker 05:
And then MISO proposes a system under which they exclude the approved projects.

[00:03:23] Speaker 05:
In calculating the degree of benefits, which then begets the calculation of the cost avoidance advantage,

[00:03:32] Speaker 05:
MISO's proposal, which FERC then rejects, but MISO's proposal excludes approved projects from the field of vision.

[00:03:41] Speaker 05:
CERTEPS, as I understand it, includes approved projects.

[00:03:48] Speaker 05:
Why is there that mismatch?

[00:03:49] Speaker 05:
Doesn't it seem like it's already skewed if one side is including approved project and figuring out its cost share and the other side who, there's only two entities here, we're gonna divide it 50-50, 60-40, 70-30, whatever, we're gonna come up with some system to divide us between the two of them.

[00:04:10] Speaker 05:
If one side is excluding approved projects and the other side is including approved projects, why does that happen?

[00:04:16] Speaker 05:
That seems odd to me.

[00:04:18] Speaker 03:
I think what you hit on in your eye is what I'll call the complexities, I guess, of Order 1000.

[00:04:25] Speaker 03:
In the interregional coordination process under Order 1000, each pair of regions has to come up with a method of allocating costs for interregional projects between the regions.

[00:04:36] Speaker 03:
But then each region separately comes up with a way of allocating the costs within that region, its share of the interregional costs.

[00:04:45] Speaker 03:
In this particular case, and the reason for that, Your Honor, I think it's fair to say, is because there can be differences between the internal regional planning processes in each region.

[00:04:55] Speaker 05:
OK.

[00:04:56] Speaker 03:
And in this instance, what MISO proposed, as you said, was that an interregional project could displace a regional project in MISO only to the extent a regional project had not yet been approved by the MISO board.

[00:05:13] Speaker 03:
And that's really the heart of the issue here.

[00:05:15] Speaker 05:
Right, for cost allocation purposes.

[00:05:17] Speaker 03:
For cost allocation purposes, that's right.

[00:05:19] Speaker 03:
And the reason for that, Your Honor, if I can sort of jump ahead here, is that in MISO, the process goes forward with MISO developing alternative projects that might be viable to serve various needs in its system goes through stakeholder vetting of those projects.

[00:05:40] Speaker 03:
And in that course of events, we'll compare not only various regional alternatives, but also interregional alternatives that may arise.

[00:05:49] Speaker 03:
Then MISO determines from that process what to recommend to the board to approve.

[00:05:54] Speaker 03:
Once the board approves projects, they become a formal part of the MISO regional plan and listed in what's called Appendix A to the MISO plan.

[00:06:05] Speaker 03:
Once projects are in Appendix A, the MISO tariff

[00:06:09] Speaker 03:
requires MISO to designate the entity that's responsible for developing that project.

[00:06:15] Speaker 03:
And in many cases, that's the transmission owners who are involved here.

[00:06:18] Speaker 03:
But it can also be an independent developer.

[00:06:23] Speaker 03:
And in fact, MISO, in some cases, puts projects out for competitive bidding and selects the developers through that process.

[00:06:30] Speaker 03:
But in any event, once a project is approved by the board and placed in Appendix A, there's an affirmative obligation under the tariff to go forward in good faith

[00:06:39] Speaker 03:
to finish that project, to complete it.

[00:06:42] Speaker 02:
Aren't there such projects right now that would be displaced by the interregional plan?

[00:06:48] Speaker 03:
Well, under these orders as it stands, Your Honor, every project currently listed in Appendix A is potentially susceptible to being bumped by an interregional plan.

[00:06:58] Speaker 03:
And to give you an example of the mistakes here, Your Honor, for example, Entergy, which is just one of the... Are there any that you know will be displaced?

[00:07:08] Speaker 03:
No, sir, I don't know any of that.

[00:07:10] Speaker 02:
Doesn't that create a standing problem then?

[00:07:13] Speaker 03:
We think it does not, Your Honor.

[00:07:15] Speaker 03:
We rely on several precedents, particularly Idaho Power is one where this court recognized that where FERC issues an order that creates uncertainty where there previously was certainty.

[00:07:24] Speaker 03:
that that is a concrete injury to petitioners' interests and therefore gives it standing to challenge the FERC's orders.

