[00:00:00] Speaker 01:
Case number 23-1133, Perigold Light and Water Commission join business as Perigold Light Water and Cable, PLWC, EDAL, petitioners versus Federal Energy Regulatory Commission.

[00:00:13] Speaker 01:
Mr. Fitzgerald for the petitioners, Mr. Schaener for the respondents, Ms.

[00:00:17] Speaker 01:
Strinkle for the intervener.

[00:00:21] Speaker 03:
Good morning.

[00:00:22] Speaker 03:
Everyone got to learn a lot more than they thought they would about investor employment creating visas.

[00:00:30] Speaker 03:
energy pricing.

[00:00:32] Speaker 03:
Mr Fitzgerald, when you're ready.

[00:00:34] Speaker 02:
Thank you, Your Honor.

[00:00:35] Speaker 02:
May it please the court at Fitzgerald for the petitioners.

[00:00:40] Speaker 02:
I'd like to start with what we're asking this court to do.

[00:00:44] Speaker 02:
This court should vacate and remand with instructions to FERC to apply the proper legal test to the cost shift in this case.

[00:00:54] Speaker 02:
and the test is this.

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FERC must identify benefits roughly commensurate with the new costs being imposed on petitioners and the rest of zone 10.

[00:01:07] Speaker 02:
FERC must say why it makes sense for NICSA to be relieved of 90%, roughly, of the costs of assets that NICSA itself planned, NICSA itself built, and that serve almost entirely

[00:01:24] Speaker 03:
Nick saw Mister Fitzgerald when the next a load was added to zone 10.

[00:01:31] Speaker 03:
I didn't see this in the record, although it might be there.

[00:01:34] Speaker 03:
I assume when the next a load was added to zone 10 that the rates went down.

[00:01:41] Speaker 03:
There were more ratepayers paying for the same amount of transmission infrastructure.

[00:01:46] Speaker 02:
No, Your Honor.

[00:01:47] Speaker 02:
And the reason is because before the NICSA load was added, the NICSA load was paying a share for zone 10.

[00:01:56] Speaker 02:
from the outside by contract.

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And this is discussed a little bit in the JA at 353 and 354, why they were positioned the same.

[00:02:07] Speaker 02:
It's related to why the load was by contract required to join zone 10.

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And the key to that is that all of the other assets in zone 10 had been planned and built by one transmission owner with everyone in mind, including NYXA.

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And so NYXA had been paying

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a share of the rest of Zone 10 assets before, and it was paying a share of the rest of Zone 10 assets after.

[00:02:33] Speaker 04:
So there wasn't a four-month period where your rates went down before the NYXA assets were added?

[00:02:38] Speaker 02:
So I don't believe that there was a period where there was a meaningful change in the rates.

[00:02:43] Speaker 02:
I mean, the question was, so NYXA always paid for the NYXA assets until this order.

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And before this order, NYXA had paid first from the outside by contract for everything else.

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and then it's pro rata share on the inside.

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And I don't think that there's a meaningful adjustment made there.

[00:03:03] Speaker 04:
So I have a question.

[00:03:05] Speaker 04:
Are there other, I guess, groups of customers within zone 10 who get most or all of their power from a particular transmission line?

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But everybody pays that

[00:03:24] Speaker 04:
the same rate and therefore is kind of subsidizing that.

[00:03:28] Speaker 02:
So your honor, it's interesting.

[00:03:30] Speaker 02:
FERC has been hinting that for a very long time, but in all the years of this case, they've never identified one.

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And I don't think that one exists.

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And I know that there is no other asset inside of zone 10 that was planned by a single city.

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and built by a single city to serve that single city.

[00:03:47] Speaker 04:
Is this just a very special, specific case?

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Because it just seems like the whole concept of, I guess, the way they do the rates, the license plate structure.

[00:03:57] Speaker 04:
I wanted to understand too why it's called license plate structure.

[00:04:00] Speaker 02:
That's a great question.

[00:04:01] Speaker 02:
I do not know why it's called a license plate.

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I mean, I understand what it means.

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The pro rata, they all pay their share.

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But it was compared to other types of

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I don't know where they came up with that.

