[00:00:00] Speaker 02:
Case number 20-1262 et al.

[00:00:03] Speaker 02:
Entergy Arkansas LLC et al.

[00:00:05] Speaker 02:
Petitioners versus Federal Energy Regulatory Commission.

[00:00:08] Speaker 02:
Ms.

[00:00:08] Speaker 02:
Amer-Kale for the petitioners, Ms.

[00:00:10] Speaker 02:
Banta for the respondents.

[00:00:12] Speaker 03:
Good morning, council.

[00:00:15] Speaker 03:
You may proceed.

[00:00:16] Speaker 03:
Good morning.

[00:00:17] Speaker 04:
Thank you, your honor.

[00:00:19] Speaker 04:
I may please the court.

[00:00:20] Speaker 04:
I'm Jennifer Amer-Kale for Petitioners Entergy Operating Companies and for the subsidiaries of Excel Energy Inc.

[00:00:29] Speaker 04:
which are Northern States Power, Wisconsin, and Northern States Power, Minnesota.

[00:00:35] Speaker 04:
I'd like to reserve two minutes for rebuttal, please.

[00:00:41] Speaker 04:
The cost causation principle requires that costs roughly match benefits, but exacting precision is not required.

[00:00:50] Speaker 04:
When you are dealing with transmission cost allocation, there are frequently imperfections, and that is the case here.

[00:00:58] Speaker 04:
But there is

[00:00:59] Speaker 04:
But here FERC required precision and perfection in rejecting our interregional transmission cost allocation proposal.

[00:01:09] Speaker 03:
Well, FERC denies that, and it seems to me its orders don't support that.

[00:01:14] Speaker 02:
What are you relying on?

[00:01:18] Speaker 04:
Your Honor, they required that any spillover benefits outside of the zone have to be allocated regionally.

[00:01:28] Speaker 04:
which is not what Old Dominion said.

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They're interpreting Old Dominion incorrectly to require that any potential benefit that falls outside of a local zone has to be allocated to the beneficiary of that zone.

[00:01:47] Speaker 04:
But the MISO transmission owners case in the Seventh Circuit in 2016 tells us otherwise.

[00:01:52] Speaker 03:
Well, of course, we're not in the Seventh Circuit.

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And I'm not sure

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that your reading of dominion is the only way dominion can be read.

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That's what I'm trying to understand.

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I mean, FERC has taken the position that, first of all, the Seventh Circuit cases are different factually.

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But secondly, it doesn't read dominion to say that.

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And it said that back since 2017, hasn't it?

[00:02:37] Speaker 04:
Dominion is only a 2018 case, Your Honor.

[00:02:41] Speaker 03:
Yes, yes.

[00:02:42] Speaker 03:
What I'm referring to is the fact that what happened in 2017 and the direction that Fert gave, then Dominion comes and it says, this is basically what we're talking about.

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And so now it says,

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You know, it had to reject Mid-Continent's proposal because it continues to demonstrate as it says, that some such projects would provide benefits to both regional systems and yet under the proposal,

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some would not be recognized.

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Isn't that correct?

[00:03:33] Speaker 04:
No, Your Honor, that's not correct.

[00:03:35] Speaker 04:
That's not what FERC said about inter-regional projects.

[00:03:38] Speaker 04:
That's a misunderstanding about inter-regional projects and it's supposed to talk rationalization by FERC.

[00:03:45] Speaker 03:
I'm looking at the red brief page 31.

[00:03:56] Speaker 04:
Yes, and that is where FERC gets into its post-hoc rationalization that interregional projects are somehow different from regional projects.

[00:04:06] Speaker 04:
But here, that was never raised in the orders below where FERC failed to analyze the interregional proposal at all and simply relied on the regional proposal to reject.

[00:04:24] Speaker 03:
No, but Council, what I'm getting at is the way I read FERC's brief is you're arguing one thing and it's saying something else.

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It's saying that back in 2017, it ordered what it wanted and Mid-Continent has never done it.

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And so so much time has passed, you know, even up and down, up and down.

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So FERC says, all right, we're going to exercise our authority under Section 206.

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Work was not clear on what it wanted.

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It did not set the just and reasonable cost allocation.

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It did not set any cost allocation when it lowered the voltage thresholds to 100 KB in this case.

[00:05:07] Speaker 00:
I have a couple of questions at the outset.

[00:05:12] Speaker 00:
If you were right, wouldn't PJM position be unreasonable?