[00:07:33] Speaker 03:
In this case, Your Honor, there are literally dozens of projects, even in just the most recent MISO transmission plan.

[00:07:40] Speaker 03:
Entergy, for example, has nearly 50 projects in the 2017, just added in the 2017 MISO plan, in which it already has invested approximately $9 million and expects to eventually invest almost $800 million.

[00:07:54] Speaker 05:
So I'm missing something very basic here which is why are we talking, the case is about cost allocation.

[00:08:04] Speaker 05:
Why are we talking about whether the projects ultimately, which projects ultimately may or may not be approved because it just seems like

[00:08:13] Speaker 05:
those are two potentially at least conceptually distinct steps.

[00:08:18] Speaker 05:
One is you take it, you figure out what's going to factor into allocating costs between the two regions for an interregional project.

[00:08:26] Speaker 05:
That doesn't necessarily have to do with which projects are ultimately going to be approved.

[00:08:31] Speaker 05:
Then you have a separate step about which projects are going to be approved.

[00:08:34] Speaker 05:
We're only talking, as far as I know, we're only talking about the cost allocation step here.

[00:08:39] Speaker 03:
Right.

[00:08:39] Speaker 03:
But the reason we're talking, if I may, Your Honor.

[00:08:41] Speaker 03:
Yeah.

[00:08:43] Speaker 03:
The reason we're talking about that, Your Honor, is because FERC has required that in determining the cost allocation step.

[00:08:49] Speaker 03:
And in this case, the cost allocation step is the allocation between the two regions.

[00:08:53] Speaker 03:
Within the portion of benefits in MISO is what we're looking at.

[00:08:57] Speaker 03:
Yeah.

[00:08:57] Speaker 03:
And the way MISO determines what those are.

[00:09:00] Speaker 03:
And Burke is saying you have to look at projects that are already approved and listed in Appendix A at that step.

[00:09:10] Speaker 03:
The transmission owners in MISO argued that that was unnecessarily disruptive of the process and harmful to developers like the transmission owners and even non-incumbent developers because of the commitments they make once projects are approved.

[00:09:26] Speaker 05:
But that, right there, you're talking about what's going to ultimately happen with the projects.

[00:09:32] Speaker 05:
And I guess my question is, when we're talking about the cost allocation formula, we're not necessarily talking about what's ultimately going to happen with the projects.

[00:09:40] Speaker 05:
We're only talking about a mathematical formula to determine how to apportion costs as between the two regions.

[00:09:45] Speaker 03:
I guess maybe what I need to explain is that the cost allocation step is important in determining whether the interregional project that's being evaluated meets the cost benefit threshold for going forward in MISO and the southeastern region.

[00:10:01] Speaker 03:
And so if, by definition under this process, if the cost benefit threshold is met,

[00:10:08] Speaker 03:
And by virtue of having looked at projects already in Appendix A, it might be met based on assumption that the interregional project will replace something that's in Appendix A. But then the interregional project should go forward at that point, presumably in lieu of the regional project that's already in Appendix A. The cost benefit threshold is what, exactly?

[00:10:29] Speaker 03:
1.25.

[00:10:31] Speaker 05:
And where is that?

[00:10:32] Speaker 05:
I'm sorry?

[00:10:33] Speaker 05:
Where is that?

[00:10:34] Speaker 05:
Where would I find that?

[00:10:35] Speaker 03:
I'll have to look at the exact record site.

[00:10:37] Speaker 03:
I'm sorry.

[00:10:37] Speaker 03:
I don't have it at my fingertips.

[00:10:39] Speaker 05:
I don't think I don't remember that being referenced in the briefing, but maybe I'm wrong.

[00:10:42] Speaker 05:
Maybe that's just an assumption that everybody understands.

[00:10:44] Speaker 03:
I know it's at least in the commission's orders.

[00:10:45] Speaker 03:
I don't know if it's in the briefs.

[00:10:50] Speaker 04:
What I'm struggling with as I hear your argument is, I mean, OK, I understand your answer to Judge Cunavasin, but even accepting that,

[00:11:00] Speaker 04:
What you're asking us to do is second guess.

[00:11:03] Speaker 04:
We have a very deferential standard of reviewing cases like this, right?