[00:04:14] Speaker 02:
That is a totally fair question.

[00:04:16] Speaker 04:
So it just seems to me that the whole concept of this license plate structure is kind of what my hypothetical was meant to draw out, which is you're not supposed to look at each individual user and make them pay for what they're using.

[00:04:31] Speaker 04:
It's a whole system.

[00:04:33] Speaker 02:
So the key to that, Your Honor, is the way that these zones were originally created.

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It was designed to avoid cost shifts exactly like this.

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So when they made these zones, when they created the zones in the RTO, they drew zonal boundaries around areas that were already provided for by one transmission owner.

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And the key to that is that those areas, which became zones, had been jointly planned.

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So everybody, NICSA included in this instance,

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You know has the opportunity to have a say in what was being built one transmission owners job was to serve everyone it was planned what what is their grid their system was planned for everyone and so everyone was paying a share and they said great let's put a zone around that because they're already paying.

[00:05:18] Speaker 02:
essentially in a similar way for this.

[00:05:21] Speaker 04:
So NYXA was part of this, but then they also had their own transmission?

[00:05:24] Speaker 02:
Exactly.

[00:05:25] Speaker 02:
And fair to wonder why, I think it's fair to wonder why SWPA did not build the NYXA assets and NYXA wound up building them by themselves for themselves, quite possibly because they serve almost entirely NYXA and it didn't make sense for the rest of the zone to have these.

[00:05:44] Speaker 06:
I mean, it seems like maybe it just means

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Nixa should never have been in the zone to begin with.

[00:05:52] Speaker 02:
Well, so it's fair and no one has challenged that the Nixa load be in zone 10, because after all, the rest of the assets in zone 10 were planned with the Nixa load in mind by one transmission owner, SWPA,

[00:06:10] Speaker 02:
Nick says among the cities in this geographic region, SWPA built its lines to connect hydro and other generation to all of this.

[00:06:21] Speaker 06:
If once all the assets in Zone 10, am I remembering that right?

[00:06:29] Speaker 06:
Yeah.

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Once all the assets in Zone 10 are integrated with each other.

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If it means NYXA is going to get a gigantic windfall at the expense of the rest of the zone, then it seems like the zone should have been gerrymandered around them in the first place.

[00:06:46] Speaker 02:
Well, for a while, it was.

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But they were still paying.

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I mean, we would be fine with that situation.

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But the only time when the unfairness arises is when this asset that's unique to NYXA is brought into our zone.

[00:07:01] Speaker 06:
There was a time when they weren't in zone.

[00:07:03] Speaker 06:
Correct.

[00:07:04] Speaker 06:
Yes.

[00:07:04] Speaker 06:
And then did you challenge whatever the action was that allowed them to join Zone 10?

[00:07:14] Speaker 02:
No, Your Honor, the load was brought into Zone 10.

[00:07:17] Speaker 02:
The load had always been paying its share of the assets that were in Zone 10.

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And so the reason why the load joined Zone 10 was essentially to avoid unfairness, to avoid separating them from what they had long been paying.

[00:07:31] Speaker 06:
part of FERC's argument, maybe from a 10,000 foot level, is maybe they shouldn't have been allowed on zone 10, maybe they should have been.

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But once they're in, this is just how zones work.

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Everybody pays the same rate.

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And that wouldn't be fair on a region-wide 15-state geographic area.

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And we know that in Illinois, one percent.

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But the license plate method will capture benefits that are not highly localized.

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And the drawing of the zone will ensure that that captures benefits that are localized.

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And so as long as you're in, maybe this is a shorter way to say it,

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If you're in a zone, license plate method seems like it's always fair.

[00:08:32] Speaker 02:
Well, Your Honor, the key is that this is a zonal placement.

[00:08:36] Speaker 02:
So the question here is, does it make sense for the NYXA assets to be in this zone?

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What's the alternative?

[00:08:43] Speaker 02:
Yes.

[00:08:44] Speaker 03:
Would you say a subzone?

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A separate subzone just for these assets?

[00:08:48] Speaker 02:
Certainly.