[00:05:21] Speaker 04:
Which PJM position is that, Your Honor?

[00:05:23] Speaker 04:
Where they allocate low voltage?

[00:05:26] Speaker 00:
They do it the way FERC thinks they should do it, right?

[00:05:34] Speaker 04:
They allocate low voltage projects, as Old Dominion said, to the local zone, which is what we are proposing in our proposal.

[00:05:44] Speaker 00:
Then I misunderstand.

[00:05:45] Speaker 00:
I thought PJM did it the way FERC likes it.

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Isn't that correct?

[00:05:52] Speaker 04:
What PJM did is they allocate... May I just answer the question?

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Doesn't PJM do it the way FERC wants it to be done?

[00:06:01] Speaker 04:
No, Your Honor, they allocate low voltage projects to the local zone.

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That's what our proposal is.

[00:06:12] Speaker 00:
Yeah, I thought PJM did it differently than you did.

[00:06:17] Speaker 04:
PJM allocates

[00:06:18] Speaker 04:
No, that's not correct, Your Honor.

[00:06:20] Speaker 04:
PJM allocates high voltage projects across the region and it allocates low voltage projects to the local zone.

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But it is not protesting in this case.

[00:06:33] Speaker 04:
No, Your Honor, it's not.

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So it is acquiesced in the FERC's position.

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In Old Dominion, yes.

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Right.

[00:06:44] Speaker 04:
It acquiesced to firm.

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Now one other question I have.

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What is the economic reason for your objection?

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Not the legal reason, but the economic reason.

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What's the concern about the 20% allocation throughout the entire?

[00:07:04] Speaker 04:
The concern is that there's many, many low voltage connections between

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along the MISO PJM theme and we will be allocated costs that are not commensurate with benefits.

[00:07:23] Speaker 00:
So different parts of your mid-continent would have different views, right?

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In other words, what I'm a little puzzled about is where is the economic

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fight about in this case.

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I know you don't like the allocation of the 20% throughout the entire region.

[00:07:53] Speaker 00:
Well, why economically?

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Not legally, but economically.

[00:07:58] Speaker 00:
What's the fight about?

[00:07:59] Speaker 04:
Because costs will be shifted from those that benefit that are located on the scene to those that don't benefit.

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And we don't want to receive those shifts in costs because it's unjust and unreasonable for us.

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And it would be expensive for our customers.

[00:08:18] Speaker 00:
Well, but of course, there's a difference in economic views between those who are far removed from the project and those who are close, right?

[00:08:31] Speaker 04:
Not in this case, Your Honor.

[00:08:33] Speaker 00:
No, I'm talking about generally.

[00:08:38] Speaker 04:
I believe that for low voltage projects, there is a common understanding that the benefits are local and that they should be allocated locally.

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So even, so say there was a local project in Arkansas, which is where energy operating companies are, they would pay for that project.

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They prefer to pay for that project rather than shift costs to those outside of the local zone because they recognize that low voltage projects

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principally benefit the local region.

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They're fine with high voltage allocations across the region because those projects actually bring regional benefits.

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But these are low voltage projects that principally have their and almost exclusively have their benefits in the local zone.

[00:09:38] Speaker 00:
But what about FERC's argument that when you propose projects, you take into account the benefits to the end of your borders?

[00:09:56] Speaker 04:
So FERC applied the wrong 205 standard here, and it was requiring that there be that any potential

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benefit outside of the zone has to be allocated to outside of the zone.

[00:10:16] Speaker 04:
But that is that is not what cost causation requires and it's not.

[00:10:20] Speaker 00:
You're not responding to my question.

[00:10:24] Speaker 00:
FERC points out that when you propose a project you take into account the benefits far removed from the particular zone in which the project will be located.

[00:10:38] Speaker 04:
Only for high voltage projects, Your Honor, not for low voltage ones.

[00:10:43] Speaker 04:
Burke has a history of approving proposals for low voltage projects that are allocated locally.

[00:10:49] Speaker 04:
You're right, exactly right, for high voltage projects where there are benefits outside of the local zone for a high voltage project.

[00:11:00] Speaker 04:
Yes, those benefits are allocated appropriately to far away

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spots where the power can actually flow because under low voltage projects, power doesn't flow very far.

[00:11:13] Speaker 04:
And these are small localized projects with locally concentrated benefits.

[00:11:21] Speaker 00:
You say very far, but you wouldn't deny that there's some benefit that flows to the end of the transmission belt.

