[00:00:00] Speaker 00:
Mr. Lowell for the petitioner.

[00:00:11] Speaker 00:
Excellent energy services, Inc.

[00:00:18] Speaker 00:
Miss Kimmel for the petitioner.

[00:00:19] Speaker 00:
Kansas Electric Power Cooperative Inc.

[00:00:24] Speaker 00:
Miss

[00:00:30] Speaker 05:
Mr. Lowell, please proceed when you're ready.

[00:00:44] Speaker 07:
My name is Joseph Lowell.

[00:00:45] Speaker 07:
I'm an attorney for Xcel Energy Services here today presenting the arguments of the petitioners regarding

[00:00:52] Speaker 07:
the tariff interpretation of Attachment Z2 by FERF in this case.

[00:00:56] Speaker 05:
Could you try to speak up just a little, please, thanks.

[00:00:58] Speaker 05:
You can also switch to raise the podium, but I think it's okay.

[00:01:01] Speaker 05:
Okay.

[00:01:08] Speaker 07:
Your Honor, this case concerns Attachment Z2 of the SPP tariff, and Attachment Z2 sets forth a process of determining cost responsibility

[00:01:17] Speaker 07:
with the use of creditable upgrades, which are a type of transmission upgrades that are directly funded by a sponsor.

[00:01:28] Speaker 07:
The standard of review in this case for this issue is the arbitrary and capricious standard.

[00:01:33] Speaker 07:
When questions of tariff interpretation, this court will review the tariff interpretation, will review the tariff language to determine whether it's ambiguous

[00:01:43] Speaker 07:
If it's unambiguous, it will apply the unambiguous meaning.

[00:01:48] Speaker 07:
If it is ambiguous, this court will defer to FERC's interpretation if it's reasonable.

[00:01:55] Speaker 07:
Moreover, FERC's interpretation must be supported by the record.

[00:02:00] Speaker 07:
If we look at the provisions at issue in this case, in Attachment Z2, the first key relevant provision of Attachment Z2

[00:02:13] Speaker 07:
It establishes a role for who is responsible for paying these revenue credits.

[00:02:19] Speaker 07:
And it states that revenues for credits will be provided from new long-term network integration transmission service that could not be provided but for one or more credible upgrades to accommodate the service.

[00:02:35] Speaker 04:
Mr. Lowell, one of your arguments is that the N1 contingency analysis is the industry standard.

[00:02:43] Speaker 04:
here for calculating something like for upgrades.

[00:02:47] Speaker 04:
So what is your evidence that this is the industry standard for that?

[00:02:54] Speaker 04:
Well, in our especially when we're talking about not calculating things ex ante but ex post where this method seems to be very difficult to implement.

[00:03:06] Speaker 07:
So the articulation that it is only the

[00:03:13] Speaker 07:
N-1 test is only used for initial determinations of upgrade responsibility.

[00:03:20] Speaker 07:
As you said, not exposed.

[00:03:25] Speaker 07:
That is a new concept that was announced in this order.

[00:03:29] Speaker 07:
We have cited to the precedent that traditionally, the buffer test to implement that type of requirement, you need to do an N-1 analysis.

[00:03:44] Speaker 04:
So your friends on the other side say that using that method would essentially be so difficult that the petitioners here would end up not paying any upgrade credits because it would be so difficult to calculate under this method.

[00:03:59] Speaker 04:
What is your response to that?

[00:04:02] Speaker 07:
Well, I have a few cons to that.

[00:04:07] Speaker 07:
We did argue that the industry standard and FERC precedent traditionally would use the N minus one test to implement the but for language in the term.

[00:04:19] Speaker 07:
However, even if it were the case that the N minus one test were too difficult as a method of implementing that language, there may be some other approach that might work, but it would need to still satisfy the condition.

[00:04:34] Speaker 07:
It would still need to demonstrate

[00:04:37] Speaker 07:
that the service could not be provided without the upgrade.

[00:04:41] Speaker 07:
So ultimately it's what's in the tariff.

[00:04:43] Speaker 07:
I think it governs.

[00:04:46] Speaker 05:
Um, do you know what, what does the, um, implementation of rule two cause as I understand it, rule one deals with flows that are in the same direction as the one that gave rise to the need for the upgrade.

[00:05:04] Speaker 05:
But if you go in the opposite direction,

[00:05:07] Speaker 05:
The way that the methodology is set out does something more than what happens under rule one, because under rule one, everyone who uses the same direction is on the hook.

[00:05:26] Speaker 05:
In the opposite direction, not everybody is.

[00:05:28] Speaker 05:
It's only if the upgrade made possible the use of the opposite direction.

[00:05:33] Speaker 07:
Well, they use some simplifying assumptions.

[00:05:36] Speaker 07:
Yeah, you're correct.

[00:05:37] Speaker 07:
Rule one, if you exceed the 3% threshold PDF factor, you're deemed to be using the upgrade under that reservation stack analysis.

[00:05:48] Speaker 07:
Rule one.

[00:05:49] Speaker 07:
Rule two, they'll look there assuming that they take a look at what the capacity of the system was there before and what the flows are, and then they assume that there is a

[00:06:06] Speaker 07:
the calculated limit and then assume that once you exceed that threshold by stacking transactions going in the reverse direction, that they are then, once they pass that threshold, now using that.

[00:06:19] Speaker 05:
Do you have any issue with the way Rule 2 is implemented?

[00:06:23] Speaker 05:
We do.

[00:06:24] Speaker 05:
So, as our expert explained... On the basis that that doesn't qualify as but for?

[00:06:30] Speaker 05:
Well, that it doesn't implement.

[00:06:31] Speaker 07:
the tariff languages, which requires that the service can, if the service could be provided without the upgrades, customers shouldn't have to pay again, because we're already paying for the cost of the transmission system.

[00:06:45] Speaker 07:
If you're only looking, since we're talking about an electrical circuit, and the flows go where they will, as they generally follow a path of least resistance, if you're only looking at the impacts on this credible upgrade,

[00:07:01] Speaker 07:
And as a way to infer what's happening with the capability of the rest of the circuit to accommodate our flows, we think that's simply invalid.

[00:07:12] Speaker 07:
It's employing, we think, a incorrect assumption.

[00:07:16] Speaker 07:
And it will not determine whether or not our service could be provided.

[00:07:20] Speaker 05:
But at least the way rule two is articulated, it seems consistent with a but for goal.

[00:07:29] Speaker 05:
It may be that in pursuit of the but for goal, there's something going on.

[00:07:32] Speaker 05:
That's a rye in the way that you're describing it.

[00:07:34] Speaker 07:
But I think I agree with you that in both who they are attempting to do more that there is an attempt to do some sort of causation.

[00:07:45] Speaker 05:
Whereas in rule one, your view is that there's not rule one.

[00:07:51] Speaker 05:
Right.

[00:07:51] Speaker 07:
But as I said, in rule two, we still don't think that that would comply with the tariff to

[00:07:57] Speaker 05:
just look at the impacts on that particular upgrade.

[00:08:02] Speaker 05:
And then can I ask you about one statement in your brief?

[00:08:05] Speaker 05:
Sure.

[00:08:05] Speaker 05:
So I've gotten some attention in the briefing.

[00:08:07] Speaker 05:
But on page 57, and this goes to some of the arguments about whether the challengers have received adequate notice of the costs.

[00:08:18] Speaker 05:
And the brief says the service agreements could have said that it is unknown at this time whether particular upgrade costs will be assignable to the customer, but they did not.

[00:08:27] Speaker 05:
which I read to mean if the service agreements had just said it's unknown, that would be fine.

[00:08:33] Speaker 05:
And if that's true, then why does it matter that the tariff might be articulated a high level of generality such that you don't have the direct ability at that point to discern the precise level of costs and you may be on the hook for, but by your own argument, you think it would have been fine if they would have just said that it would be totally unknown.

[00:08:57] Speaker 07:
Well, not that what I mean is the service agreement was simply silent.

[00:09:02] Speaker 07:
There was no indication whatsoever that we might have this responsibility in the service agreement.

[00:09:10] Speaker 07:
And the service agreement, remember, it's functioning as sort of the tariff is the menu, and here's what I'm taking up.

[00:09:18] Speaker 07:
Here's what I'm paying for.

[00:09:20] Speaker 07:
So all I meant was if there was some sort of caveat, if there was some sort of notation that

[00:09:28] Speaker 07:
You may be responsible for X, Y, or Z creditable upgrade.

[00:09:33] Speaker 07:
It's not indeterminate yet what that ultimate price is.

[00:09:36] Speaker 07:
That would have been more than what happened.

[00:09:39] Speaker 05:
But would that have been OK?

[00:09:41] Speaker 05:
Would that have been enough?

[00:09:43] Speaker 05:
So you would have gotten a heads up that precise amount, and even more than the precise amount, the precise way in which we're going to calculate the amount.

[00:09:53] Speaker 05:
That's unknown.

[00:09:55] Speaker 05:
If you would have gotten notice that it's unknown, would your notice-based challenges not exist?

[00:10:02] Speaker 05:
Or do you have something more to say than that?

[00:10:04] Speaker 07:
In this case, well, no, our notice challenges go beyond that.

[00:10:07] Speaker 07:
I mean, for example, in this part of the brief, I think I'm trying to highlight the difference between what our studies determine, indicated we were responsible.

[00:10:23] Speaker 07:
or what was in our service agreements and what they didn't say.

[00:10:30] Speaker 07:
To comply with the tariff, it would need to specify the upgrade and the cost.

[00:10:38] Speaker 05:
And if the tariff just said like this suggests that the agreements would have said that it is unknown at this time whether the particular upgrade costs will be assignable to you.

[00:10:48] Speaker 05:
Would that have been enough if the tariff said that?

[00:10:52] Speaker 05:
No, I don't think so.

[00:10:53] Speaker 05:
You don't think the tariffs would have to say more.

[00:10:56] Speaker 07:
Well, the service agreement.

[00:10:59] Speaker 07:
I'm sorry.

[00:10:59] Speaker 07:
Maybe I misunderstood you saying it's tariffs that you could be responsible for upgrades, right?

[00:11:08] Speaker 07:
No, I don't think so.

[00:11:09] Speaker 07:
I mean, well, I was just discussing the rule.

[00:11:13] Speaker 07:
But overall, this is a rule that defines who is responsible.

[00:11:17] Speaker 07:
If the terrorist simply said you might have to pay this, that would clearly be insufficient.

[00:11:24] Speaker 05:
That would be insufficient, right.

[00:11:25] Speaker 05:
That's your argument.

[00:11:25] Speaker 05:
That's why I was just thrown a little bit by the language in the brief, which made it seem like it would actually be sufficient if there were just a statement about it being unknown.

[00:11:34] Speaker 05:
But that doesn't seem to be your argument.

[00:11:35] Speaker 05:
That wouldn't be enough.

[00:11:37] Speaker ?:
Right.

[00:11:37] Speaker 05:
That's a statement.

[00:11:40] Speaker 06:
Now, would you think that the regional operator was required to amend the tariff to specifically include this reservation stack analysis?

[00:11:51] Speaker 07:
I think that they should have amended the tariff included.

[00:11:56] Speaker 07:
I mean, interveners have characterized it as a business practice, which is we don't agree that this is a business practice.

[00:12:07] Speaker 07:
It was not presented as such.

[00:12:10] Speaker 07:
or comply with the normal rules for a business practice.

[00:12:13] Speaker 07:
But business practices are certainly allowable, and they may specify the finer details of how to implement tariff language.

[00:12:23] Speaker 07:
But it's pretty standard rule at FERC that business practices cannot vary the tariff.

[00:12:29] Speaker 07:
They can't contradict the tariff.

[00:12:32] Speaker 07:
And to the extent this is a rule that affects service as it does, it should have been on file for a case.