[00:11:07] Speaker 04:
I mean, you cite Pacific gas and electric in your brief, arbitrary and capricious standard.

[00:11:14] Speaker 04:
It's all very deferential.

[00:11:15] Speaker 04:
You're asking us,

[00:11:17] Speaker 04:
The second gets the Commission's judgment about what elements go into a cost allocation formula.

[00:11:24] Speaker 04:
That just seems to me not the kind of thing we do without some very powerful argument that it's illegal or arbitrary and capricious.

[00:11:35] Speaker 04:
What is your very best argument that this is something we should worry about?

[00:11:42] Speaker 03:
Well, there are two reasons, Your Honor.

[00:11:43] Speaker 03:
The first is that the Commission did not squarely address the arguments that we made over the hearing about the harm of its choice in how to apply the allocation.

[00:11:52] Speaker 04:
But it did address them.

[00:11:53] Speaker 04:
You just don't like its answer.

[00:11:56] Speaker 04:
It did respond to your arguments, didn't it?

[00:11:59] Speaker 04:
You just don't like its response.

[00:12:01] Speaker 03:
For the reasons we've explained in our reason, I'll be happy to go into it again.

[00:12:04] Speaker 03:
If you like, Your Honor, we think they actually did not directly address those harms.

[00:12:09] Speaker 03:
And much of the reason, for example, the Commission cited the provisions in the license tariff

[00:12:15] Speaker 03:
that it said provide for the reassignment of projects.

[00:12:19] Speaker 03:
And those provisions, in fact, Your Honor, are very narrow, much narrower than the circumstances in which the commission's order potentially could require displacement of a project already listed in Appendix A.

[00:12:30] Speaker 03:
They apply only in circumstances that are really under the developer's control.

[00:12:34] Speaker 03:
If the developer goes bankrupt, if its qualifications to proceed with the project are changed, or if it runs into problems getting regulatory approvals, cost overruns, or other circumstances that might prevent completion of the project.

[00:12:48] Speaker 03:
And in that event, MISO will reevaluate the project and look for a way of mitigating the problem.

[00:12:54] Speaker 03:
it doesn't necessarily reassign the project.

[00:12:57] Speaker 03:
In this case, FERC has created a risk that every project listed in Appendix A potentially might have to be replaced or could be replaced by an interregional project.

[00:13:07] Speaker 03:
And because developers who are designated to build projects listed in Appendix A incur costs related to engineering, design, environmental approvals, regulatory approvals, lining up supply,

[00:13:23] Speaker 04:
contractors etc in addition if my son well excuse me but well since you one of your answers I think you answered judge Griffith that there's no specific project that we know will be displaced so we're talking about

[00:13:39] Speaker 04:
future projects that get approved, won't developers or everybody else who's involved in this, let's assume that we affirm, we deny the petition here, and MISO is required to include approved projects, won't developers and others simply take that risk into account in terms of how they cost their projects?

[00:14:00] Speaker 03:
It seems to me they will, Your Honor, which is one of the problems we raised.

[00:14:04] Speaker 04:
But isn't that sort of the answer to the question?

[00:14:08] Speaker 04:
That risk will be built into the process.

[00:14:14] Speaker 03:
The issue with that, Your Honor, is presumably going forward it would.

[00:14:17] Speaker 03:
But one, that raises costs to consumers.

[00:14:19] Speaker 03:
Second, it doesn't answer the problems related to projects already approved by the board.

[00:14:33] Speaker 03:
I mentioned to you, Judge Tatel, that there were two reasons why we think the Commission's being reversed.

[00:14:37] Speaker 03:
One is what I mentioned.

[00:14:39] Speaker 03:
The second one is that the Commission failed to make the finding required by Section 206 that its formulation or its application of the cost allocation method in this case is just and reasonable.

[00:14:49] Speaker 03:
This Court's been very stringent in ensuring that FERC understands the distinction between 205 and 206 and makes the findings, in particular, that Section 206 requires.

[00:15:01] Speaker 03:
In this case, the Commission failed to do that.

[00:15:04] Speaker 03:
The commission's argument in this case that it didn't have to do that because Order 1000 purportedly resolved this issue is incorrect.

[00:15:13] Speaker 03:
In particular, Your Honor, we point you to the decision C of Cleveland v. Ferck where the court held that.