[00:11:35] Speaker 04:
For a low voltage project like the one that we put in our brief, that example?

[00:11:40] Speaker 04:
No.

[00:11:41] Speaker 00:
The lower voltage.

[00:11:44] Speaker 04:
Those?

[00:11:45] Speaker 04:
No, the benefits don't flow out to the edge of the grid.

[00:11:49] Speaker 00:
Absolutely not.

[00:11:50] Speaker 00:
Not a single volt.

[00:11:54] Speaker 04:
No, Your Honor, this record shows that when PJM and MISO looked at interregional projects in North Dakota, they were suspect because

[00:12:05] Speaker 04:
Neither MISO or PJM thought that those would flow to the edge of the grid as far enough to get to PJM.

[00:12:15] Speaker 04:
So low voltage projects are treated very differently in transmission planning and in the interregional planning.

[00:12:23] Speaker 04:
And this record, in fact, shows that you can't build a small low voltage project

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in North Dakota and have its benefits flow out to PJM?

[00:12:45] Speaker 03:
Well, your statement includes various adverbs which acknowledge that benefits can flow beyond the place where the low voltage

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is located, correct?

[00:13:07] Speaker 03:
Yes.

[00:13:08] Speaker 03:
So then why isn't Judge Silverman's question directly relevant here?

[00:13:17] Speaker 04:
Because he asked whether it could flow out to the edge of the grid.

[00:13:20] Speaker 03:
No, his original question was when you propose a project, you take into account where both the high and the low

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voltage projects will provide benefits.

[00:13:42] Speaker 04:
Yes, Your Honor, to the extent that you can measure those benefits and you can measure them reliably, yeah.

[00:13:48] Speaker 03:
And what FERC resisted, as I understand it, is excluding those benefits that flowed out, that you can't exclude them.

[00:14:04] Speaker 04:
Well, in our inter-regional proposal, there was only one metric that would measure those benefits.

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And there was no showing that there were actual regional benefits that flowed outside of the zone of where the project was located.

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That's the SPP settlement metrics.

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That was the only metric that would measure whether the zone

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had extrazonal, whether the project had extrazonal benefits.

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And there were no, there was no data, there was no, it was pure speculation about whether those would actually produce benefits outside of the zone.

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And those types of spillover benefits FERC has approved a local cost allocation for

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to the local zone for those types of spillover benefits.

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It says, yes, there is not, exacting precision is not required.

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And you can allocate to the local zone, even if there are some benefits.

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In the MISO transmission owners case, it was up to 25% of the benefits were outside of the local zone.

[00:15:24] Speaker 03:
Right.

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But the Seventh Circuit took the position that they weren't substantial.

[00:15:30] Speaker 04:
And here they, yes, that's correct, Your Honor, yes.

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Here they were not substantial either.

[00:15:36] Speaker 04:
Firk took that position.

[00:15:38] Speaker 03:
Well, Firk wasn't looking at the Seventh Circuit case.

[00:15:46] Speaker 04:
Why wasn't it, Your Honor?

[00:15:47] Speaker 04:
That was part of the old Dominion case.

[00:15:51] Speaker 03:
Oh, I understand that council, but it's looking at the proposal here.

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It issued the order in 2017.

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Don't exclude benefits simply because they flow outside.

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You've measured them, you know they exist, but you're excluding them.

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And so petitioner came back with one proposal that didn't do that for disapproved it, came back with a second.

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where it didn't do that and FERC disapproved it.

[00:16:19] Speaker 03:
Isn't that this record we have here?

[00:16:21] Speaker 04:
No, Your Honor, the benefits in that complaints order that FERC was pointing to are not the kind of benefits that are used.

[00:16:33] Speaker 04:
They are not benefits, they're transfer payments.

[00:16:36] Speaker 04:
And so they are not used to calculate benefits for the purposes of cost allocation.

[00:16:44] Speaker 04:
As our brief explained,

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MISO and PJM did a study in 2015 and looked at the transfer payments, but it did not find that those benefits, that those were benefits.

[00:17:02] Speaker 04:
They weren't.

[00:17:03] Speaker 04:
They're transfer payments.

[00:17:05] Speaker 04:
And what are they?

[00:17:05] Speaker 04:
And what are they?

[00:17:07] Speaker 04:
They are payments between PJM and MISO

[00:17:14] Speaker 04:
when there is congestion on one system that can be relieved by generators on the other system?