[00:12:41] Speaker 04:
What about the fact that the petitioners here agreed to the methodology in the white paper?

[00:12:49] Speaker 04:
So it's not just a business practice, but it is a business practice that the petitioners explicitly approved.

[00:12:58] Speaker 07:
Well, I guess, Your Honor, we would disagree that it is a business practice.

[00:13:03] Speaker 07:
You're correct that petitioners endorsed the white paper back in 2012.

[00:13:10] Speaker 07:
However, for its part, my client did not understand the white paper proposing an alteration in the meaning of Attachment Z2.

[00:13:24] Speaker 04:
Well, if your client thought it was N minus one and then the white paper says reverse stack methodology, then it seems quite obvious.

[00:13:37] Speaker 04:
I mean, if that was their understanding originally, why would they endorse the white paper?

[00:13:42] Speaker 07:
Well, I don't think they understood at the time what the intent was.

[00:13:46] Speaker 07:
I mean, I think if you look, I think it is

[00:13:52] Speaker 07:
Go to the white paper for a second.

[00:14:20] Speaker 07:
It does propose, obviously.

[00:14:22] Speaker 04:
What page are you on?

[00:14:23] Speaker 07:
I'm sorry.

[00:14:24] Speaker 07:
This is 275 with the joint appendix, page three of the white paper.

[00:14:39] Speaker 07:
So if we look on page three, and my point would be, I don't think that the white paper is entirely crystal clear, and I'm not sure

[00:14:50] Speaker 07:
My client did not understand that the intent of this was to change the tariff.

[00:14:56] Speaker 07:
It was a white paper process.

[00:14:58] Speaker 07:
It was a sickle of process about the white paper and the issues of implementing it too.

[00:15:05] Speaker 07:
But it was not a process to change the tariff, which is a different and separate process under SPP.

[00:15:13] Speaker 05:
But didn't everybody understand, everybody had to understand that the tariff was changed at least insofar as it would now go in both directions.

[00:15:20] Speaker 05:
I thought that was the whole point of going from Z to Z1, Z2.

[00:15:23] Speaker 05:
Or am I just thinking of something else?

[00:15:24] Speaker 05:
Oh, yeah.

[00:15:25] Speaker 07:
No, no.

[00:15:25] Speaker 07:
You're correct.

[00:15:26] Speaker 07:
That's what happened in 2008.

[00:15:28] Speaker 07:
Oh, I see.

[00:15:29] Speaker 05:
In fact, they changed that.

[00:15:30] Speaker 07:
Got it.

[00:15:31] Speaker 07:
Got it.

[00:15:31] Speaker 07:
OK.

[00:15:31] Speaker 07:
But Judge Rao, just to my point, the last paragraph of page 3 is talking about applying N minus 1 analysis to sponsored upgrades to determine whether it's needed for the service.

[00:15:47] Speaker 07:
Now, this passage.

[00:15:50] Speaker 07:
is discussing application of M minus one test to a subset of credible upgrades, which are these so-called sponsored upgrades.

[00:15:59] Speaker 07:
And there are also.

[00:16:01] Speaker 04:
But M minus one, again, that's the initial allocation, right?

[00:16:05] Speaker 04:
Isn't a sponsored upgrade referring to an initial allocation?

[00:16:11] Speaker 07:
I think this is talking about after sponsored upgrade.

[00:16:17] Speaker 07:
This is a sponsored upgrade that's been built.

[00:16:21] Speaker 07:
and it's trying to determine whether to apply, whether it moves from the set of sponsored upgrade creditable.

[00:16:29] Speaker 05:
That's why it's under Z2, because Z1 has to do with the sponsor upgrade, right?

[00:16:34] Speaker 05:
And Z2 is the credit mechanism by which this sponsor upgrade gets reimbursed.

[00:16:40] Speaker 05:
through revenue credits?

[00:16:41] Speaker 07:
Am I understanding that?

[00:16:42] Speaker 07:
Well, I think you're on the right track.

[00:16:44] Speaker 07:
Z2 is definitely talking about the credits.

[00:16:47] Speaker 07:
That's when Z1 is a little broader.

[00:16:48] Speaker 07:
It kind of talks about the process by which SPP does its studies.

[00:16:54] Speaker 07:
And it talks about the aggregate transmission service study, where SPP is batching a bunch of these together.

[00:17:02] Speaker 07:
And it does talk about sponsored upgrades.

[00:17:06] Speaker 04:
I mean, here it says there's a 10 minus 1 analysis.

[00:17:10] Speaker 04:
Prior to the application of the RSA, it's talking about how that will be used to determine sponsored upgrades.

[00:17:16] Speaker 04:
But once a sponsored upgrade becomes a creditable upgrade, it will become the base values used in the RSA reservation stack.

[00:17:26] Speaker 04:
But that seems pretty clear to me that the reservation stack analysis will be used for upgrade credits.

[00:17:33] Speaker 07:
That's true.

[00:17:34] Speaker 07:
I'm not trying to steer you away from that.

[00:17:36] Speaker 04:
But you just said it was unclear.

[00:17:38] Speaker 04:
But this is actually like pointing me to this paragraph suggests it was quite clear that at least in the white paper, the reservation stack analysis would be used for upgrade credits.

[00:17:47] Speaker 07:
Yeah, but this page three is talking about applying an M on this one, expose to an upgrade

[00:17:58] Speaker 07:
Well, and Judge Rao, I think we had a little bit of this discussion during the Oklahoma gas case.

[00:18:06] Speaker 07:
You asked about the same question.

[00:18:08] Speaker 07:
And I told you there that Excel did not understand that it was approving a change to the tariff.

[00:18:18] Speaker 07:
And I understand any skepticism you may have, but ultimately,

[00:18:23] Speaker 07:
We have a contract with SPP that is comprised of the tariff and the service agreement.

[00:18:30] Speaker 07:
And if there was misunderstanding during the white paper process, that's unfortunate.

[00:18:37] Speaker 07:
But we're going to, we've intended to stand on our contract rights, and the contract has not changed.

[00:18:45] Speaker 06:
And I was going to ask you about that, because it appears like the white paper is more going to a feasibility analysis.

[00:18:51] Speaker 06:
And then how do you feel like it affects the intent of the parties?

[00:18:53] Speaker 06:
Because it comes way later than the agreement.

[00:18:56] Speaker 07:
Yeah, I don't think it's indicative of the intent of the parties in 2008, because it was developed in 2012.

[00:19:07] Speaker 07:
It highlights the N minus 1 approach

[00:19:12] Speaker 07:
is one approach to determining whether transmission service needs to use a credible upgrade.

[00:19:24] Speaker 07:
It doesn't express any intent that this is always what they intended.

[00:19:27] Speaker 07:
It more is indicating that they did not know how to implement Attachments 2 at that time.

[00:19:35] Speaker 05:
What is the ambiguity you're seeing in this paragraph again?

[00:19:37] Speaker 05:
Because I guess I'm following up on Judge Rao's question.

[00:19:42] Speaker 05:
It seems like the second sentence of that paragraph says the N minus one analysis will be used to determine whether the sponsored upgrade is needed to provide the new service, which is the antecedent stage where you're trying to decide whether the upgrade is going to happen, not what the methodology is for determining how the sponsor will be reimbursed by users of the upgrade.

[00:20:05] Speaker 07:
So the reason I directed us to this page is just, number one,

[00:20:11] Speaker 07:
There's this suggestion, not by Judge Rao herself, but by Fergen and the intervenors that the N-1 test can't be used after the fact.

[00:20:22] Speaker 07:
And this clearly shows that at least the white paper contemplates it.

[00:20:27] Speaker 07:
And number two, this white paper, frankly, I'm just, I suppose I'm trying to show that

[00:20:35] Speaker 07:
My client could have been confused and not understand that they did not intend to apply an M minus one test throughout.

[00:20:51] Speaker 05:
My colleagues have no additional questions for you at this time.

[00:20:54] Speaker 05:
I guess we'll hear from counsel for the other commissioner.

[00:20:59] Speaker 05:
Thank you.

[00:21:05] Speaker 05:
Ms.

[00:21:06] Speaker 05:
Kimmel?

[00:21:06] Speaker 02:
Yes, good morning.

[00:21:08] Speaker 02:
Can you hear me okay?

[00:21:10] Speaker 05:
Yes.

[00:21:11] Speaker 02:
Okay, thank you.

[00:21:12] Speaker 02:
May it please the court?

[00:21:13] Speaker 02:
My name is Phyllis Kimmel and I'm arguing on behalf of Kansas Electric Power Cooperative and on behalf of petitioners.

[00:21:23] Speaker 02:
I will be addressing the filed rate doctrine and the study process rules.

[00:21:30] Speaker 02:
I'd like to reserve two minutes for rebuttal.

[00:21:33] Speaker 02:
At the outset,

[00:21:36] Speaker 02:
Even if this court agrees that or finds that SPP was implementing the attachency to tariff correctly, there are still two fundamental problems with FERC's orders.

[00:21:54] Speaker 02:
One is the filed rate doctrine and the other is SPP's violation of the study process rules.

[00:22:04] Speaker 02:
So, Ms.

[00:22:06] Speaker 04:
Kimmel, here the BUP4 method was, well it's not a method, say the BUP4 standard for upgrade credits was put into the filed TARA.

[00:22:18] Speaker 04:
And that standard was arguably under-determined.

[00:22:23] Speaker 04:
It didn't say how BUP4 would be calculated.

[00:22:26] Speaker 04:
So what I'm wondering is, in a situation like that where a tariff has clearly set out that some rate will be paid, right, that petitioners in this situation would pay upgrade credits, but the method for calculating that is left undetermined.

[00:22:43] Speaker 04:
Does that mean upgrade credits cannot be charged by SPP until there's a further filing?

[00:22:52] Speaker 04:
Because it seems that that might be the consequence of petitioners position here.

[00:22:56] Speaker 04:
So where there's an under determined rate, nothing can really be charged until there's a further filing.

[00:23:06] Speaker 02:
The I mean, it could be that that could end up being a result that I mean, the Federal Power Act requires that charges be

[00:23:21] Speaker 02:
you know, that customers receive notice, formal notice of charges in a specific manner.

[00:23:29] Speaker 02:
And here in this case, the service agreement is where the customers receive notice of their actual charges.

[00:23:42] Speaker 02:
There were a couple of questions earlier

[00:23:51] Speaker 02:
Would it, you know, the statement in our brief about would it have been enough to say that the charges are unknown.

[00:23:59] Speaker 02:
The brief, the brief, we were trying to make a point and perhaps it was a little imprecise if There's a tension if if if the service agreements had said

[00:24:14] Speaker 02:
We have no idea what upgrades you're going to be charged for.

[00:24:20] Speaker 02:
And we have no idea what those charges will be.

[00:24:27] Speaker 02:
Customers would have at least had actual notice as to what was going on.

[00:24:32] Speaker 02:
Would that have been compliant with the federal power act section 205 requirements for charging rates?

[00:24:41] Speaker 02:
I don't believe that it would.

[00:24:44] Speaker 04:
Well, but the petitioners here don't question that they were on the hook for upgrade credits.

[00:24:52] Speaker 04:
I mean, that was part of the tariff, that some upgrade credits would be paid.

[00:24:56] Speaker 04:
Maybe they didn't know how those would be calculated.

[00:24:59] Speaker 04:
Well, petitioners... But petitioners knew that they would have to pay for upgrade credits in some way.

[00:25:07] Speaker 02:
In some way.

[00:25:08] Speaker 02:
But where...

[00:25:12] Speaker 02:
In the study process, SPP was obligated to provide notice in the study process of the upgrades and of the cost of the upgrades.