[00:15:19] Speaker 03:
when a compliance directive is not definitive or not specific, then the determination of justness and reasonableness is deferred until the order on the compliance filing.

[00:15:31] Speaker 03:
And that's the stage at which the orders were issued in this case, Your Honor, and they don't make the Section 206 findings.

[00:15:36] Speaker 03:
Okay.

[00:15:37] Speaker 03:
Thank you.

[00:15:37] Speaker 04:
Thank you.

[00:15:57] Speaker 01:
Good morning, Your Honors.

[00:15:58] Speaker 01:
May it please the Court?

[00:15:59] Speaker 01:
Nicholas Glad for the Commission.

[00:16:01] Speaker 01:
I'd like to start out by addressing Judge Srinivasan's point about what is actually going on, what is at issue in this order.

[00:16:07] Speaker 01:
And it is not displacement that has not been directed by this compliance proceeding or Order 1000.

[00:16:14] Speaker 01:
Order 1000 set in place a framework whereby displacement is a possibility as a result of these planning processes and requirements and cost allocation requirements.

[00:16:23] Speaker 01:
These compliance proceedings then set forth, for purposes of this appeal, the method for calculating the benefits of an interregional project.

[00:16:32] Speaker 01:
What the transmission owners are really concerned about here is that this benefits calculation is going to produce information that may eventually be used to indicate that an interregional project is superior to a regional project that has already been approved.

[00:16:47] Speaker 01:
So if there is any displacement that occurs in the future, its only connection to these orders is that these orders put in place a calculation that indicates some sort of data.

[00:16:57] Speaker 05:
So can I just ask you a question about this?

[00:16:59] Speaker 05:
Why is it the case that everybody seems to be assuming this is true, that if approved projects are excluded from the field of vision for purposes of cost allocation, that necessarily means that approved projects can't be displaced when you get to the point of picking which projects to approve?

[00:17:18] Speaker 05:
Why is that?

[00:17:19] Speaker 05:
I get that everybody's assuming that your brief assumes that.

[00:17:23] Speaker 05:
The way you're discussing it assumes that.

[00:17:25] Speaker 05:
Is it because of this 1.25 cost benefit ratio?

[00:17:28] Speaker 05:
Or what's the connection between those two steps?

[00:17:31] Speaker 01:
I'm not sure I exactly understand your question.

[00:17:34] Speaker 01:
Is the question that... So let me ask the question this way.

[00:17:39] Speaker 05:
Maybe the question is just... It's missing such a basic assumption that is often left field.

[00:17:48] Speaker 05:
You could have a situation in which the cost allocation formula is just 50-50.

[00:17:54] Speaker 05:
And, you know, it's not grander than anything.

[00:17:55] Speaker 05:
It's just that, on average, these are roughly divided 50-50.

[00:17:59] Speaker 05:
So that's just going to be the cost allocation formula.

[00:18:02] Speaker 05:
And then we're going to go and pick which projects are going to be approved.

[00:18:05] Speaker 05:
And for that, we have to do a bunch of calculations to decide whether it makes sense.

[00:18:09] Speaker 05:
to displace either an approved project or identified but is yet unapproved project.

[00:18:13] Speaker 05:
But what that shows is that there's not necessarily a linkage between the cost allocation formula and the determination whether to approve or disapprove a project, an interregional project.

[00:18:24] Speaker 05:
That's what I'm not quite understanding is that it seems like the assumption across the board is that if

[00:18:31] Speaker 05:
one were to exclude approved projects from the relevant field of projects for purposes of cost allocation, that necessarily means that approved projects can't be displaced when you're talking about determining whether to approve an interregional project.

[00:18:49] Speaker 05:
And that's what I'm missing.

[00:18:51] Speaker 05:
There's got to be some

[00:18:52] Speaker 05:
the cost allocation and then the ultimate decision whether approve or disapprove an interregional project.

[00:19:00] Speaker 01:
Okay.

[00:19:00] Speaker 01:
I think I see your concern and it's that I think the linkage is that if you can't include in that benefits calculation the already approved projects.

[00:19:10] Speaker 01:
Yeah.