[00:17:22] Speaker 03:
So I guess, Council, I don't know why the Seventh Circuit was even talking about unsubstantial benefits if it's talking only about transfer payments.

[00:17:37] Speaker 03:
And I didn't understand it to be talking only about transfer payments.

[00:17:44] Speaker 04:
I think I may have confused you, Your Honor.

[00:17:48] Speaker 04:
The MISO transmission owners case in the Seventh Circuit wasn't talking about transfer payments.

[00:17:55] Speaker 04:
Precisely.

[00:17:57] Speaker 04:
So neither are we here.

[00:18:00] Speaker 04:
Isn't that correct?

[00:18:02] Speaker 04:
Burke is saying that interre... No, that's not correct, Your Honor.

[00:18:06] Speaker 03:
So we are here talking only about transfer payments?

[00:18:12] Speaker 04:
In terms of what would distinguish inter-regional projects from regional projects, yes.

[00:18:19] Speaker 03:
Oh, I understand that, but we're talking... See, I appreciate, Council, that you may be a lot more familiar with the technical terms here, but I didn't understand this to be a problem of one circuit's dealing with transfer payments, another circuit's dealing with something else.

[00:18:40] Speaker 03:
I thought this was just a question of FERC's view that if there are benefits outside the zone, you can't ignore them.

[00:18:54] Speaker 04:
You are correct, Your Honor.

[00:18:56] Speaker 04:
There is nothing about transfer payments between the different circuits.

[00:19:01] Speaker 04:
But FERC followed Old Dominion, which said in order to allocate regionally

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you have to have significant regional benefits.

[00:19:12] Speaker 04:
It found there were no significant regional benefits for these interregional projects.

[00:19:20] Speaker 04:
And it was not able to substantiate any benefits.

[00:19:25] Speaker 04:
All benefits were speculative in terms of the benefits that were measured through the SPP metric.

[00:19:37] Speaker 02:
All the rest of them.

[00:19:39] Speaker 02:
All right, excuse me.

[00:19:42] Speaker 02:
Please, please finish.

[00:19:45] Speaker 04:
All the rest of the benefits that MISO would have calculated for local low voltage projects were in the local zone.

[00:19:56] Speaker 04:
There was a potential, a very small potential that one metric would measure some small benefits outside of that local zone.

[00:20:05] Speaker 04:
But FERC rejected our 205 filing requiring precision and perfection that it doesn't require for its own self in setting the replacement rate.

[00:20:19] Speaker 03:
Any further questions?

[00:20:21] Speaker 00:
No.

[00:20:22] Speaker 00:
No.

[00:20:23] Speaker 03:
Thank you.

[00:20:23] Speaker 03:
Council will hear from you after we hear from council for FERC.

[00:20:32] Speaker 01:
So council for FERC.

[00:20:33] Speaker 01:
Yes.

[00:20:34] Speaker 01:
Good morning, Carol Banta for the commission.

[00:20:36] Speaker 01:
And before I address old dominion, which I will, I'd like to clear up some confusion about the 2017 order or about this transfer payment question.

[00:20:46] Speaker 01:
I believe petitioners are trying to relitigate something that they raised and lost on rehearing in that proceeding.

[00:20:53] Speaker 01:
Yes.

[00:20:54] Speaker 01:
The commission made findings in the 2016 order based on the quick hit analysis.

[00:20:58] Speaker 01:
The transmission owners were unhappy with the commission's treatment of the quick hit analysis and raised all of that on rehearing and the commission addressed it in the hearing order in 2017 at.

[00:21:14] Speaker 01:
I'm sorry, paragraph 48, we denied transmission owners requests for rehearing, which it recaps the previous page.

[00:21:21] Speaker 01:
This is JA 189 and 190, recaps the previous page, pages six to 10 of their reply brief for essentially a rehash of the rehearing request that was denied that no party sought judicial review of that.

[00:21:33] Speaker 01:
So this is a collateral attack that the court doesn't need to consider at all.

[00:21:37] Speaker 01:
Now turning to the old dominion question,

[00:21:41] Speaker 01:
I believe the court's questions have gotten to this.

[00:21:45] Speaker 01:
The commission does not read Old Dominion as limited as the petitioners do to the idea that we have large projects that we know have significant regional benefits, and that's the end of the story.

[00:21:57] Speaker 01:
The commission in particular was looking at language in Old Dominion.

[00:22:03] Speaker 01:
It is true in that case that there didn't have to be

[00:22:06] Speaker 01:
further findings of what the regional benefits were because they were large projects that were assumed.