[00:25:28] Speaker 02:
In Kepko's case, over half of the costs that my client is being charged are for upgrades

[00:25:38] Speaker 02:
that as far as we can tell from the study weren't even at issue at that point.

[00:25:45] Speaker 02:
And so, you know, we do believe that that's a problem both with compliance with the study process rules and compliance with the file rate doctrine.

[00:25:57] Speaker 04:
So, Ms.

[00:25:57] Speaker 04:
Kimmel, if the white paper had been filed with FERC or, you know, some version of that explaining this methodology, would that have been sufficient?

[00:26:07] Speaker 02:
If the white paper had been filed and the tariffs specified how the charges were to be calculated, and if the service agreements had specified the charges, those two components absolutely would have been sufficient.

[00:26:31] Speaker 02:
But what we have here is not the case of a formula rate where you can just

[00:26:35] Speaker 02:
low inputs in after the fact.

[00:26:37] Speaker 02:
That's just not what is on.

[00:26:41] Speaker 05:
Can I just have a second?

[00:26:42] Speaker 02:
Sure.

[00:26:43] Speaker 05:
Because I thought that you added a few things to just the white paper.

[00:26:46] Speaker 05:
So what if just the white paper were baked into the tariff?

[00:26:50] Speaker 05:
The tariff cross references the white paper.

[00:26:53] Speaker 05:
It says look at the white paper.

[00:26:55] Speaker 02:
And that's it.

[00:26:56] Speaker 02:
If the white paper had been filed, then

[00:26:59] Speaker 02:
Um, we'd have a, we'd have a harder case to make here, your honor, but that's not what it would have been enough.

[00:27:06] Speaker 02:
Would that have been enough?

[00:27:08] Speaker 02:
Um, no, I don't, I don't think that it is.

[00:27:10] Speaker 02:
I think that, um, I don't, we have not found anything in, in all of first precedent in the court's precedent saying that a service agreement need not specify the actual charges.

[00:27:26] Speaker 02:
Um, we just haven't found that.

[00:27:28] Speaker 02:
And as,

[00:27:29] Speaker 02:
As far as we know, that is pretty clearly what the Federal Power Act section 205 requires.

[00:27:34] Speaker 02:
That's what FERC's rate regulations require.

[00:27:39] Speaker 02:
We're just not aware of anything where a service agreement can omit the actual charges with the exception of- What does a service agreement have to do with the filed rate?

[00:27:48] Speaker 05:
Because I thought, and maybe it's a separate argument, but I thought part of your argument was that the filed rate didn't give you enough notice.

[00:27:56] Speaker 05:
Not the ultimate agreement.

[00:27:58] Speaker 02:
So our-

[00:27:59] Speaker 02:
Our position is that the service agreement is the filed rate.

[00:28:04] Speaker 02:
That's where the charges to the customer appear.

[00:28:10] Speaker 02:
Oh, because the, I see, okay.

[00:28:14] Speaker 02:
Yes, I mean, as Mr. Lowell explained, there is, SPP has a tariff.

[00:28:20] Speaker 02:
It's got thousands of pages, all kinds of terms and conditions.

[00:28:24] Speaker 02:
Different charges need to be calculated in compliance and consistent with that tariff.

[00:28:29] Speaker 02:
But in the end, there's a service agreement, and it says, KEPCO is going to pay $100, or KEPCO is going to pay $10 million.

[00:28:38] Speaker 02:
And if we don't have that information when we're presented with that service agreement, there's just no way for us to make an informed decision about whether we want to take on the costs.

[00:28:50] Speaker 05:
And the agreement gets filed?

[00:28:53] Speaker 02:
That gets complicated.

[00:28:56] Speaker 02:
Um, the service agreements used to get filed and then first regulations changed.

[00:29:01] Speaker 02:
Um, and under certain circumstances, they are filed, but the rules treat them for the same purpose as if they were filed.

[00:29:08] Speaker 02:
Um, it's in 35, um, 0.1 G I believe the first regulations, but it has the same effect.

[00:29:16] Speaker 05:
Can I go back to one question that Judge Ralph started with, which is that you, um, you agree that you knew that you would have to pay something

[00:29:24] Speaker 05:
by way of credits under C2?

[00:29:28] Speaker 02:
Yes, there is always the possibility of having to pay credits.

[00:29:37] Speaker 05:
Not the possibility.

[00:29:37] Speaker 05:
I'm trying to figure out whether you knew that you were on the hook as a butt for a causer.

[00:29:44] Speaker 02:
In this case, when the service agreement said that there is only one upgrade or

[00:29:52] Speaker 02:
that there was only one upgrade that was, whatever, that met the but for test.

[00:30:00] Speaker 02:
And in that case, the costs are not directly assignable to KEPCO.

[00:30:04] Speaker 02:
No, we didn't expect that we'd be paying for that.

[00:30:10] Speaker 02:
And there were four upgrades that just were being charged for that weren't even part of the study process.

[00:30:21] Speaker 02:
They came along later.

[00:30:22] Speaker 02:
And no, that totaled over half of the $6 million.

[00:30:27] Speaker 02:
And no, we did not have notice of that.

[00:30:30] Speaker 05:
Because what I'm trying to understand is the following is that on your argument that the use of, I guess it's the RSA test, the RSA analysis, the RS analysis, sorry, I didn't mean to repeat the A,

[00:30:50] Speaker 05:
It doesn't satisfy the but for test.

[00:30:53] Speaker 05:
And I'm looking at paragraph 39 on JA 185, which I think is the commission's response to your rehearing petition.

[00:31:02] Speaker 05:
And it contains the following sentence.

[00:31:05] Speaker 05:
Because there was insufficient available capacity in the forward direction, immediately prior to the creditable upgrade, any use of the upgrade in that direction

[00:31:14] Speaker 05:
by a new reservation is considered to be facilitated by the additional capacity created by the upgrade and thus satisfy the BudFord test.

[00:31:22] Speaker 05:
So I take it the commission's view and that we can ask the commission about it is once you know that a request results, a new request results in the use of the upgrade in the forward direction, the same direction that gave rise to the need for the upgrade, well then BudFord's already satisfied because the only way that would have been possible is

[00:31:43] Speaker 05:
The upgrade.

[00:31:45] Speaker 05:
And do you agree with that?

[00:31:48] Speaker 05:
Or do you think that's not true?

[00:31:54] Speaker 02:
I'm not sure, but what I do know is that what's very clear is, I'll start with the low-hanging fruit, the upgrades that weren't studied, that Kansas

[00:32:11] Speaker 02:
electric put in a request for service and there were four upgrades identified as potentially being needed to be made so that we could have the service.

[00:32:26] Speaker 02:
Now there's new upgrades that we're being charged for.

[00:32:28] Speaker 02:
So there's no but for, as a factual matter, there's just no but for or on those.

[00:32:42] Speaker 05:
What's wrong with that sentence, I guess is my question.

[00:32:45] Speaker 05:
You must think there's something wrong with that sentence because as I understand it, that's the commission's explanation for how its implementation of Z2 in the forward direction satisfies the but-for test.

[00:33:00] Speaker 05:
And you obviously think that the way they do it does not satisfy the but-for test.

[00:33:09] Speaker 02:
Maybe I'm...

[00:33:10] Speaker 05:
missing something what what what they think they think any use of the upgrade in the forward direction necessarily satisfies the bug portents we can ask the commissioners but that's my understanding of the rationale yes i mean right and you must disagree with that you must think that's not true not any use

[00:33:32] Speaker 05:
in the forward direction by a new observation.

[00:33:35] Speaker 02:
We have two problems with that.

[00:33:36] Speaker 02:
One is the sentence itself.

[00:33:38] Speaker 02:
But two is that there's a premise that there are upgrades that you're looking at measuring whether there's a use in either direction.

[00:33:48] Speaker 02:
And our point is that at the time when the service requests were put in, these upgrades weren't even identified as being needed in the first instance.

[00:34:02] Speaker 02:
So we don't understand how we can then legally be or lawfully be charged for those.

[00:34:19] Speaker 04:
I see, okay.

[00:34:20] Speaker 04:
Ms.

[00:34:20] Speaker 04:
Kimmel, can I ask you a question about the standard of review here?

[00:34:25] Speaker 04:
I mean, this is a section 206 proceeding.

[00:34:28] Speaker 04:
So petitioners bear the burden to show that the rate

[00:34:32] Speaker 04:
is unjust and unreasonable.

[00:34:35] Speaker 04:
Do you agree that that's the standard here and that?

[00:34:38] Speaker 02:
No, Your Honor, it is a 206 filing, but what we have argued is there's a couple of different ways that a text, sorry, a section 206 complaint can be made.

[00:34:52] Speaker 02:
One is that you're arguing that the existing tariff is unjust and unreasonable, and then you advocate for a replacement.

[00:34:59] Speaker 02:
What we're saying here

[00:35:01] Speaker 02:
And a different type of filing made under 206 and actually 306 309 of the Federal Power Act is that there is a rate on file, which we believe was our service agreement, and that wasn't complied with.

[00:35:14] Speaker 02:
So there is our view is that there is a violation of the file rate doctrine.

[00:35:18] Speaker 02:
And so it's a different standard.

[00:35:20] Speaker 04:
And do we.

[00:35:23] Speaker 04:
Council, for the other petitioner, suggested we review FERC's determination here under the arbitrary and capricious standard.

[00:35:32] Speaker 04:
Do you agree with that, or do you believe that we review it de novo?

[00:35:37] Speaker 04:
So FERC has said here that there's no violation of the filed right doctrine.

[00:35:42] Speaker 04:
Do we review that determination for reasonableness, or do we review it de novo?

[00:35:51] Speaker 04:
I believe Mr. Lowell said that we review it

[00:35:54] Speaker 04:
for reasonableness under the arbitrary and capricious standard?

[00:35:57] Speaker 02:
I would need to double check that, Your Honor.

[00:36:00] Speaker 02:
The de novo, to my knowledge, the de novo review comes into the contract interpretation, whether the court believes that the language of the attachment C2 itself is ambiguous.

[00:36:15] Speaker 02:
But I would need to double check that, and I can

[00:36:22] Speaker 02:
uh, find the answer, um, and perhaps answer on rebuttal.

[00:36:30] Speaker 05:
Make sure my colleagues don't have additional questions for you.

[00:36:32] Speaker 05:
All right, we'll give you a little time for rebuttal.

[00:36:34] Speaker 05:
Thank you.

[00:36:35] Speaker 05:
The commission now.

[00:36:36] Speaker 05:
It's the cell.

[00:36:39] Speaker 03:
Morning, Your Honor.

[00:36:40] Speaker 03:
Set the cell for the commission.

[00:36:42] Speaker 03:
Can you hear me?

[00:36:43] Speaker 03:
Yes.

[00:36:44] Speaker 03:
Thank you.

[00:36:45] Speaker 03:
I think I'll start with, like I said, that last question that Judge Rao just asked.

[00:36:52] Speaker 03:
And certainly, the interpretation of the statute itself is not really an issue here.

[00:37:00] Speaker 03:
The commission used its own expertise to explain why the file grade doctrine is satisfied.

[00:37:07] Speaker 03:
It interpreted a tariff here, and the commission approves that tariff.

[00:37:14] Speaker 03:
the commission has reviewed that tariff over the years.

[00:37:17] Speaker 03:
So it is definitely arbitrary and nutritious review regarding the commission's determination.

[00:37:23] Speaker 04:
I mean, but isn't, I mean, the filed rate doctrine is rooted in statutory requirements.

[00:37:29] Speaker 04:
So whether there's been a violation of the law,

[00:37:33] Speaker 03:
which is in a sort of encapsulated in the father a doctor and why wouldn't we review that because we're not interpreting statue and I'm not saying I'm not saying that that would be not arbitrary issues for you if we were but we don't have a situation here what we have here is mission interpreting.