[00:19:10] Speaker 01:
Then the benefits that you're quantifying through that method are not the benefits of the most efficient or cost effective solution.

[00:19:19] Speaker 01:
Yeah, and therefore your because you're using an avoided cost only method for quantifying the original projects benefits.

[00:19:26] Speaker 01:
the interregional project's benefits are going to be under inflated or understated because they're not reflecting the most efficient or cost effective solution.

[00:19:35] Speaker 05:
So what that assumes is that when you're doing the cost benefit calculation for purposes of cost allocation, you're going to use the same methodology when you're deciding whether to approve or disapprove a project.

[00:19:45] Speaker 05:
Is that just what happens?

[00:19:47] Speaker 05:
That's just, you could do something totally different.

[00:19:50] Speaker 05:
Conceptually, it seems to me you could do something totally different.

[00:19:52] Speaker 05:
You could decide for cost allocation purposes, we're going to figure out the benefits in one fashion.

[00:19:58] Speaker 05:
And then when we're getting to the stage of deciding whether to approve or disapprove a project, we're going to do cost benefit analysis in a different way.

[00:20:04] Speaker 05:
But is it just understood that

[00:20:07] Speaker 05:
actually there's no conceivable distinction between those two that the same considerations are going to inform understanding the degree of benefits for purposes of figuring out cost allocation and for purposes of figuring out whether it makes sense to go forward with the project.

[00:20:21] Speaker 01:
Yes, I think they are the same in that this is the information developed in this proceeding.

[00:20:27] Speaker 01:
These cost allocation principles are going to be the metrics for determining whether project displacement occurs in the future, but

[00:20:35] Speaker 01:
project displacement is not a foregone conclusion, even if you're looking at this information generated by this compliance filing.

[00:20:42] Speaker 01:
The commission hasn't addressed the issue of whether and when a project should or shouldn't be displaced.

[00:20:47] Speaker 05:
Yeah, I get that.

[00:20:48] Speaker 05:
I get the point.

[00:20:49] Speaker 05:
I think I get the point that we don't know yet whether a project's going to be displaced because there has to be a lot more stuff that has to happen before that determination is made.

[00:20:57] Speaker 05:
I guess I just wasn't understanding necessarily that the same cost-benefit calculus that informs

[00:21:04] Speaker 05:
the determination of cost for purposes of cost allocation as between the two regions is the determination that determines whether to go forward with the project at the end of the day.

[00:21:14] Speaker 01:
It's one piece of that analysis.

[00:21:16] Speaker 01:
Another piece, which is key, is what you picked up on in discussion with my friends.

[00:21:21] Speaker 01:
And that's the net benefits test, the benefit cost ratio of 1.25%.

[00:21:25] Speaker 01:
And that's at JA 226, the first order, paragraph 172.

[00:21:32] Speaker 01:
And the practical effect of that 1.25 benefit to cost ratio is that not just any interregional project can displace a regional project, even if you find an interregional project that

[00:21:47] Speaker 01:
could satisfy the same transmission needs, because of that ratio, which is also referred to as a net benefits test, that interregional project, which is going to be bigger, this interregional, will also have to be at least 20% cheaper than the interregional project or projects it's displacing.

[00:22:04] Speaker 01:
And that tips the scale against displacement.

[00:22:11] Speaker 04:
I want to follow up on one of your questions.

[00:22:13] Speaker 04:
So did I understand from what you said to Judge Srinivasan that the ultimate question of whether there are any limits on what types of approved projects can be displaced and not displaced hasn't been decided?

[00:22:26] Speaker 04:
Is that right?

[00:22:26] Speaker 01:
That's right.

[00:22:27] Speaker 04:
So for example, suppose there's a project that's completely approved and it's 90% complete.

[00:22:36] Speaker 04:
That could be displaced.

[00:22:38] Speaker 04:
The commission hasn't resolved that question.

[00:22:41] Speaker 01:
Is that right?

[00:22:42] Speaker 01:
That's correct, Your Honor.

[00:22:43] Speaker 01:
That project could be subject to displacement, but it's not a foregone conclusion that it would be displaced.

[00:22:49] Speaker 04:
And if it is displaced, I realize we're going beyond what's before us.

[00:22:55] Speaker 04:
But suppose it is displaced.