[00:08:50] Speaker 02:
That's what else is that the only there are two I can think of one would be a sub zone for these assets which essentially would be the assets are inside of zone 10 but they they are in a sub zone which means that NYXA continues to pay the legacy costs of them but that on an ongoing forward-looking basis purposes of planning and upgrades they could be considered along with the rest of the zone that's a perfectly good proposal so that were the case would

[00:09:16] Speaker 06:
the next assets I understand would be in the sub zone.

[00:09:19] Speaker 06:
Yes.

[00:09:20] Speaker 06:
What about next?

[00:09:21] Speaker 06:
What about the rest of NYXA?

[00:09:23] Speaker 02:
The rest of the load of NYXA is in zone 10, generally speaking, has been for a few years.

[00:09:30] Speaker 06:
The rest of zone 10 will, you know, needs the NYXA load.

[00:09:35] Speaker 06:
So it needs NYXA to pay the cost of the

[00:09:39] Speaker 02:
Facilities which is what it's always been doing right always so But you just what we just won't integrate NYXA's assets into that Not the not the sunk costs of NYXA's assets, which are serving almost exclusively NYXA and always have So if if there were no subzone created, but they just said no, let's disapprove this transaction.

[00:10:03] Speaker 00:
Mm-hmm

[00:10:03] Speaker 03:
We're just going to cut loose these NICTA assets.

[00:10:08] Speaker 03:
No problem.

[00:10:08] Speaker 03:
They'll go dark.

[00:10:10] Speaker 03:
And then the load, let me just say, we're just going to mothball it.

[00:10:17] Speaker 03:
Nobody wants it.

[00:10:17] Speaker 03:
We don't want to pay for it.

[00:10:20] Speaker 03:
And NICTA, though, is part of zone 10.

[00:10:25] Speaker 03:
Don't the utilities have an obligation, and SPP have an obligation, to ensure that

[00:10:30] Speaker 03:
rate payers within the zone have service, so they would have to construct something.

[00:10:36] Speaker 02:
They would have to, if the NICSA assets didn't exist, because I don't think they would never be moth mauled, NICSA will pay for them as they have been, you know, they need them.

[00:10:45] Speaker 02:
But if they didn't exist, sure, if they didn't exist, what would happen?

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And the answer is there would be a joint planning process that would take into account

[00:10:53] Speaker 02:
the viewpoints and the needs of everyone in this zone, and they would decide to build something, that something may be, for instance, much bigger than just 69 kilovolts.

[00:11:03] Speaker 02:
It may be something that could actually move power across the zone other than just syncing and mix up.

[00:11:08] Speaker 02:
It may be rooted differently.

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There are all sorts of different things that they might do.

[00:11:12] Speaker 03:
I guess my larger point is that every day within zones, transmission investments are made that are expensive.

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and that the idiot sense serve different subparts of the rate paying public.

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And that's just the nature of, as Judge Walker's question was intimated, that's the nature of the beast.

[00:11:39] Speaker 03:
And you're saying, well, this is different because

[00:11:42] Speaker 03:
this was not subjected to this common planning process?

[00:11:46] Speaker 02:
Correct.

[00:11:47] Speaker 03:
But isn't that just a transition problem?

[00:11:49] Speaker 03:
It will be in the future, whether it's how much is spent to keep it up, whether other things are prioritized?

[00:11:54] Speaker 02:
Well, we're paying for what we, under FERC's order, my clients face a 22% rate increase to pay for assets that someone not them built and that serve almost entirely not them.

[00:12:08] Speaker 02:
I mean, under the NPPD case, we knew what the standard was, and we went and did these studies.

[00:12:15] Speaker 02:
Well, do the NYXA assets that you plan for yourself actually serve us?

[00:12:18] Speaker 02:
And the answer is they don't.

[00:12:20] Speaker 03:
Well, let's say no NYXA assets.

[00:12:24] Speaker 03:
NYXA load is there.

[00:12:25] Speaker 03:
They need something.

[00:12:27] Speaker 03:
there's a planning process and it raises, you know, maybe it's configured differently and maybe it raises the other rate payers rates, you know, 30%.

[00:12:40] Speaker 03:
They would have to pay that, right?