[00:37:52] Speaker 03:
and its own precedent to determine whether the filed rate doctrine, as this court has set it out in Oklahoma Gas and other cases, is satisfied.

[00:38:02] Speaker 03:
And that is quintessential agency arbitrary and malicious review matter.

[00:38:09] Speaker 04:
So I have a question about this.

[00:38:13] Speaker 04:
I mean, to comply with the filed rate doctrine, I mean, the tariff here, Z2 is at least, I mean, even if it's not quite ambiguous, it's under-determined.

[00:38:20] Speaker 04:
It doesn't say how BOT4 is going to be calculated.

[00:38:24] Speaker 03:
It doesn't specifically say that.

[00:38:25] Speaker 03:
It doesn't specifically.

[00:38:26] Speaker 03:
It does indicate, we believe, your honor, the commission believes, does indicate that it will be using a subsequent use analysis.

[00:38:36] Speaker 04:
Mm-hmm.

[00:38:37] Speaker ?:
Okay.

[00:38:38] Speaker 04:
Why I mean in a situation like this where you have a term like for and methodology there's no clear formula set out like no precise formula set out in the terror when when the parties when S.P.P.

[00:38:52] Speaker 04:
and its stakeholders agree to the white paper.

[00:38:55] Speaker 04:
Why wouldn't the white paper be filed with FERC?

[00:38:58] Speaker 04:
Would something like that ordinarily be filed with FERC?

[00:39:01] Speaker 03:
So I will answer your question.

[00:39:04] Speaker 03:
I just want to say, teachers have never argued that the white paper could have been filed with FERC.

[00:39:09] Speaker 03:
So I don't really think that that's.

[00:39:11] Speaker 04:
Well, that might fix the filed rate doctrine concern, though, right?

[00:39:14] Speaker 04:
If the RSA methodology had been filed explicitly with FERC, amending the tariff or updating the tariff.

[00:39:21] Speaker 04:
Yes.

[00:39:22] Speaker 03:
I'm going to answer your question now.

[00:39:24] Speaker 03:
Of course I need to.

[00:39:25] Speaker 03:
And I want to.

[00:39:26] Speaker 03:
That happens.

[00:39:28] Speaker 03:
There are white papers and business practice manuals all the time that are not filed with FERC.

[00:39:32] Speaker 03:
That is the normal, ordinary course of business.

[00:39:35] Speaker 03:
And that's because tariffs themselves are extremely long.

[00:39:40] Speaker 03:
And you cannot include in a tariff every detail that is then explained further in a business practice manual or a white paper.

[00:39:48] Speaker 03:
There is a standard to determine that the commission uses called the rule of reason, which is again not raised in this brief.

[00:39:55] Speaker 03:
are not arguing that the rule of reason was not, it wasn't raised to the permission.

[00:39:59] Speaker 03:
No one has argued this, but the point is you determine using the rule of reason, and I don't know the specifics of it, because it's not before the court hearing, so I didn't learn enough about it, but basically the idea is using this rule of reason analysis, the permission determines whether there's enough in something that it has to be included in the tariff or not.

[00:40:20] Speaker 03:
And that's not been questioned here.

[00:40:22] Speaker 04:
Is that rule of reason standard from the key span Ravenswood case, you know, the judge Scalia case.

[00:40:29] Speaker 03:
I just didn't, I just learned and it because it's not not been raised.

[00:40:36] Speaker 03:
I didn't learn more about that.

[00:40:37] Speaker 03:
I apologize for that.

[00:40:38] Speaker 03:
And it may well be, but it is an established.

[00:40:41] Speaker 03:
Commission method for determining whether something needs to be in the tariff.

[00:40:44] Speaker 04:
Because in that case from the 80s, which has been cited even recently by this court, you know, then Judge Scalia says, well, things that can be specified should be specified in a file break.

[00:41:00] Speaker 04:
And so obviously, you know, when they do the white paper and they come up with this methodology, I mean, in some ways that's showing that it's capable of specification.

[00:41:09] Speaker 04:
So why does that not then have to be filed with her?

[00:41:13] Speaker 03:
You know, I apologize.

[00:41:14] Speaker 03:
I just don't know.

[00:41:15] Speaker 03:
It misses you.

[00:41:16] Speaker 03:
I can tell you what the seller's view on the head is because of very reason explaining is that tariffs are very long.

[00:41:23] Speaker 03:
And that mean that is that is the fact tariffs are very, very long and everything is just not included.

[00:41:30] Speaker 03:
That is normal, typical business practice.

[00:41:33] Speaker 05:
just how it is done.

[00:41:35] Speaker 05:
So what you're suggesting is we should consider this case as if the white paper were in the filed right?

[00:41:43] Speaker 03:
No, I'm not arguing that mission did not rely on the white paper as being part of the filed right here because it's not filed with the commission.

[00:41:52] Speaker 03:
The commission only considered the white paper for purposes of determining the as a last piece of information determining

[00:42:00] Speaker 03:
what the ambiguous meaning of the specific meaning of Bush War means under the tariff.

[00:42:09] Speaker 05:
So with respect to their argument that says they didn't have enough notice of what they'd be on the hook for, from the commission's perspective, what documents should we be taking into account to determine whether they had enough notice?

[00:42:21] Speaker 03:
So the commission found that there was adequate formal notice from four things.

[00:42:27] Speaker 03:
One is the text.

[00:42:29] Speaker 03:
itself, of course, the text provided.

[00:42:31] Speaker 05:
That's just saying that there's going to be a but for standard.

[00:42:36] Speaker 03:
It's explaining not just that, Your Honor, that there's going to be a budget for standard, but in the introductory paragraph of attachment Z2 section 2 at 827 and in attachment Z2 section 2B at 828 of the petitioner's brief, the opening brief, where the provisions are set out.

[00:42:54] Speaker 03:
Introductory paragraph and those other provisions, which I'll be happy to go through, I've set them out in my brief, but I'm happy to do it here as well.

[00:43:01] Speaker 03:
They point out, not only will there be a but four causation test, but that it will be conducted based on a subsequent use analysis.

[00:43:09] Speaker 03:
And that is what the reservation stack analysis ends up recommending.

[00:43:14] Speaker 03:
And that's, so it's not a change to the tariff.

[00:43:17] Speaker 03:
It's, the commission's point is that's exactly what the tariff said it would do.

[00:43:21] Speaker 06:
The original- But didn't you only argue three sources for, with respect to issue two?

[00:43:26] Speaker 03:
I'm sorry.

[00:43:26] Speaker 06:
Did you only argue or support three sources for?

[00:43:29] Speaker 06:
issue to your saying for now.

[00:43:32] Speaker 03:
No, I'm sorry.

[00:43:34] Speaker 03:
So there's the tariff.

[00:43:36] Speaker 03:
There's an explanation in SPP's filings and the commission's orders regarding those filings.

[00:43:42] Speaker 03:
And I may have misspoken.

[00:43:44] Speaker 03:
I mean, it's service agreements.

[00:43:47] Speaker 03:
So I broke down the explanation.

[00:43:51] Speaker 05:
Those don't go into that much more depth than what's already in the tariff.

[00:43:55] Speaker 05:
Is something material added by the other things you just ticked off?

[00:43:59] Speaker 06:
I'm sorry.

[00:44:02] Speaker 05:
I'm trying to figure out what do we look out to determine whether there was a notice.

[00:44:07] Speaker 05:
So the things that you just told us to look at are this a 27 and a 28, which is, uh, uh, um, Tara.

[00:44:16] Speaker 05:
Right.

[00:44:16] Speaker 05:
And then you ticked off a couple of other things, the service agreements and then one other item and the S P P's S P P's Tara filing.

[00:44:25] Speaker 05:
Right.

[00:44:26] Speaker 05:
And what I'm wondering is,

[00:44:28] Speaker 05:
For things beyond the tariff, things beyond what's A27 and A28, what do those other things add to what's already in A27 and A28?

[00:44:35] Speaker 03:
So what those things add, well, first let me say that the tariff again, it indicates that a subsequent use analysis will be used.

[00:44:46] Speaker 03:
And then the filings,

[00:44:50] Speaker 03:
that were made regarding attachment Z, which pre-existed attachment Z2.

[00:44:56] Speaker 03:
And they explain the subsequent use analysis was used there.

[00:44:59] Speaker 05:
And then in the 2008 filing, that... So that doesn't sound like that adds much.

[00:45:06] Speaker 03:
Well, what it does is... This is my next point.

[00:45:08] Speaker 03:
One of the things SPP explained in its 2008 tariff filing, along with it in its transmittal letter explaining its filing, was that

[00:45:22] Speaker 03:
And this is at, it's in the Kansas electric order, paragraph 69, JA122.

[00:45:32] Speaker 03:
And it's citing the transmittal letter, which is at JA420.

[00:45:36] Speaker 03:
And it explained that the proposal is consistent with an existing tariff attachment Z's requirement that customers pay for new or increased uses of network upgrades.

[00:45:46] Speaker 03:
So the tariff filing itself explained

[00:45:48] Speaker 03:
that it was going to continue to use the subsequent use analysis as part of this.

[00:45:54] Speaker 03:
It's now added this but for language, but it explained why it changed the language and it explained in that filing that it changed the language to recognize that there could be benefits in the opposite direction, not only in the forward direction.

[00:46:07] Speaker 03:
So there were free riders before and now there wouldn't be free riders.

[00:46:11] Speaker 06:
So are you saying that this attachment to

[00:46:14] Speaker 06:
Z2 is ambiguous.

[00:46:17] Speaker 03:
Attacking Z2 is ambiguous, but only as to the specific but for analysis that will be used.

[00:46:25] Speaker 03:
It's not ambiguous that there will be a but for causation analysis.

[00:46:30] Speaker 03:
You just don't know which kind.

[00:46:31] Speaker 03:
And it indicates, the text itself indicates there'll be subsequent use.

[00:46:35] Speaker 03:
SPP's tariff files indicate there'll be subsequent use.

[00:46:39] Speaker 03:
The commission's orders

[00:46:40] Speaker 03:
it indicate that it's always understood that there will be a subsequent use analysis for this.

[00:46:45] Speaker 03:
Before when it was attachment Z, and now that it's attachment Z too.

[00:46:49] Speaker 06:
But how does the but for and then the subsequent use analysis interplay with each other?

[00:46:54] Speaker 03:
Good question, and I'm happy to explain that.

[00:46:57] Speaker 03:
As the commissioner explained, you need to satisfy under rule one as

[00:47:10] Speaker 03:
As your honor was saying, since SPP has already determined under attachment Z1's N-1 contingency analysis that the upgrade was needed to relieve flow constraint caused by the upgrade sponsor's service request, all new reservations that flow in that same direction are considered to also need that upgrade capacity.

[00:47:35] Speaker 03:
You know that before the upgrade, the upgrade service couldn't be provided.

[00:47:39] Speaker 03:
That prompted the upgrade in the first place.

[00:47:43] Speaker 03:
So anything flowing in that same direction also would need that capacity.

[00:47:47] Speaker 05:
Why?

[00:47:48] Speaker 05:
I guess I don't understand that because isn't it possible if where the electricity goes is based on kind of a second by second estimation of where's the best place for it to go, which is the way it's been laid out to us.

[00:48:02] Speaker 05:
And how do we know

[00:48:04] Speaker 05:
that just because in one instant it's determined that it will use the new path means that it could only get through if it used the new path, that it wouldn't have also gotten through anyway, regardless of the new path.

[00:48:15] Speaker 05:
How do we know that?

[00:48:19] Speaker 03:
The analysis that's set out in the tariff is not the same type of knee level that you would need, right?