[00:22:58] Speaker 04:
Are there methods for compensating the developer for the 85% of the costs the developer has put into developing the project?

[00:23:08] Speaker 01:
That goes to the scope of order 1,000, and the commission said clearly that cost recovery is beyond the scope.

[00:23:14] Speaker 01:
And the reason that's the case is because cost recovery is handled through each individual transmission owner's formula rate.

[00:23:21] Speaker 01:
And so at any time before, during, and after this proceeding, the transmission owners and the system operator have the power to come in to the commission and present a tariff filing if they think that these types of costs are not recoverable under the current rate.

[00:23:32] Speaker 01:
I see.

[00:23:33] Speaker 05:
Yeah.

[00:23:34] Speaker 05:
For standing purposes, though,

[00:23:37] Speaker 05:
It seems like it could make a difference whether displacement of an approved project is even possible.

[00:23:45] Speaker 05:
Because I think what Miso's argument would be, I take it, is that, look, we'd like a proposal under which displacement of approved projects is just not possible.

[00:23:58] Speaker 05:
And then FERC comes along and says, no, that's not acceptable.

[00:24:02] Speaker 05:
You have to at least allow for the possibility of displacement of approved projects.

[00:24:05] Speaker 05:
Whether that's in fact going to happen, we'll defer to that issue.

[00:24:08] Speaker 05:
We don't know that yet.

[00:24:09] Speaker 05:
but at least have to allow for the possibility of displacement of an approved project.

[00:24:13] Speaker 05:
So far, I'm understanding it correctly.

[00:24:15] Speaker 01:
Yes, that's correct.

[00:24:16] Speaker 05:
And then so then Meis's argument would be, at least for standing purposes, put aside what's going to happen on the merits, but for standing purposes, once we know that displacement of approved project is possible, that has current implications for investor expectations and all sorts of other things.

[00:24:30] Speaker 05:
It's true that we don't know yet, let's just hypothesize, it's true that we don't know yet whether in fact project displacement of an approved project is going to happen.

[00:24:38] Speaker 05:
But once we know that it could happen, that has a current real-world effect on us, which gives us enough of a concrete interest to go forward with the case.

[00:24:47] Speaker 05:
It may or may not mean that we went on the merits at the end of the day, but it does mean that we have enough of a concrete interest as a result of this choice between including approved projects or excluding approved projects that they're standing.

[00:25:00] Speaker 01:
I think that's right, Your Honor, but the key here is that they're not alleging real-world impacts.

[00:25:06] Speaker 01:
They're alleging just uncertainty at this stage.

[00:25:08] Speaker 04:
No, but they've been ordered to revise their tariff, right?

[00:25:15] Speaker 01:
No, Your Honor.

[00:25:15] Speaker 01:
Only the system operator has been ordered to revise its tariff, and it's not a petitioner here.

[00:25:20] Speaker 01:
It's an intervener.

[00:25:23] Speaker 05:
And is that the distinction?

[00:25:25] Speaker 04:
Yeah, that was my question.

[00:25:28] Speaker 04:
So MISO would have standing, would it?

[00:25:32] Speaker 01:
Yes, I think MISO would have standing.

[00:25:34] Speaker 01:
This is its tariff, and it's the object of the commission action.

[00:25:37] Speaker 04:
Do transmission owners own the facilities that the tariff covers?

[00:25:43] Speaker 01:
Transmission owners are entities that provide service pursuant to the system operator's tariff.

[00:25:48] Speaker 01:
But if that's sufficient to be an object.

[00:25:50] Speaker 04:
Right, pursuant to a tariff that the commission has ordered revised.

[00:25:54] Speaker 04:
Right?

[00:25:55] Speaker 04:
In other words, the tariff that they operate under, the commission has ordered the tariff they operate under to be revised.

[00:26:03] Speaker 04:
Right?

[00:26:03] Speaker 01:
Correct.

[00:26:04] Speaker 04:
So, and we don't, and why isn't that sufficient for standing, and both, and right, we don't really need any more information, do we, to know how to review this question of whether or not approved projects should be included or not.

[00:26:19] Speaker 04:
That's the only question before us, correct?

[00:26:22] Speaker 04:
That's it.

[00:26:23] Speaker 04:
That's the only question.