[00:12:43] Speaker 03:
And the point is just that there's this sort of democratic process or is it a democratic process or isn't it just that the incumbent

[00:12:50] Speaker 03:
transmission owners are participating.

[00:12:54] Speaker 02:
The incumbent transmission owners do the process with input from the municipalities and everyone there.

[00:13:02] Speaker 02:
There's an opportunity for them to be heard.

[00:13:04] Speaker 02:
If they ultimately object, I mean, they can challenge it.

[00:13:07] Speaker 02:
They can go to FERC and say, this new line being built is unjust and unreasonable based on the way that the rates will change.

[00:13:14] Speaker 02:
And if FERC agrees with that and this court agrees,

[00:13:17] Speaker 02:
then ultimately the line will have to be paid for by who it benefits.

[00:13:21] Speaker 02:
Now as a practical matter, joint planning normally solves all of that because they ultimately build something that does offer meaningful benefits across the zone.

[00:13:31] Speaker 04:
Could you have just objected to the acquisition of the NYXA assets?

[00:13:35] Speaker 04:
I'm sorry, what?

[00:13:36] Speaker 04:
Could you have just objected to the acquisition of the NYXA assets?

[00:13:40] Speaker 04:
That is what we did.

[00:13:41] Speaker 04:
That is what this case is, right?

[00:13:43] Speaker 04:
Because it just seems to me that

[00:13:45] Speaker 04:
Okay, maybe I'm misunderstanding this, but it just seems to me that they had this unilateral or bilateral contract and there was a provision, the tariff that said once that's gone and the load.

[00:13:55] Speaker 04:
And then there are always assets out there and are the choices mothball them as judge pillard said.

[00:14:04] Speaker 04:
or assign them to a different zone.

[00:14:06] Speaker 02:
So subzone is a possibility.

[00:14:08] Speaker 02:
Now, of course, FERC did not consider the possibility of subzone.

[00:14:11] Speaker 02:
It said we don't have to consider other alternatives because we're happy with this one.

[00:14:14] Speaker 02:
That's a J417.

[00:14:16] Speaker 02:
But subzone is an alternative.

[00:14:18] Speaker 02:
Another alternative is the NICSA assets could just be left out of the zonal construct.

[00:14:23] Speaker 02:
I mean, they don't have to be brought in.

[00:14:24] Speaker 04:
NICSA will keep paying for it.

[00:14:25] Speaker 04:
To me, that's different because my question was, do they have acquired these assets at all?

[00:14:29] Speaker 04:
But you can acquire them.

[00:14:31] Speaker 04:
Just don't put them in my zone.

[00:14:33] Speaker 02:
Sure, NYXA has these assets.

[00:14:37] Speaker 02:
They keep the lights on in NYXA.

[00:14:39] Speaker 02:
NYXA, before this order, has been paying for them 100%.

[00:14:42] Speaker 02:
We think that's what's fair, and that's what should continue to happen.

[00:14:46] Speaker 02:
And so what I'm saying is there are several ways that could happen.

[00:14:49] Speaker 02:
One is the subzone.

[00:14:51] Speaker 02:
One is they could be left out of the zonal construct.

[00:14:53] Speaker 04:
So why did their bilateral agreement go away?

[00:14:55] Speaker 04:
Because it seems like everybody was happy with the way

[00:14:59] Speaker 02:
I don't know.

[00:15:01] Speaker 02:
I think it was a natural expiration.

[00:15:03] Speaker 02:
They had a long-term bilateral agreement.

[00:15:05] Speaker 02:
They agreed they were going to be asked.

[00:15:07] Speaker 06:
I thought they were getting double taxed.

[00:15:10] Speaker 06:
I could be wrong, but I thought NYXA was paying for NYXA unique assets and NYXA was paying for non-NYXA assets, whereas non-NYXA cities were only paying for non-NYXA assets and they weren't paying for NYXA assets.

[00:15:26] Speaker 02:
That is correct.

[00:15:28] Speaker 02:
But that's not a reason, that's not a double, that's not a double taxation anymore than- It's like paying for private school and public school.

[00:15:37] Speaker 02:
Exactly.