[00:48:26] Speaker 03:
So there is a simplifying

[00:48:31] Speaker 03:
assumption here that if you have a certain amount of capacity on the system, you need upgrades, provide the upgrade sponsor service, anything that's going to flow on that.

[00:48:40] Speaker 03:
I understand that that's the same, but that's based on the tariff.

[00:48:42] Speaker 03:
The tariff says we will do it based on subsequent use.

[00:48:45] Speaker 05:
But I guess what I don't follow with that is

[00:48:50] Speaker 05:
Of course it's based on subsequent use, and I see the word subsequent use in the tariff and in the subsequent filings from SPP and maybe in the service agreement too, you can point me to that.

[00:49:00] Speaker 05:
There's references to subsequent use, but just because there's a reference to subsequent use, I don't think it necessarily means that you can tell me why this is wrong, that every subsequent use satisfies the bug four test.

[00:49:13] Speaker 05:
It just says that determining

[00:49:16] Speaker 05:
whether the BudFord test is satisfied will base it on subsequent uses.

[00:49:20] Speaker 05:
And it seems to me, yeah, that makes perfect sense you'd base it on subsequent uses.

[00:49:24] Speaker 05:
You don't know yet what use is coming down.

[00:49:28] Speaker 05:
So you look at the subsequent uses and you determine whether they satisfy the BudFord test.

[00:49:32] Speaker 05:
But it doesn't necessarily mean, I don't think, but you can tell me why this is wrong, that every subsequent use, just using the term subsequent use in a tariff,

[00:49:41] Speaker 05:
was supposed to put somebody on notice that every subsequent use of the new pathway satisfies the budget.

[00:49:49] Speaker 03:
If you're going in the same direction.

[00:49:50] Speaker 05:
If you're going in the same direction, yeah, exactly.

[00:49:51] Speaker 03:
Only if you're going in the same direction.

[00:49:52] Speaker 03:
Yes, only in the same direction.

[00:49:53] Speaker 03:
And that's because the, remember attachment Z only had a subsequent use test.

[00:49:59] Speaker 03:
It didn't have, and going one direction.

[00:50:01] Speaker 03:
If you flowed in the same direction, then you were on the hook for upgrade as reimbursement.

[00:50:09] Speaker 05:
And when you're talking to Z, meaning before there was a divide to Z one and Z two.

[00:50:13] Speaker 03:
And so when, when SPP changed tariff to the Z two language, it wasn't changing.

[00:50:18] Speaker 03:
It didn't take out any of the subsequent use language.

[00:50:21] Speaker 03:
It just, it took out the directional language.

[00:50:23] Speaker 03:
It added in the could not be provided before language, but it explained that the purpose of that was not to, um,

[00:50:33] Speaker 03:
to require that there's no way you could possibly be.

[00:50:37] Speaker 03:
It was just to bring in these former free riders who were going in the opposite direction.

[00:50:42] Speaker 03:
It didn't really mean but for in the same context that you might possibly think but for would mean.

[00:50:49] Speaker 03:
And that you were supposed to be using subsequent, they again explained, continue to use a subsequent use analysis.

[00:50:55] Speaker 03:
This is consistent with the prior provision.

[00:50:58] Speaker 03:
And so subsequent use is, are you flowing on the system?

[00:51:01] Speaker 03:
The commission,

[00:51:03] Speaker 03:
Didn't just stop there.

[00:51:04] Speaker 03:
Flows are not enough.

[00:51:05] Speaker 03:
Commission explained we are using a supplement use analysis.

[00:51:10] Speaker 03:
If you, if we've already determined that the upgrade

[00:51:16] Speaker 03:
If the upgrade we've already determined that under an N minus one contingency analysis that service could not be provided for the service, the upgrade sponsor, then then we are deeming this also to be needed.

[00:51:29] Speaker 03:
And it is a different standard.

[00:51:31] Speaker 03:
I'm not hiding from that.

[00:51:32] Speaker 03:
I'm not afraid.

[00:51:33] Speaker 03:
It's just.

[00:51:34] Speaker 03:
it's supposed to be a different standard.

[00:51:35] Speaker 05:
It's not supposed to be like an n minus one.

[00:51:37] Speaker 05:
So you use the word and I appreciate the use of the words deeming it to be because it does sound to me then that it's kind of like a proxy.

[00:51:46] Speaker 05:
It's just saying we're just going to assume that every subsequent use wouldn't have been possible but for the upgrade.

[00:51:53] Speaker 03:
Because we already have had this n minus one contingency.

[00:51:56] Speaker 05:
Yes.

[00:51:57] Speaker 05:
So in other words there were there definitely

[00:52:00] Speaker 05:
There are definitely some uses in the future that wouldn't be possible but for the upgrade because that's established by the Z1N1 complex because the only reason you have the upgrade is because there's a capacity constraint and there needs to be an expansion of the capacity in order to accommodate some new requests.

[00:52:22] Speaker 05:
But whether a particular new request

[00:52:25] Speaker 05:
would have been possible, but for the upgrade, it sounds to me like what you're saying is it was always understood, including at the time before the Z1, Z2 divide, when all we had was attachment Z, it was always understood that we never looked at whether a particular new use would have only been possible because of the upgrade.

[00:52:41] Speaker 05:
We just assumed and we deemed that any new use was possible because of the upgrade, even if it's possible, even if you could envision a universe.

[00:52:52] Speaker 03:
It might not have been

[00:52:53] Speaker 03:
And minus one contingency before needed it possibly could have flowed somewhere else.

[00:52:59] Speaker 03:
But that's the point is you're trying to figure out how to reimburse entities that build these upgrades.

[00:53:05] Speaker 03:
The tariff says subsequent use multiple times in this provision.

[00:53:09] Speaker 03:
the SDP's filings explain and the commission's orders explain that that was always intended to be continued to be used.

[00:53:16] Speaker 03:
So this is the commission's way of honoring both the buff for language and the subsequent use.

[00:53:22] Speaker 05:
Okay, then I think I understand.

[00:53:24] Speaker 05:
I'm sorry.

[00:53:25] Speaker 05:
I'm sorry.

[00:53:25] Speaker 05:
Is the question just for a second?

[00:53:27] Speaker 05:
I think I understand the commission's approach for why

[00:53:32] Speaker 05:
the way you're doing the RSA methodology satisfies the but-for test.

[00:53:36] Speaker 05:
And then in terms of notice, would you take the position that what's at A27 and A28, which includes a reference to subsequent incremental use, that that was enough notice?

[00:53:49] Speaker 05:
That at that point, the petitioners knew because as long as they had a subsequent use, the new pathway, that they would be on the hook for something.

[00:54:01] Speaker 05:
that that was enough.

[00:54:02] Speaker 05:
No more needed to be said.

[00:54:04] Speaker 05:
About amounts, about precise way that the amount was going to be calculated.

[00:54:08] Speaker 03:
It is certainly enough to put the petitioners on notice that they might have to pay if that for causation is satisfied under attachment Z2, that they would be charged for credit payment.

[00:54:21] Speaker 05:
Right, but it's just telling somebody that you might be charged.

[00:54:24] Speaker 05:
Is that enough to satisfy?

[00:54:25] Speaker 03:
It is because it's a great rule and I appreciate you bringing that up so I can

[00:54:31] Speaker 03:
explain this as petitioners acknowledge in their reply brief at 22, under the court's precedent and they cite the Trans-Western case, a rate rule in a tariff can provide the necessary notice, and Z2 is a rate rule.

[00:54:47] Speaker 03:
So it is not a formula, but it is a rate rule that if but for causation is satisfied under a subsequent use analysis, then you will be charged for credit payment applications.

[00:54:58] Speaker 03:
The specifics of that can be determined through a white paper or business practice net.

[00:55:03] Speaker 05:
But a rate rule means all you have to do is say that there's going to be a but for analysis and it's going to be based on subsequent use.

[00:55:11] Speaker 03:
That is enough.

[00:55:14] Speaker 03:
And I think the

[00:55:16] Speaker 05:
Do we have a decision that says, what's the decision that says that?

[00:55:20] Speaker 05:
That a rate at that level of generality would be enough?

[00:55:22] Speaker 03:
It's, I mean, petitioners, they conceded the point, they acknowledged this point, so I didn't further research that, but they cited TransWestern at 897, F2nd, 57.

[00:55:33] Speaker 04:
But we also have a lot of cases saying that the filed rate doctrine is kind of an impenetrable shield, and the only exceptions are very narrow, including whether there's a specific formula.

[00:55:45] Speaker 04:
And the filed rate cases that look at formulas, I mean the formulas are very

[00:55:50] Speaker 04:
particular.

[00:55:51] Speaker 04:
They're not just something like some words like for subsequent use.

[00:55:55] Speaker 04:
They're in fact formulas that different market conditions are then input into to find the actual amount that would be owed.

[00:56:04] Speaker 04:
So I'm not sure how this would fit under the exception to the filed rate doctrine for formulas.

[00:56:15] Speaker 03:
It's an odd position for me to tell you what the court's precedent means, and I apologize, but let me tell you our view of what the court's precedent says.

[00:56:25] Speaker 03:
As the court said in Oklahoma Gas, quote, notice may satisfy the filed rate doctrine when entities have formal notice of the rates, either through a FERC proceeding or through the courts.

[00:56:37] Speaker 03:
And it talks about

[00:56:39] Speaker 03:
the two examples of situations in which, you know, continually.

[00:56:47] Speaker 04:
I wrote Obahoma Gaps.

[00:56:48] Speaker 03:
Exactly.

[00:56:50] Speaker 03:
So, but the point is the, and in Old Dominion, the court said that there's no violation of polygyny doctrine when buyers are on adequate notice.

[00:57:02] Speaker 03:
that resolution of some specific issue may cause a later adjustment to the rate being collected at the time of service.

[00:57:07] Speaker 03:
So these things together, all of the things the commission are relying on are things that were filed with the commission.

[00:57:15] Speaker 03:
The commission did not rely on anything that was not filed in a FERC proceeding and also the

[00:57:21] Speaker 03:
the tariff obviously, but even the SPP rate filings that explanations are contemporaneous with the filing itself to explain.

[00:57:32] Speaker 04:
I think this case is different from some of our other filed rate cases because it really is about the degree of specification that is necessary.

[00:57:41] Speaker 04:
I mean, I think the petitioners can see that they owe some kind of opportunity.

[00:57:44] Speaker 04:
based on the tariff.

[00:57:46] Speaker 04:
And then the question is, how specific does that have to be?

[00:57:50] Speaker 04:
Which is why I was asking you about that Keyspan Ravenswood case, which is like one of the early cases discussing that.

[00:57:58] Speaker 04:
And then I think if it really is about how specific it has to be, then the standard of review does become quite important, right?

[00:58:08] Speaker 04:
If we're reviewing this for whether FERC is being reasonable,

[00:58:13] Speaker 04:
in terms of how they interpret the degree of specification or whether we have to make a kind of de novo legal determination whether this level of specification is sufficient to meet the filed rate doctrine.

[00:58:29] Speaker 04:
And I think that I feel like I'm not sure I've gotten a very clear answer about that.

[00:58:35] Speaker 04:
Or with citations to our cases about how this question of specification should be reviewed by this court.

[00:58:42] Speaker 03:
I think petitioner's point wasn't that the tariff wasn't specific enough.

[00:58:46] Speaker 03:
I think the petitioner's point was that the service agreements needed to list the

[00:58:53] Speaker 03:
the upgrades.

[00:58:54] Speaker 04:
So you think that issue just isn't preserved?

[00:58:56] Speaker 03:
I don't think that's preserved.

[00:58:57] Speaker 03:
I really don't.

[00:58:58] Speaker 03:
I would have spent a lot of time preparing for this case.

[00:59:01] Speaker 03:
I would have spent a lot of time on the rule of reason and all that.