[00:26:24] Speaker 01:
I'm sorry, can you state the only question?

[00:26:25] Speaker 04:
I was combining rightness and standing by saying, oh, they've been ordered, they are operating pursuant to a tariff that the commission has ordered to be revised.

[00:26:36] Speaker 04:
And the legal issue before us is whether or not being ordered to include approved projects in it is lawful or not.

[00:26:43] Speaker 04:
So A, they're injured because they're operating under a tariff that has to be revised.

[00:26:48] Speaker 04:
And B, there's a clear legal issue that we don't really need any more information, right?

[00:26:55] Speaker 01:
No, Your Honor, I don't think that's the standard, because one, I'm not aware of any case that says you have standing just because you take service under a tariff that was revised.

[00:27:04] Speaker 04:
Well, but they're also arguing that this increases their risks, right?

[00:27:09] Speaker 04:
Right, I think that's a separate... It affects the planning process, their planning process, correct?

[00:27:15] Speaker 01:
Yes, but I think they're distinct issues.

[00:27:18] Speaker 01:
There's a threshold question of whether

[00:27:22] Speaker 01:
The third party can be the object of the commission action when the commission changes a specific tariff.

[00:27:28] Speaker 01:
I'm not aware of any case that says just because you take or provide service under a tariff that's changed that's not yours, you have standing.

[00:27:36] Speaker 01:
The implications of that are pretty wide-ranging.

[00:27:41] Speaker 01:
The second issue is

[00:27:42] Speaker 01:
whether there's, independent of whether you're an object of the commission action, you can have standing because of uncertainty that's created.

[00:27:49] Speaker 01:
And I think that's, I think the answer to the first question is, no, they're not an object.

[00:27:54] Speaker 01:
The answer to the second question is, under this court's precedent in the New England Power Generators case and under New England Regional Interconnect, this type of uncertainty that's not particularized to any individual, it's applicable to any transmission developer in the region, is not sufficient to converse injury and fact for standing for.

[00:28:12] Speaker 05:
Can I ask this as a – part of this at least turns on the language of the Federal Power Act, which requires – which calls – which allows for review for agreed parties.

[00:28:21] Speaker 05:
Yes.

[00:28:21] Speaker 05:
So if you – it sounds like it ignores that MISO would be an agreed party.

[00:28:26] Speaker 05:
Yes.

[00:28:27] Speaker 05:
Withstanding, so they could bring it.

[00:28:28] Speaker 05:
Yes.

[00:28:28] Speaker 05:
And then the question is, what's the basis for drawing a distinction between MISO and the transmission owners that make up MISO?

[00:28:34] Speaker 05:
I guess you would also allow that in certain circumstances, the underlying transmission owners would be agreed parties, even if what they're complaining about is a change to a tariff that applies directly only to myself.

[00:28:46] Speaker 01:
Yes, that's correct.

[00:28:47] Speaker 05:
So that conceptually could happen.

[00:28:48] Speaker 05:
Yes, they could be agreed parties.

[00:28:50] Speaker 05:
So what we're talking about here is

[00:28:52] Speaker 05:
Is there a difference between the degree to which MISOs agreed and the degree to which the transmission owners who make up MISOs agreed sufficient to deny the underlying transmission owners agreed party status?

[00:29:05] Speaker 05:
That's what we're really talking about.

[00:29:07] Speaker 01:
That's what we're really talking about.

[00:29:08] Speaker 01:
And relatedly, the burden to proof standing is, I think, heightened when it's a third party not

[00:29:16] Speaker 01:
when the third party is bringing the claim, not the entity whose tariff is at issue.

[00:29:21] Speaker 01:
And I would argue that under CR Club DEPA, this court's precedent, the burden is to show each element of standing through affidavit or other evidence.

[00:29:29] Speaker 01:
And mere allegations in a brief are not sufficient.

[00:29:31] Speaker 01:
And all we have here are mere allegations in a brief that, generally, they may have a project that could be subject to displacement.

[00:29:37] Speaker 01:
They haven't identified any specific project that they've been granted.

[00:29:41] Speaker 01:
And also, to Judge Griffith's earlier question,

[00:29:43] Speaker 01:
Um, not only have they not identified any projects that they have that have been approved that are subject to displacement, but to date there have been no interregional projects proposed in this region, period.