[00:15:40] Speaker 02:
It's like paying your share of taxes for the roads, but building yourself a driveway.

[00:15:46] Speaker 02:
Because if you look at these NYXA assets, if you imagine them like roads, this is like NYXA's driveway.

[00:15:51] Speaker 02:
99% of the power on these assets is consumed by NYXA itself.

[00:15:56] Speaker 03:
And so they... You could say it that way, or you could also say, you know, Grandma Jane lives out in the country and she's the only house three miles on this road.

[00:16:09] Speaker 03:
Why should we maintain the road that goes to her house?

[00:16:14] Speaker 03:
She should pay for that.

[00:16:16] Speaker 03:
She's a member of the town.

[00:16:18] Speaker 03:
We maintain the roads.

[00:16:19] Speaker 03:
If all the people who lived in the more dense area said, we're only going to pay pro rata for what we use, we never go down the road to Aunt Jane's, then you don't have government, and you don't have zones, and you don't have...

[00:16:34] Speaker 02:
Your honor, I understand that.

[00:16:35] Speaker 02:
I think you're missing, though, in that element, the key of the joint planning process.

[00:16:40] Speaker 02:
So in other words, the government's gotten together and built the roads.

[00:16:43] Speaker 02:
It built the roads with everyone in mind, including Grandma.

[00:16:46] Speaker 02:
But the NYXA assets are the driveway that Grandma built herself without asking anyone.

[00:16:51] Speaker 03:
But I think part of the question about this may be, I mean, I should ask this as a question, not an assertion, because I certainly don't know as much as you do.

[00:16:59] Speaker 03:
When Judge Penn asked, why did the bilateral agreement go away, my understanding is actually that the

[00:17:07] Speaker 03:
Southwest Power Pool and that the concept of zone-based infrastructure is that we want to integrate.

[00:17:17] Speaker 03:
We don't want all these different crazy quilts of ownership.

[00:17:21] Speaker 03:
We want to have it integrated because then the process going forward is logical and the different parts speak to one another and there's common control and input.

[00:17:31] Speaker 03:
Just the virtues you're talking about were absent.

[00:17:35] Speaker 03:
when the NICSA assets were constructed are intensified and enhanced when all the relevant transmission is part of the system.

[00:17:48] Speaker 02:
Your Honor, and if you think that that is an important policy goal, as FERC certainly does, you could do something like create a subzone, which allows the legacy costs of the NICSA assets to be paid for by who designed and built them.

[00:18:04] Speaker 02:
and yet at the same time allows the future planning and integration the way that they want.

[00:18:09] Speaker 02:
But what FERC has done here is different than that.

[00:18:13] Speaker 02:
I mean, the rule we're asking to be applied has been around for a long time.

[00:18:18] Speaker 02:
there should be benefits roughly commensurate with costs that are being imposed on you.

[00:18:22] Speaker 02:
We're saying these are huge new costs.

[00:18:24] Speaker 02:
22% is the greatest cost shift in SPP placement, zonal placement history.

[00:18:31] Speaker 02:
And all we want is for someone to say, here are the benefits that warrant these new costs.

[00:18:36] Speaker 02:
And FERC refuses to do it.

[00:18:38] Speaker 02:
What they're doing is saying, as you've acknowledged, I think, but they're saying,

[00:18:42] Speaker 02:
These assets really benefit NYXA, and that's a reason why NYXA, who has been paying 100% of them, should now pay just 11% of them.

[00:18:52] Speaker 02:
And it doesn't make sense.

[00:18:53] Speaker 02:
There should be something that is there for us.

[00:18:56] Speaker 02:
There is normally joint planning, which solves a lot of the problem.

[00:18:59] Speaker 02:
There is certainly not that here.

[00:19:01] Speaker 02:
So absent that, we're looking for benefits.

[00:19:03] Speaker 06:
You refer to a long-standing rule, but isn't another long-standing rule that when you're in a zone,

[00:19:11] Speaker 06:
everybody pays the same rate.

[00:19:15] Speaker 02:
Your honor, the load and the assets joining are a separate analysis.