[00:59:04] Speaker 04:
Isn't it sort of basically that question when they say it doesn't satisfy the filed rate doctrine?

[00:59:09] Speaker 04:
They're saying there's no filed rate.

[00:59:11] Speaker 04:
It's not specific enough.

[00:59:12] Speaker 04:
Like we don't know what we owed because the formula wasn't filed with FERC.

[00:59:17] Speaker 04:
So we were not on notice.

[00:59:19] Speaker 04:
There's nothing in Z2 that tells us how

[00:59:22] Speaker 04:
You know, we would know what we owed.

[00:59:25] Speaker 03:
But they're not saying something wasn't filed with FERC.

[00:59:27] Speaker 03:
That's what I'm saying.

[00:59:28] Speaker 03:
They're saying what the commission relied on wasn't sufficient.

[00:59:31] Speaker 03:
And that's a very different argument.

[00:59:33] Speaker 03:
And the commission didn't rely on anything that wasn't filed with FERC for purposes of determining the file.

[00:59:38] Speaker 05:
But I think, I thought what they're saying is the stuff that was filed with FERC didn't give us enough notice about what we would owe.

[00:59:45] Speaker 03:
Right.

[00:59:45] Speaker 03:
And that's based on their argument that it needed to be in the service agreement, which just isn't true.

[00:59:50] Speaker 03:
I mean, there's no,

[00:59:52] Speaker 03:
They're only pointing to the filed rate doctrine to say that.

[00:59:56] Speaker 03:
And the service agreements incorporated, explicitly incorporated the tariff and the service agreements.

[01:00:04] Speaker 05:
But I don't think they dispute that it incorporated the tariff.

[01:00:07] Speaker 05:
I think what they're saying is, you can account the tariff.

[01:00:10] Speaker 05:
That's 827, 828, I think, right?

[01:00:12] Speaker 05:
They're just saying those words just don't give us enough notice of what we might owe.

[01:00:18] Speaker 05:
And the whole point of,

[01:00:19] Speaker 05:
The filed rate doctrine is that it's supposed to make us make an intelligent choice based on what we might not be on the hook for.

[01:00:27] Speaker 05:
So it has to be at some level of specific.

[01:00:28] Speaker 05:
I mean, the best would be something that tells us exactly what we owe.

[01:00:32] Speaker 05:
And then I think we can all agree that it doesn't require that.

[01:00:36] Speaker 05:
But it has to give you some indication of what you might owe.

[01:00:40] Speaker 03:
I think, and perhaps I'm wrong, but I really think that their argument is a little different than that.

[01:00:46] Speaker 03:
Their argument really is the tariff said what the tariff said, and that the service agreements needed to specifically set out what part, what upgrades we would be charged with.

[01:00:57] Speaker 06:
And you know, that- But aren't you also relying a lot on the white paper that's, you know, not filed, but something that's in play years later?

[01:01:07] Speaker 05:
not for purposes of the father a talk matter you're on which is only relying on the white paper for purposes of determining what the ambiguous but for provision I just I'm sorry to interrupt but I want to make sure we still have the we still have the connection okay sorry I just want to make sure to counsel okay we lost our screen sorry okay that shouldn't go home thanks

[01:01:30] Speaker 04:
I had a question.

[01:01:33] Speaker 04:
Has FERC ever used the N-1 analysis for something other than initial allocation?

[01:01:40] Speaker 04:
Absolutely not.

[01:01:42] Speaker 03:
Okay.

[01:01:43] Speaker 03:
The petitioner doesn't cite any case in which we have and we are completely unaware of any situation is only an initial cost allocation.

[01:01:51] Speaker 04:
So from FERC's understanding, is the petitioner's argument that this is unreasonable because, you know, is the main reason that this is unreasonable from petitioners, like what petitioners advance to FERC, that they, that SPP failed to use the N minus one analysis?

[01:02:12] Speaker 03:
Certainly that was Excel's argument below, and it's definitely Wens' way through the petitioners' briefs.

[01:02:21] Speaker 03:
They say in their reply brief that they're not saying that.

[01:02:23] Speaker 03:
Kansas Electric didn't argue the same way that it has been an N-1 contingency analysis to the commission.

[01:02:31] Speaker 03:
They don't know what other analysis they think should be used.

[01:02:35] Speaker 03:
I mean, the stakeholder process,

[01:02:39] Speaker 03:
thought about this pretty hard and the White Paper set all this out and my understanding is, and perhaps I'm wrong, that the record indicates that Excel was actually on the credit task force.

[01:02:54] Speaker 04:
So because this is a 206 proceeding, the petitioners have the burden to show that it's unlawful or unjust and unreasonable.

[01:03:03] Speaker 04:
Either one.

[01:03:05] Speaker 04:
I'm sorry?

[01:03:05] Speaker 04:
It can be, under 206, one of their arguments could be that it's unlawful, right?

[01:03:10] Speaker 04:
Because it violates the file-break doctrine?

[01:03:13] Speaker 03:
Whatever the standard is, it's petition-less burying.

[01:03:15] Speaker 03:
That's right.

[01:03:16] Speaker 04:
What is the standard?

[01:03:17] Speaker 03:
Standard?

[01:03:19] Speaker 03:
In our view, it's arbitrary and vicious review, except for the determination whether Z2 is plain or ambiguous.

[01:03:34] Speaker 04:
But to the extent that under 206, the petitioners are arguing that there's been a violation of the filed rate doctrine, isn't that a legal argument under 206?

[01:03:47] Speaker 03:
It is.

[01:03:50] Speaker 04:
And if it's a legal argument, right, that there's been a violation of the filed rate doctrine, isn't that something we review de novo?

[01:04:00] Speaker 03:
I think it's for the court

[01:04:02] Speaker 03:
to determine.

[01:04:03] Speaker 03:
They don't argue that the filed rate doctrine requires something different than what the commission addressed.

[01:04:14] Speaker 03:
The petitioner's argument is that the commission improperly analyzed the tariff and the service agreement requirements, which are all for

[01:04:26] Speaker 03:
approved or regulated or jurisdictional things.

[01:04:30] Speaker 03:
And this is very plainly, I mean, this is a complicated case and your honors are.

[01:04:37] Speaker 03:
Please don't take this as that I'm insulting your intelligence, because I'm certainly not.

[01:04:42] Speaker 03:
But this is really quintessential FERC-y stuff.

[01:04:45] Speaker 03:
This is hard to understand.

[01:04:48] Speaker 03:
And it takes the commission's expertise to figure this out.

[01:04:52] Speaker 03:
This isn't just some issue that perhaps would be anybody, you know, an Article III judge without the expertise that FERC has would decide on its own, respectfully.

[01:05:08] Speaker 04:
I think it's interesting that in my response to what the standard of review is, you fall back on, well, FERC is the expert agency, right?

[01:05:16] Speaker 04:
Because if there is a legal question that is at the heart of this, then we have to review that de novo.

[01:05:23] Speaker 04:
And I just feel like you're not quite answering that question.

[01:05:26] Speaker 04:
And I think to fall back just on the commission's expertise, which I respect, is not an answer to the standard of review question.

[01:05:32] Speaker 03:
So perhaps I'm not understanding exactly what your question is.

[01:05:35] Speaker 03:
I'm not trying not to answer it.

[01:05:37] Speaker 03:
But I guess it's because the issues, it's not something

[01:05:44] Speaker 03:
But petitioners have argued that they're not saying the Commission misinterpreted the statute, the statutory requirements of the filed rate doctrine.

[01:05:55] Speaker 03:
And they're not saying that the Commission misunderstood what the Commission viewed as Oklahoma gas saying that matters filed with the Commission are part of the filed rate doctrine.

[01:06:06] Speaker 03:
We can look, they can provide notice.

[01:06:08] Speaker 03:
They're not disputing any of that.

[01:06:11] Speaker 03:
Their dispute simply is that the Commission's analysis of its view, its expert view, satisfies the solid-rate doctor requirements.

[01:06:20] Speaker 03:
It's set out and it's accepting what the court has said.

[01:06:23] Speaker 03:
It's not interpreting the statute.

[01:06:26] Speaker 03:
It's not interpreting.

[01:06:28] Speaker 03:
It's just interpreting the tariff to see whether it provided adequate notice and whether the service agreement provided adequate notice and whether the

[01:06:38] Speaker 03:
So I just don't see.

[01:06:39] Speaker 04:
So you don't understand the petitioners to be saying that this tariff, that Z2 violates the filed rate doctrine because it was not specific as to what the rate credits.

[01:06:52] Speaker 04:
You do not understand them to be saying that.

[01:06:54] Speaker 04:
I guess we'll ask them on rebuttal.

[01:06:55] Speaker 03:
I do not see it that way.

[01:06:57] Speaker 03:
And I don't.

[01:06:58] Speaker 03:
Commission did not see it that way.

[01:07:00] Speaker 03:
Commission and I viewed it as simply being that the service agreements needed to list

[01:07:08] Speaker 03:
And that's in 2013.

[01:07:11] Speaker 03:
That's a different tariff later on that was required in 2018 that you had included in service agreements.

[01:07:17] Speaker 03:
That's what the basis of their argument was.

[01:07:19] Speaker 03:
We didn't know because you didn't list them in the service agreement.

[01:07:23] Speaker 03:
And they also make theirs the one argument.

[01:07:25] Speaker 05:
So as far as you're concerned, BORC hasn't even made an argument in its briefings that they got enough notice about the level of costs

[01:07:37] Speaker 05:
that they might be subject to because you didn't understand them to be arguing that you hadn't been specific enough.

[01:07:44] Speaker 03:
Oh no, the Commission absolutely believes that they were adequately notified from the tariff and the service agreement and the Commission's orders in the prior orders and SPP's filings that they would be charged for these if the subsequent use but for analysis was satisfied.

[01:08:04] Speaker 05:
No, not the fact of whether they would be

[01:08:07] Speaker 03:
on the hook, whether they knew enough about how much, but that is, that's the commission's point is that that's sufficient.

[01:08:15] Speaker 03:
There was no requirement.

[01:08:17] Speaker 05:
So the commission thinks that as long as the filed rate tells somebody you're going to be on the hook for something, we won't tell you what you're just going to be on the hook for something.

[01:08:30] Speaker 05:
And then later on we'll tell you what that's enough notice.

[01:08:33] Speaker 03:
Well, because it's a rate rule.

[01:08:35] Speaker 03:
So it's just kind of like with a formula rate, and they're different, and I understand that.

[01:08:40] Speaker 03:
But there's a rate rule that if you will be charged to reimburse entities who pay for upgrades, you will be charged to reimburse them based on subsequent use analysis that if the subsequent use plus four causation is satisfied.

[01:08:57] Speaker 03:
And that's all that needed to be in the tariff.

[01:09:02] Speaker 05:
One, a couple of other just follow-ups.

[01:09:05] Speaker 05:
That's right.

[01:09:07] Speaker 05:
On Z1 and Z2, one thing I'm not quite understanding, and I'll ask the Interveneers Council this too, is I had understood that Z1 tells the upgrade sponsor, it's speaking to the upgrade sponsor, not to upgrade users.

[01:09:28] Speaker 05:
It's talking to upgrade sponsors, and it's talking about the fact that if you're the upgrade sponsor, then you're initially on the hook for the cost of the upgrade.

[01:09:37] Speaker 05:
And then Z2 then goes on to say that the upgrade sponsor can be reimbursed from upgrade users through revenue credits.

[01:09:46] Speaker 03:
That's right.

[01:09:47] Speaker 03:
So there really wasn't any obligation that the study provide creditable upgrade notifications.

[01:09:55] Speaker 05:
But then why didn't the commission and I don't see anything and even in your brief or in the commissions and if I could just finish the question because I know you're you're antsy but I just want to just get out my question to make sure that you're addressing the question.