[00:22:11] Speaker 01:
They were actually assumed and the commission made no such assumption here.

[00:22:14] Speaker 01:
The commission looked at page 1263 of Old Dominion where the court says we failed to see how our categorical refusal to permit regional cost sharing was the problem and goes on to say the cost causation principle prevents regionally beneficial projects from being arbitrarily excluded.

[00:22:36] Speaker 01:
So what the commission said in the orders here about cost causation is that the mid-continent proposed to calculate benefits that would be beyond the zone in the process of selecting a project and then actively disregard.

[00:22:55] Speaker 00:
Excuse me, counsel.

[00:22:57] Speaker 00:
The petitioner denied that.

[00:23:00] Speaker 00:
I was puzzled.

[00:23:03] Speaker 01:
Well, they think it's not

[00:23:05] Speaker 01:
And I believe this argument was not raised on re-hearing before the commission about the propriety of the Southwest Power Pool Settlement metric.

[00:23:16] Speaker 01:
But Mid-Continent proposed to gauge or to assess these projects for selection using several metrics, one of which was the Southwest Power Pool Settlement metric, which would look at any benefits anywhere in the region.

[00:23:33] Speaker 01:
but then only count the ones in the local zone.

[00:23:37] Speaker 01:
So I believe what petitioners are arguing, and again, I don't think I saw this argument raised below, is that that particular metric would never apply to seams projects with the mid-Atlantic operator, between the mid-continent and the mid-Atlantic operator.

[00:23:53] Speaker 01:
I don't think we have anything on this record to show that, but the commission, because this isn't just Indiana, the seam with PJM, the seam with the mid-Atlantic region extends for some distance.

[00:24:03] Speaker 00:
Speaking of the mid-Atlantic region, PJM, what is their position on this cost allocation question?

[00:24:13] Speaker 01:
Well, the orders and the filings that were before the commission here were strictly for mid-continents allocation.

[00:24:22] Speaker 00:
I know.

[00:24:23] Speaker 00:
Well, so PJM didn't take a position.

[00:24:24] Speaker 00:
This is an interregional concern.

[00:24:28] Speaker 00:
So what was PJM's position?

[00:24:33] Speaker 01:
Well, in the 2016-2017 original proceeding, the whole problem the commission found was that PJM was already willing to consider projects down to 100 kilovolts.

[00:24:44] Speaker 01:
And it was mid-continent that didn't.

[00:24:46] Speaker 00:
In other words, they had different views.

[00:24:49] Speaker 01:
Yes, but they had different standards for projects they were willing to do cost sharing for.

[00:24:54] Speaker 01:
And that was the entire problem.

[00:24:56] Speaker 00:
And incidentally, that's the lower projects, not the low projects, right?

[00:25:00] Speaker 01:
They're not low.

[00:25:01] Speaker 01:
They're all 100 kilovolts is transmission.

[00:25:04] Speaker 01:
And the commission, I don't believe, certainly not in the orders here, has never adopted low voltage.

[00:25:11] Speaker 01:
There's lower and higher.

[00:25:12] Speaker 01:
There's extra high.

[00:25:15] Speaker 00:
Let me see if I can nail this down.

[00:25:17] Speaker 00:
What is PJM's position with respect to the issue in this case, whether or not

[00:25:24] Speaker 00:
20% should be allocated to the far regions of the region or not.

[00:25:32] Speaker 00:
Are they in agreement with FERC or not?

[00:25:35] Speaker 00:
They're not involved in this case at all.

[00:25:38] Speaker 00:
I know they're not involved in this case.

[00:25:43] Speaker 00:
What was their position before FERC?

[00:25:46] Speaker 01:
Do they agree with FERC or not?

[00:25:49] Speaker 01:
They did not intervene in mid-continent filing.

[00:25:53] Speaker 01:
They have their own

[00:25:55] Speaker 01:
their own way of doing it which I do not know and which has not been an issue in this case because this is this was only about mid-continent so they didn't.

[00:26:03] Speaker 00:
The reason I ask is this is an inter-regional project and it would be certainly peculiar if one of the regions did it one way and the other region did it another way.

[00:26:14] Speaker 01:
Well no that was what the commission found in 2016-2017 as far as selection you both have to

[00:26:21] Speaker 01:
You don't necessarily have to do it the same way, but you have to both be able to consider these lower voltage projects.