[00:29:54] Speaker 01:
So there's no project that yet could do any displacements.

[00:29:58] Speaker 04:
Hmm.

[00:30:00] Speaker 01:
Anything else?

[00:30:02] Speaker 01:
No.

[00:30:02] Speaker 01:
If there are further questions?

[00:30:03] Speaker 04:
Well, I don't think so.

[00:30:04] Speaker 04:
Thank you.

[00:30:04] Speaker 04:
Thank you.

[00:30:05] Speaker 04:
Uh, was Mr. Thompson's at the time, right?

[00:30:10] Speaker 04:
How many?

[00:30:11] Speaker 04:
Sixty.

[00:30:12] Speaker 04:
Sixty.

[00:30:12] Speaker 04:
Six seconds.

[00:30:13] Speaker 04:
Oh, six seconds.

[00:30:14] Speaker 04:
Okay.

[00:30:15] Speaker 04:
You can have two minutes and six seconds, but I'm going to use up your six seconds and ask you, six of them, to respond to this standing argument that we just heard.

[00:30:26] Speaker 04:
And particularly the point that at this stage you need, the allegations in your brief are not sufficient to support standing, that you needed affidavits at this point.

[00:30:39] Speaker 03:
Well, the first thing I'd say about that, Your Honor, is this is the first time we've heard it in this case.

[00:30:43] Speaker 03:
It wasn't included in the Commission's briefs.

[00:30:46] Speaker 04:
Well, they did argue you lack standing.

[00:30:47] Speaker 03:
They did make that argument and we responded to it, Your Honor.

[00:30:51] Speaker 03:
Frankly, Your Honor, we were surprised the argument was even made because the transmission owners own the facilities that MISO operates under its tariff.

[00:30:58] Speaker 03:
They are subject to the tariff.

[00:31:00] Speaker 03:
Right.

[00:31:00] Speaker 03:
for the Commission to suggest that the transmission owners whose facilities are involved and whose facilities are the subject of the expansions and upgrades that are directly implicated by the planning process and the cost allocations that are at issue here don't have standing to challenge the Commission's directive to change the tariff.

[00:31:19] Speaker 04:
It seems, you know... Okay, why don't you go on to the points about the merits you'd like to make.

[00:31:27] Speaker 03:
I thank my friend for giving you the record reference in the order.

[00:31:32] Speaker 03:
You can also find it in the tariff at JA 139-455.

[00:31:34] Speaker 03:
Thanks.

[00:31:35] Speaker 03:
I guess a couple of points very quickly here is the

[00:31:44] Speaker 03:
There were questions for counsel about what happens if a project eventually is displaced.

[00:31:49] Speaker 03:
Can an owner come in and ask for cost recovery?

[00:31:51] Speaker 03:
And sure, transmission owners do have the right to come in and make section 205 filings.

[00:31:56] Speaker 03:
Of course, there's no guarantee that those filings will be approved.

[00:32:00] Speaker 04:
None of this is before us now, correct?

[00:32:02] Speaker 04:
That's true.

[00:32:04] Speaker 04:
This all relates to the question of risk, correct?

[00:32:07] Speaker 03:
I believe that's right, Your Honor.

[00:32:09] Speaker 03:
And the only point I want to make in addition to that is the Commission's general policy, which has been in place for a long time, is that utilities are entitled to recover only 50 percent of the costs of abandoned projects from ratepayers, unless in advance they get approval for incentive treatment that would permit them to recover more than that.

[00:32:26] Speaker 04:
Okay, all right.

[00:32:37] Speaker 03:
We also have an argument to the extent that cost recovery is beyond the scope of Order 1000.

[00:32:41] Speaker 03:
And I guess what I'd suggest, if the Court does concur with the Commission's view on standing, we would ask the Court to ensure that the Commission is not going to argue in a future case that the transmission orders would be collaterally stopped from coming in to seek recovery of the costs that we contend they have put at risk with these orders in this case.

[00:33:02] Speaker 03:
And with that, I'll ask the court, please, to grant the petition for review.

[00:33:05] Speaker 03:
OK.

[00:33:05] Speaker 03:
Thank you both.

[00:33:06] Speaker 03:
The case is submitted.