[01:10:05] Speaker 05:
Why wouldn't the most straightforward answer have been.

[01:10:09] Speaker 05:
Why are you even making a claim under Z1?

[01:10:11] Speaker 05:
Because you're a Z2 entity.

[01:10:13] Speaker 05:
You're an upgrade user.

[01:10:14] Speaker 05:
You're not a Z1 entity.

[01:10:16] Speaker 05:
So we didn't owe you any notice under Z1.

[01:10:19] Speaker 05:
Z1 wasn't speaking to you.

[01:10:21] Speaker 05:
Z2 speaks to you.

[01:10:22] Speaker 05:
Do you understand my question?

[01:10:23] Speaker 05:
I absolutely do.

[01:10:25] Speaker 05:
And I didn't see that answer anywhere.

[01:10:27] Speaker 03:
So it is, as the intervener brief pointed out, it is in the orders a bit.

[01:10:35] Speaker 03:
The commission says it at,

[01:10:40] Speaker 03:
In.

[01:10:45] Speaker 05:
Is it in the brief?

[01:10:46] Speaker 05:
Can I just ask you?

[01:10:46] Speaker 05:
I'm not trying to say it wrong.

[01:10:48] Speaker 03:
Here's the point.

[01:10:49] Speaker 03:
It doesn't have to be in the brief while I'm finding that.

[01:10:52] Speaker 03:
I'm looking at the wrong page.

[01:10:53] Speaker 03:
I apologize.

[01:10:55] Speaker 03:
That is something that the court can decide on its own.

[01:10:59] Speaker 05:
But I guess the thing is, from what I read in your brief, and I thought in the orders, too, it's assuming that Z1 is relevant.

[01:11:11] Speaker 05:
And we did provide enough notice under Z1, where it seems like the better

[01:11:15] Speaker 03:
or at least the more fundamental answer is why are we even talking about z1 with you exactly your honor and that's what happened during my preparation for the briefing and and as intervenors brief points out and and for brief eight does point this out as well that um in the

[01:11:33] Speaker 03:
In the Kansas Electoral for Hearing Order at J.A.

[01:11:36] Speaker 03:
168-69, paragraphs four and five and note nine, and at J.A.

[01:11:41] Speaker 03:
177, paragraph 23, which quotes the Z1 provision.

[01:11:46] Speaker 03:
And in the Excel for Hearing Order, J.A.

[01:11:49] Speaker 03:
443, paragraphs four and five, the commission explains that Z1 is about identifying and providing estimates for new upgrades.

[01:11:59] Speaker 03:
And these are not new upgrades under Z2.

[01:12:01] Speaker 03:
You're dealing with existing upgrades.

[01:12:03] Speaker 03:
So that's all the Commission said about that in the orders, but Your Honors can decide this issue on your own, because as Your Honor figured out, Z1 just plainly doesn't apply to these creditable upgrades.

[01:12:19] Speaker 05:
Then the question is whether we think that the

[01:12:22] Speaker 05:
the orders actually rely on that rationale, because we can't supply a rationale that's not in the orders themselves.

[01:12:26] Speaker 03:
Well, you can, actually, when something is plain.

[01:12:29] Speaker 03:
And I apologize for not having the precedent for that.

[01:12:32] Speaker 03:
And that's been written in an opinion, of course, that it wasn't in the commission's order.

[01:12:37] Speaker 03:
But fortunately, that doesn't matter, because we are making a determination based on the provision itself that it's plain.

[01:12:44] Speaker 03:
But you would do de novo yourselves anyway.

[01:12:47] Speaker 03:
And you can make that determination, even if it's not

[01:12:52] Speaker 06:
And want to make sure just just just see one and see that see one incorporate see to charge.

[01:12:58] Speaker 03:
So is that different.

[01:12:59] Speaker 03:
The one does not see one does not incorporate the two charges they have.

[01:13:04] Speaker 03:
They have different for analyses.

[01:13:06] Speaker 03:
See one is as the commission explained that it's about new.

[01:13:11] Speaker 03:
upgrades, determining whether someone comes in and asks for something, what's limiting your service.

[01:13:17] Speaker 03:
Z2 is about what you used.

[01:13:20] Speaker 03:
You weren't limited by those upgrades.

[01:13:22] Speaker 03:
The upgrades existed, and you were able to use them, and therefore you pay under Z2.

[01:13:27] Speaker 05:
My last question, I think, is not about Z1, Z2.

[01:13:30] Speaker 05:
It's about rule one, rule two, which goes to Z, implementation of Z2.

[01:13:35] Speaker 05:
And it's a more conceptual question.

[01:13:37] Speaker 05:
And that it's the way rule one is laid out.

[01:13:43] Speaker 05:
makes the assumption, the deeming that we talked about earlier, which is that every use by a new requester satisfies the but for test.

[01:13:52] Speaker 05:
And therefore, we don't have to go through and try to figure out which particular uses are only made possible by the upgrade.

[01:13:58] Speaker 05:
That's the way rule one is built out, because it's going in the forward direction.

[01:14:02] Speaker 05:
And then when you come in the backward direction, the reverse direction, whatever the terminology is, we need to do more than that.

[01:14:09] Speaker 05:
We can't just assume that a use in the reverse direction

[01:14:13] Speaker 05:
um, satisfies about four tests, we have to, we have to drill down deeper and we have to figure out whether this particular use is one that is only brought about because of the change.

[01:14:25] Speaker 05:
And I guess my question is, if that can be done in the verse direction, why isn't that just same thing being done in the forward?

[01:14:34] Speaker 03:
All you're doing in the reverse direction is, not all, because there's plenty, but what the commission does, what the analysis requires in the reverse direction is that you look at the capacity before the upgrade and you determine whether the service request could be satisfied by that capacity before the upgrade.

[01:14:56] Speaker 03:
If it can be, the BudFord causation test is not satisfied.

[01:14:59] Speaker 03:
If it can't be, the BudFord causation test is not satisfied.

[01:15:02] Speaker 03:
So an N minus one contingency analysis is completely different.

[01:15:04] Speaker 03:
You put the service request in, you take the upgrade out, and the commission explained the three, the white paper explained and the commission explained as well the three reasons why you just can't really do that.

[01:15:20] Speaker 05:
In other words, keep N minus one out of it because I'm not worried about the details of that.

[01:15:26] Speaker 05:
I guess conceptually what you're saying is

[01:15:28] Speaker 05:
In the reverse direction, there may, there was excess capacity.

[01:15:32] Speaker 05:
I mean, there was excess room.

[01:15:33] Speaker 05:
And so we can already, we can test whether the amount that's being used would have fit within that margin.

[01:15:40] Speaker 05:
In the former direction, we already know there wasn't any excess room.

[01:15:43] Speaker 05:
So we're necessarily not able to do that kind of analysis.

[01:15:46] Speaker 03:
Yeah, we just hadn't done, no one had, excuse me, SPP hadn't done the analysis in the opposite direction under Z1.

[01:15:51] Speaker 03:
Okay.

[01:15:52] Speaker 03:
And so it needed to happen under, something happened to happen under Z2.

[01:15:55] Speaker 03:
And that is the subsequent use analysis.

[01:15:59] Speaker 05:
Be sure there's no further questions and then I thank you.

[01:16:01] Speaker 03:
Thank you.

[01:16:02] Speaker 03:
You're on.

[01:16:02] Speaker 05:
We'll hear from you to read this council.

[01:16:03] Speaker 05:
Although before we do that, can I make sure that we don't, we lost the entire video feed.

[01:16:07] Speaker 05:
Do we still have council?

[01:16:09] Speaker 05:
We do.

[01:16:09] Speaker 05:
Okay.

[01:16:15] Speaker 05:
Mr. Bennett.

[01:16:24] Speaker 01:
Good morning, Your Honor.

[01:16:25] Speaker 01:
May I please use the court map for SPP and the interveners?

[01:16:29] Speaker 01:
I'd like to start with what you were just discussing, which is the rule one.

[01:16:32] Speaker 01:
And I think you hit the nail on the head.

[01:16:35] Speaker 01:
Prior to the creditable upgrade, there was no ability to flow in that direction.

[01:16:40] Speaker 01:
So when that creditable upgrade was put into service, that alleviated that constraint.

[01:16:44] Speaker 01:
So when the next user comes into the system and wants to flow across that same constraint, that constraint's already been relieved because of the creditable upgrade.

[01:16:52] Speaker 01:
Whereas in the reverse direction, there's no guarantee that's the case, which is why SBP applies the extra tests under Rule 2.

[01:16:57] Speaker 01:
Now, I'd like to turn to the file break doctrine issues that were discussed with Judge Rao's questions.

[01:17:06] Speaker 01:
I don't read the petitioner's briefs as saying that Attachment Z2 was not detailed enough.

[01:17:12] Speaker 01:
In fact, they said Attachment Z2 was unambiguous.

[01:17:16] Speaker 01:
They didn't say that Attachment Z2 needed more detail.

[01:17:18] Speaker 01:
They said we applied the wrong test.

[01:17:21] Speaker 01:
Obviously, FERC found that it was ambiguous and found that multiple potential tests could satisfy the but for and subsequent use language, and that the one that we applied was reasonable.

[01:17:32] Speaker 01:
So their file rate doctrine objection with respect to notice, I think, really arises under which upgrades they were going to be required to pay for, which is an Attachment Z1

[01:17:46] Speaker 01:
filed rate doctrine objection, which as Ms.

[01:17:52] Speaker 01:
Tsela said, the tariff didn't require us to list the attachment Z2 upgrades in an attachment Z1 study agreement or study, I'm sorry, study report or agreement, because those are two entirely separate processes.

[01:18:06] Speaker 01:
It wasn't until 2017 that SPP made a filing to modify its tariff to require SPP to now list creditable upgrades

[01:18:14] Speaker 01:
going forward in the network service agreements and that's just simply to provide people with more information now that we have more information to provide.

[01:18:26] Speaker 04:
Why didn't SPP file the white paper or you know something like that say we're going to use this RSA

[01:18:34] Speaker 04:
you know, or R.S.

[01:18:35] Speaker 04:
analysis to calculate credible upgrades.

[01:18:39] Speaker 04:
Is that sort of thing that ordinarily would be filed with FERC because it specifies the rate or it affects the rate that will be paid?

[01:18:49] Speaker 01:
It affects the rate, but as this court of sound, there's an infinitude of practices that affect rates.

[01:18:54] Speaker 01:
That's the city of Cleveland case.

[01:18:55] Speaker 01:
I don't have the citation right in front of me.

[01:18:57] Speaker 01:
I apologize for that.

[01:18:59] Speaker 01:
Utilities rely all the time on unfiled manuals to supplement and provide the implementation details for the obligations that are set forth in the tariff.

[01:19:09] Speaker 01:
SDP's tariff already spans more than 5,000 pages.

[01:19:12] Speaker 01:
If SDP had to file every implementation detail, such as the white paper,

[01:19:15] Speaker 01:
It's integrated marketplace protocols that provide the details for how West KB runs its day ahead in real-time markets.

[01:19:21] Speaker 01:
The tariff would be 20-30,000 pages.

[01:19:25] Speaker 04:
Are you aware of other 206 cases that are 206 challenges that challenge the specification of a tariff and an implementation doctrine in this way?

[01:19:37] Speaker 01:
I'm sorry, I don't quite understand the question.

[01:19:39] Speaker 04:
Well, so the challenge here is that the specification, you know, the white paper that, you know, that's set out essentially what they would pay was not bought, you know, it wasn't part of the filed rate.

[01:19:50] Speaker 04:
And so therefore the filed rate is under-specified.

[01:19:55] Speaker 01:
Well, the filed rate, as Ms.