[00:26:26] Speaker 01:
But this compliance piece is only about mid-continent cost allocation of its share within its region.

[00:26:33] Speaker 01:
I realize that.

[00:26:35] Speaker 01:
Well, PJM doesn't care because they have their X dollars of cost for the project, which they will allocate however they do.

[00:26:44] Speaker 01:
And I don't know the answer to that because it hasn't been in dispute, but they have no

[00:26:49] Speaker 01:
reason to care how mid-continent allocates its share of the inter-regional, the inter-regional is already allocated between the two, and this is just how mid-continent splits up.

[00:27:01] Speaker 00:
But if they did it differently than did mid-continent, then it would be, and mid-continent was right, then it would be unreasonable for PJM.

[00:27:14] Speaker 01:
Well, I mean just unreasonable different regions can do some things differently.

[00:27:20] Speaker 01:
And and these, these are both large regions with a lot of stakeholders and their own processes and the Commission has never tried to impose a uniform.

[00:27:29] Speaker 01:
transmission planning or allocation regime on every region.

[00:27:33] Speaker 01:
The commission does allow the regions to develop their own and they have, and they come from very different historical roots.

[00:27:40] Speaker 01:
So we have no reason to believe that PJM does it the same way that Mid-Continent does nor do they have to.

[00:27:47] Speaker 01:
Once they divvy up the cost of the project between the two of them, they each then divvy up among their regions

[00:27:55] Speaker 01:
differently and this is only about the mid-continent piece of the already divided between the two.

[00:28:01] Speaker 00:
One other question which goes to the economics.

[00:28:08] Speaker 00:
There's a difference in interest obviously between in mid-continent's region, a difference in interest between those who are

[00:28:20] Speaker 00:
in locations where big or medium-sized projects would be located and those far removed, right?

[00:28:29] Speaker 00:
So there'd be a difference in economic interests within the region.

[00:28:34] Speaker 01:
There may be, yes.

[00:28:42] Speaker 01:
And certainly some transmission owners are going to be closer to the seams with PJM, but often in these regions,

[00:28:48] Speaker 01:
the entity whose ox is gored in one instance is not the one whose ox is gored in the next instance.

[00:28:54] Speaker 01:
So, so, and this case was not about one specific project.

[00:28:58] Speaker 01:
This was about what the rules will be for any such projects.

[00:29:02] Speaker 01:
And that's how the commission approached it.

[00:29:05] Speaker 00:
Yes.

[00:29:05] Speaker 00:
I'm still trying to figure out why there's a difference in economic view between those that would be located, those zones that would be

[00:29:18] Speaker 00:
primarily where new transmission facilities would be located and those facilities which are further away.

[00:29:30] Speaker 00:
Obviously there's a conflict of interest there and I'm puzzled as to why it's resolved the way it is.

[00:29:38] Speaker 01:
And I don't have a way to answer that.

[00:29:42] Speaker 01:
I would note that the allocation method that the commission

[00:29:47] Speaker 01:
chose at the section 206 step two method would not, this is not a postage stamp allocation.

[00:29:58] Speaker 01:
Your honor mentioned 20% regionally.

[00:30:00] Speaker 01:
This actually isn't that.

[00:30:01] Speaker 01:
These projects don't get 20% across the board to everybody postage stamp.

[00:30:06] Speaker 01:
This is divvied up by zones, but the commissions

[00:30:11] Speaker 01:
The allocation method that the commission put in place does it based on the adjusted adjusted production cost savings metric.

[00:30:21] Speaker 00:
So that doesn't mean that I wish I wish to congratulate for for making up terminology is absolutely incomprehensible.

[00:30:32] Speaker 01:
We didn't make that one up.

[00:30:34] Speaker 01:
I believe that metric was made up by Mid-Continent in 2007.

[00:30:42] Speaker 01:
But it actually is descriptive of what it is.

[00:30:44] Speaker 01:
It actually is looking at production costs and the savings.

[00:30:48] Speaker 01:
And then I don't know exactly what the adjusted refers to, but I guess that has something to do with specific.

[00:30:53] Speaker 01:
Nor did I. Yeah, but it really does actually refer to what it is, which I know is not always the case.

[00:31:02] Speaker 01:
I'd like to make one further note about supposed post hoc arguments.

[00:31:06] Speaker 01:
Of course, from 2016, 2017, the commission did make a distinction between inter-regional projects and regional projects.

[00:31:15] Speaker 01:
But to the extent that we're talking about the third regional order and the paragraph that the petitioner cite, and we cited as well in that, that order issued the same day as the rehearing order in this case.

[00:31:27] Speaker 01:
So to the extent we're talking about it on appeal at all,

[00:31:31] Speaker 01:
petitioners never raised anything on rehearing because they didn't seek rehearing and they didn't have to seek further rehearing to make an appeal but they are presenting a new argument.

[00:31:42] Speaker 00:
Let me ask you one more question.

[00:31:45] Speaker 00:
I noticed that there are two other cases pending in this court involving not inter-regional projects but simply regional products in which major continent is taking essentially the same position

[00:31:58] Speaker 00:
with respect to regional projects, right?

[00:32:03] Speaker 01:
I believe that the pending cases are actually challenges by a competitive developer in which the transmission owners would be aligned with the outcome and not opposing it.

[00:32:15] Speaker 01:
Ms.

[00:32:16] Speaker 01:
Amarkale can correct me if I'm wrong, but I know that the challenge to the third regional filing that the commission did accept was brought by Ellis.

[00:32:24] Speaker 00:
If we would decide in favor of FERC in this case,

[00:32:29] Speaker 00:
Would that have any impact on the pending cases?

[00:32:33] Speaker 00:
No.

[00:32:35] Speaker 00:
I'm surprised you say that.

[00:32:38] Speaker 01:
Well, this is the end of, this is the only piece of the inter-regional project.

[00:32:46] Speaker 01:
It's the only piece left.

[00:32:51] Speaker 00:
Isn't the issue in those two cases the same whether or not you can allocate costs throughout the entire region?

[00:32:59] Speaker 01:
Well, I think in at least the one I know more about, which is LSP transmissions, challenge the third regional order.

[00:33:07] Speaker 01:
They don't like that the commission didn't make mid-continent treat regional local economic projects the way that it treats the 100 to 230 kilovolt projects for inter-regional.

[00:33:22] Speaker 01:
The Commission decided that it was okay under these circumstances that we have one treatment for the 100 to 230 interregional, and that goes back to the 2016-17 orders.

[00:33:33] Speaker 01:
But because the Commission never found Mid-Continent's regional cost allocation as it existed to be unjust and unreasonable and in need of replacement, Mid-Continent was just replacing it of its own volition.

[00:33:49] Speaker 01:
The commission didn't make mid continent do the same thing for a hundred, a hundred to 230 kilovolt and, and a competitive developer thinks they should.

[00:34:00] Speaker 01:
So I don't think a decision in that case would have an impact on this one.

[00:34:07] Speaker 01:
Um, because it's not going to undo what the commission did here.

[00:34:11] Speaker 00:
I was asking the other way, whether a decision when you're affirming your position,

[00:34:18] Speaker 00:
in this case, hypothetically, would that have an impact on the other cases?

[00:34:23] Speaker 01:
I really don't think it would, because the third region order found me.

[00:34:28] Speaker 00:
That's all I wanted to hear.

[00:34:30] Speaker 01:
OK.

[00:34:32] Speaker 01:
All right.

[00:34:34] Speaker 01:
If there are no further questions.

[00:34:36] Speaker 03:
Anything further?

[00:34:37] Speaker 03:
Either judge?

[00:34:39] Speaker 00:
No.

[00:34:40] Speaker 00:
No.

[00:34:41] Speaker 03:
Thank you, counsel.

[00:34:45] Speaker 03:
All right, counsel for petitioners.

[00:34:47] Speaker 04:
Thank you, Your Honor.

[00:34:49] Speaker 04:
First of all, I'd like to put aside the complaint proceeding and the 206 because independently FERC has an obligation under Section 205 of the Federal Power Act to evaluate and to find whether a proposal is just and reasonable.

[00:35:08] Speaker 04:
Here, the only language that we have on whether the inter-regional proposal to allocate local projects to local zones

[00:35:17] Speaker 04:
is one paragraph in paragraph 21 JA 478 on the commission's determination about whether the proposal is just and reasonable.

[00:35:30] Speaker 04:
The commission did not do any independent analysis of whether this proposal differed for interregional or regional.

[00:35:39] Speaker 04:
It just said we're confirming based on the analysis that we did in the regional order.

[00:35:45] Speaker 04:
But the commission, if it's going to raise the issue that inter-regional projects are somehow different from regional projects, it has to provide more analysis than is provided in the inter-regional rehearing order at paragraph 21, which says just that we confirm that we are not going to do any analysis of the inter-regional proposal

[00:36:15] Speaker 04:
And we are rejecting it because we rejected the regional proposal.