[01:19:57] Speaker 01:
Sella said, there's the rate rule precedent, which is the tariff sets forth the obligation

[01:20:03] Speaker 01:
And what the unfiled manuals do is they provide the detail as to how you calculate that obligation.

[01:20:09] Speaker 01:
So the tariff already says you will pay credits if your service could not be provided but for the upgrades.

[01:20:17] Speaker 01:
And obviously we have a difference in interpretation as to what but for means.

[01:20:19] Speaker 04:
Right, but nobody questions that they owe upgrades.

[01:20:22] Speaker 01:
Right.

[01:20:23] Speaker 01:
Yeah, if it was.

[01:20:24] Speaker 04:
But cap it in some way.

[01:20:25] Speaker 01:
Right.

[01:20:26] Speaker 01:
But I mean, there are other provisions in the tariff and service agreements that don't provide specific charges.

[01:20:32] Speaker 01:
I mean, for example, SPP runs a five-minute real-time balancing market across its 14-state footprint.

[01:20:38] Speaker 01:
SPP doesn't publish every one of those market prices in the tariff or in the protocols.

[01:20:42] Speaker 01:
They simply can't.

[01:20:44] Speaker 01:
So when you're talking about all of these creditable upgrades, having to publish specifically what the charges are,

[01:20:50] Speaker 01:
in either the tariff or the service agreements, it becomes such a huge endeavor.

[01:20:55] Speaker 01:
And it's not really required if the obligations are already set forth in the tariff.

[01:21:00] Speaker 01:
And if the service agreement complies with the tariff attachment under which it was signed, which is attachment Z1.

[01:21:07] Speaker 01:
And they haven't suggested that we didn't comply with attachment Z1 with respect to identifying new upgrades that were required by their service.

[01:21:15] Speaker 01:
What they're complaining is that we didn't identify the Z2 upgrades.

[01:21:19] Speaker 01:
But the Z2 and Z1 analyses are different analyses to address different issues, different types of upgrades.

[01:21:26] Speaker 01:
And there was no requirement to do that.

[01:21:29] Speaker 01:
Did I answer your question?

[01:21:30] Speaker 05:
They did point to a couple of places in the service, I think it was in the service agreement, that they understood to be a notation that they wouldn't owe anything.

[01:21:41] Speaker 05:
And do you know what I'm talking about?

[01:21:43] Speaker 01:
Yeah, I don't have it right in front of me, but I believe

[01:21:47] Speaker 05:
when the service agreement said they wouldn't owe anything that was for new upgrades right that was my question is that was a statement that would be relevant to z1 right not to z2 yeah and then there is a subsequent notification right below that that said with respect to existing upgrades you might owe something right yeah that's how spp does it yeah because they wouldn't know anything with respect to

[01:22:11] Speaker 05:
under Z1 because they weren't for these purposes in the possession of being the upgrade sponsor that's requesting.

[01:22:18] Speaker 01:
Right.

[01:22:19] Speaker 01:
And if you look at their service agreements at the time that they were signed or the time since they were signed, they do list a number of, or at least in Southwestern Public Services case, they list a whole bunch of upgrades that are required.

[01:22:32] Speaker 01:
Those were required either under Z1 or those were upgrades that are

[01:22:36] Speaker 01:
already part of the SPP transmission system, but weren't yet built, but their service was contingent on those being and going into service.

[01:22:45] Speaker 01:
But there was no, up until 2017, there was no listing of attachment Z2 upgrades.

[01:22:51] Speaker 01:
So when the service agreements talk about, in shorthand, you don't owe anything, that is for attachment Z1, new facilities that are identified through that aggregate study process.

[01:23:01] Speaker 01:
That's all it is.

[01:23:02] Speaker 01:
And that's why the notations were included in the study report

[01:23:06] Speaker 01:
That was just to provide all the information that we had available at the time.

[01:23:10] Speaker 01:
We could surmise that there were certain Z2 upgrades that may be impacted by their service.

[01:23:15] Speaker 01:
I mean, obviously something that's very close, electrically close.

[01:23:22] Speaker 01:
you know, it's something that most likely, yeah, you're gonna trigger a flow on an upgrade.

[01:23:26] Speaker 01:
So some of those were listed in the service, and not in the service agreement, rather in the study report.

[01:23:30] Speaker 01:
But we didn't put them in the service agreement because there was no certainty that those would actually be, yeah.

[01:23:37] Speaker 01:
And there was also no obligation to do so at the time.

[01:23:42] Speaker 01:
If I could just address, if I could just address one more point,

[01:23:49] Speaker 01:
Council for Excel went into the white paper and discussed how they didn't think the white paper was gonna be used to implement attachments.

[01:23:59] Speaker 01:
They pointed to page three, which is joint appendix 275, the last paragraph.

[01:24:06] Speaker 01:
I'd like to talk for a second about a couple of paragraphs in this particular page.

[01:24:08] Speaker 01:
So they cite the last paragraph, but I'd like to go up to the first full paragraph.

[01:24:14] Speaker 01:
very first sentence says the CPTF, which is the crediting process task force that put together the white paper, recommends that the reserve stacking system and the subsequent use rules be used to determine if the but for conditions have been met.

[01:24:31] Speaker 01:
I don't see how the white paper could not have been clear that the white paper was designed to implement the but for requirement.

[01:24:38] Speaker 01:
So the idea that we didn't know when we voted for this that you were going to use it for this purpose.

[01:24:43] Speaker 01:
I don't see how they can make that claim credibly with regard to their paragraph about where we do reference the analysis.

[01:24:51] Speaker 01:
That relates to sponsored upgrades.

[01:24:53] Speaker 01:
And the reason why sponsored upgrades are treated differently is that they're unilateral.

[01:24:58] Speaker 01:
Somebody comes along and says, I wanna build this, okay?

[01:25:01] Speaker 01:
At the time they wanna build it, all SPP does is takes a look at the upgrade and says, okay, is this gonna harm us?

[01:25:07] Speaker 01:
In which case you have to mitigate that harm.

[01:25:09] Speaker 01:
It doesn't necessarily become part of the SPP transmission system that SPP is gonna use until there's a subsequent use.

[01:25:17] Speaker 01:
So at that point, that's why you would apply the N minus one, because if someone else comes along and says, okay, I have this service, you would have to look at that upgrade individually to see if it is now creditable.

[01:25:29] Speaker 01:
And so that particular paragraph is actually implementing Attachment Z2, find the right site here.

[01:25:40] Speaker 01:
Attachment Z2 section 1B, which is on appendix page 51 of our brief,

[01:25:47] Speaker 01:
B talks about sponsored upgrades not automatically being a creditable upgrade, nor are they automatically eligible.

[01:25:54] Speaker 01:
That's why we applied that separate test.

[01:25:56] Speaker 01:
So we weren't admitting there that, oh, N-1 can work for all of this.

[01:26:00] Speaker 01:
We were just distinguishing this particular type of upgrade that is a, I say unilateral, I mean, it's an elective upgrade.

[01:26:06] Speaker 01:
It's not something that SDP has determined is needed as part of its system.

[01:26:10] Speaker 01:
So that's why there's a difference there.

[01:26:12] Speaker 01:
Okay.

[01:26:12] Speaker 05:
Make sure my colleagues don't have additional questions for you.

[01:26:16] Speaker 05:
Okay.

[01:26:17] Speaker 05:
Thank you, Council.

[01:26:18] Speaker 05:
Thank you very much.

[01:26:20] Speaker 05:
We'll give Tishner's Council the rebuttal.

[01:26:24] Speaker 05:
Mr. Lowe will give you two minutes.

[01:26:40] Speaker 07:
Thank you, Your Honor.

[01:26:43] Speaker 07:
So in

[01:26:45] Speaker 07:
full dominion electric cooperative, this court explained that there was no equitable considerations that would permit waiver of the file.

[01:26:55] Speaker 07:
Now here, we had a tariff that defined who was responsible for revenue credits.

[01:27:03] Speaker 07:
As it has been seen too, it states that it is that service that could not be provided before the accredited law break.

[01:27:14] Speaker 07:
We heard a solicitor talk about how it is a subsequent use test.

[01:27:26] Speaker 07:
The subsequent use test is how you calculate the credits.

[01:27:31] Speaker 07:
The text states that the credits shall be based upon subsequent use tests.

[01:27:36] Speaker 07:
And then above that, it defines who will be responsible by

[01:27:43] Speaker 07:
finding the universal people who will be on the hook, pay a credit based on social services.

[01:27:54] Speaker 07:
There was a discussion about the rule of reason.

[01:27:57] Speaker 07:
As you know, that rule of reason requires that any practice significantly affects rates, that it must be put on section 205.

[01:28:10] Speaker 07:
Here I don't think there can be any question that the white paper significantly affected rates.

[01:28:16] Speaker 07:
FERC had to look to it to figure out what the tariff meant.

[01:28:20] Speaker 07:
So it should be quite clear that it should have been filed if it was going to be used to determine rates for us.

[01:28:33] Speaker 07:
Are there any other questions?

[01:28:34] Speaker 07:
I think that's all.

[01:28:35] Speaker 05:
I don't think so.

[01:28:37] Speaker 05:
Thank you, counsel.

[01:28:39] Speaker 05:
Give Ms.

[01:28:40] Speaker 05:
Kimmel her rebuttal time.

[01:28:41] Speaker 05:
Ms.

[01:28:41] Speaker 05:
Kimmel, you have two minutes.

[01:28:49] Speaker 02:
Can you hear me now?

[01:28:50] Speaker 05:
Yes, I can hear you.

[01:28:51] Speaker 02:
Okay, thank you.

[01:28:53] Speaker 02:
So turning to the question about the standard of review, I believe that the standard of review regarding a complaint addressing the filed right doctrine would be that that was applied in the Old Dominion case.

[01:29:08] Speaker 02:
which I believe Ms.

[01:29:11] Speaker 02:
Pacella is correct that it's did FERC act arbitrarily and capriciously, did FERC adequately or reasonably explain its decisions, which obviously we maintain that it did not.

[01:29:23] Speaker 02:
FERC's council said that, I believe she said that everything that was relevant to the,

[01:29:38] Speaker 02:
the rates were filed at FERC.

[01:29:40] Speaker 02:
And obviously the white paper was not filed at FERC.

[01:29:46] Speaker 02:
The white paper is where the interpretation of how Z2 would be implemented was.

[01:29:57] Speaker 02:
That was not filed at FERC.

[01:30:00] Speaker 02:
Interveners included

[01:30:05] Speaker 02:
citation in their brief to a FERC case, California ISO 147 FERC, paragraph 61231, and that also includes the citation to the City of Cleveland case, which is 773F, second, I believe, 1368, talking about the rule of reason.

[01:30:27] Speaker 02:
the interpretation of the white paper did, as Mr. Lowell said, significantly affect rates and without having been filed cannot be considered part of the filed rate.

[01:30:38] Speaker 02:
And finally, in terms of the upgrades, there were, as I had mentioned before, a number of upgrades for which transmission customers have been charged that were just simply not put in the service agreements

[01:30:57] Speaker 02:
And nothing in FERC's orders that we understood first out a differential as to whether it was a new upgrade or an enhancement.

[01:31:08] Speaker 02:
The fact is that we're being charged for upgrades that, as far as we understood, Z1 did require an obligation for SPP to notify us as to what those upgrades in charge would be.

[01:31:21] Speaker 02:
That didn't happen.

[01:31:22] Speaker 02:
didn't make it into the service agreements, and so we maintain there was a violation of the file rate doctrine.

[01:31:29] Speaker 02:
If there are any other questions.

[01:31:32] Speaker 05:
I don't think so.

[01:31:33] Speaker 05:
Thank you, counsel.

[01:31:34] Speaker 05:
Thank you to all counsel.

[01:31:35] Speaker 05:
We'll take this case under submission.