[00:36:21] Speaker 03:
Well, that's one way you can read it.

[00:36:23] Speaker 03:
The other way you can read it is FERC said we already addressed this issue in the regional.

[00:36:28] Speaker 03:
So we don't have to readdress it in the interregional.

[00:36:34] Speaker 04:
But now it's coming and saying that that's one way to read it, Your Honor.

[00:36:38] Speaker 04:
But now it's saying that the interregional projects have some because they have some special

[00:36:45] Speaker 04:
special characteristics that they have regional benefits and it's pointing to the, it's pointing to the complaint proceeding where the commission found that there may be regional benefits of inter-regional projects based on the transfer payments that we were talking about before.

[00:37:09] Speaker 04:
But here, if the commission is going to say,

[00:37:11] Speaker 04:
These are inter-regional projects.

[00:37:13] Speaker 04:
They have regional benefits.

[00:37:15] Speaker 04:
It needs to say that when it rejects the 205 proposal, and it didn't say that.

[00:37:23] Speaker 04:
With regard to Judge Silverman's question on the PJM position, Burke directed that each RTO, each regional transmission organization, do an analysis of the benefits for its region.

[00:37:39] Speaker 04:
There's no interregional analysis done here to see how the projects are split.

[00:37:47] Speaker 04:
Each PJM counts up the benefits in its region.

[00:37:52] Speaker 04:
MISO counts up the benefits in its region by comparing the project to under its analysis that it uses for other regional projects.

[00:38:06] Speaker 04:
And they add them together and then that's how they split

[00:38:09] Speaker 04:
the split, the cost between the two regions.

[00:38:16] Speaker 04:
CJM is fine with that, Your Honor.

[00:38:18] Speaker 04:
It doesn't have any issue in determining the cost for its region based on its regional analysis.

[00:38:27] Speaker 00:
But they buy FERC's framework.

[00:38:31] Speaker 04:
They buy FERC's framework that

[00:38:34] Speaker 04:
No, they don't because they allocate low voltage projects to the local zone.

[00:38:41] Speaker 04:
Only?

[00:38:43] Speaker 00:
To local zone only?

[00:38:47] Speaker 04:
That's what Old Dominion says, yes.

[00:38:52] Speaker 04:
For low voltage projects, which are below 345 KB, there are no regional benefits, Your Honor.

[00:39:05] Speaker 00:
There are zero.

[00:39:06] Speaker 00:
In other words, they take the exact same position as you do.

[00:39:11] Speaker 04:
Yes.

[00:39:13] Speaker 00:
And in fact, but they're not challenging FERC.

[00:39:18] Speaker 04:
Because FERC has allowed them to do that, Your Honor, and FERC has said to our 205 proposal here, no, you can't.

[00:39:25] Speaker 00:
Why aren't you raising hell about that saying PJM is allowed to do what you're not allowed to do?

[00:39:34] Speaker 04:
It's not in the record, Your Honor.

[00:39:39] Speaker 04:
We are raising hell about a different kind of proposal that FERC allows to be allocated to the local zone.

[00:39:49] Speaker 04:
And that's why we're relying on FERC's order in that instance where it said spillover benefits

[00:40:01] Speaker 04:
up to 25% outside of the zone are fine.

[00:40:04] Speaker 04:
You can still meet the cost causation principle by using that allocation.

[00:40:10] Speaker 03:
Did not PGM recognize projects lower voltage down to 100?

[00:40:24] Speaker 04:
It does, and it allocates them to the local zone.

[00:40:26] Speaker 02:
Yes.

[00:40:27] Speaker 04:
Yes.

[00:40:28] Speaker 03:
Yes.

[00:40:29] Speaker 03:
All right.

[00:40:30] Speaker 03:
It's very difficult to parse an argument on a record that's not before us, but we do have these representations by FERC and your reply brief did not contest that.

[00:40:44] Speaker 03:
So I think, you know, this is complicated enough without limiting this to what FERC said about midcontinentals proposal.

[00:40:57] Speaker 03:
All right, looking only at the mid continental world.

[00:41:01] Speaker 03:
PGM is out of it, not before us.

[00:41:06] Speaker 02:
Anything further?

[00:41:13] Speaker 02:
Thank you then.

[00:41:14] Speaker 02:
Thank you.

[00:41:15] Speaker 03:
We will take the case under advisement.