[00:19:19] Speaker 02:
And the facts of this case are a good reason why the load can be served by by the surrounding grid in the zone, but the assets serve only them in this case.

[00:19:28] Speaker 06:
Maybe I'm confused about the kind of facts on the ground outside of zone 10.

[00:19:33] Speaker 06:
Do you know if there are a lot of zones where, um,

[00:19:37] Speaker 06:
where there are assets that are not integrated into the zone assets?

[00:19:45] Speaker 02:
So integration is a process.

[00:19:47] Speaker 02:
I know that in other RTOs, there are sub zones that are set up so that only one entity in a zone pays for something that's important to it and that has a different history, a different planning.

[00:19:58] Speaker 03:
Are those cited in your brief?

[00:20:01] Speaker 02:
No, Your Honor, they're not.

[00:20:03] Speaker 02:
They're in MISO, which is different RTO than SPP.

[00:20:07] Speaker 02:
But sub-zones are a thing that exists.

[00:20:09] Speaker 02:
And what we discuss in the brief is there's some analysis which we provided of sub-zones as a possibility.

[00:20:16] Speaker 02:
The other side's expert admitted that it was feasible at page 87 of the Joint Appendix.

[00:20:21] Speaker 02:
And again, FERC refused to consider it.

[00:20:24] Speaker 02:
It's not that FERC said, oh, we don't like sub-zones.

[00:20:27] Speaker 02:
That has all these practical problems.

[00:20:28] Speaker 02:
They said,

[00:20:29] Speaker 02:
We don't care about alternative proposals.

[00:20:31] Speaker 02:
We're happy with the one that's happening.

[00:20:33] Speaker 02:
And so FERC should be required to evaluate that on remand.

[00:20:38] Speaker 03:
And you know, I would assume that there are sub zones in situations where there's like a major industry or some

[00:20:45] Speaker 03:
some entity that needs sort of upgraded transmission that's kind of distinctive to it?

[00:20:54] Speaker 02:
Something unique, which would be exactly like the Nixa assets here.

[00:20:57] Speaker 02:
I think, yes, Your Honor, something that is separate from the general service to everyone.

[00:21:03] Speaker 02:
And the history here, the way that the Nixa assets were built is really important.

[00:21:07] Speaker 02:
And I think there's a good, there's an important parallel too to the City of Lincoln case.

[00:21:12] Speaker 02:
So it was decided in January, and we filed it earlier this week in this court.

[00:21:17] Speaker 02:
And the key there was there were assets that had been planned for zone 16.

[00:21:22] Speaker 02:
It was a fractional ownership of this asset planned for zone 16.

[00:21:26] Speaker 02:
The proposal was to put the costs onto zone 19.

[00:21:30] Speaker 02:
And first FERC, which did the analysis right, and then this court, which did the analysis right, said, OK, you didn't plan this for zone 19.

[00:21:38] Speaker 02:
Are there any benefits to zone 19?

[00:21:41] Speaker 02:
And when they didn't find any, they said, no, you have to leave the costs on zone 16.

[00:21:44] Speaker 03:
The load wasn't in zone 19.

[00:21:46] Speaker 03:
It was in zone 16.

[00:21:48] Speaker 02:
The load being served was in zone 16.

[00:21:50] Speaker 02:
Right.

[00:21:51] Speaker 02:
Exactly.

[00:21:52] Speaker 03:
Pretty markedly different from this case in which the load being served is in zone 10.

[00:21:56] Speaker 02:
Well, the load being served is NICSA.

[00:21:58] Speaker 02:
I mean.

[00:21:58] Speaker 03:
It's in zone 10.

[00:22:00] Speaker 02:
The load of NICSA is in zone 10.

[00:22:02] Speaker 02:
Yes.

[00:22:03] Speaker 02:
Yes.

[00:22:03] Speaker 03:
Yeah.

[00:22:03] Speaker 02:
But that isn't.

[00:22:05] Speaker 02:
I mean, the problem, I think, is if you think about it that way, if you roll in NICSA when you consider this zone, because the question here is to add the NICSA assets, if you roll in NICSA, you could add anything to any zone.

[00:22:21] Speaker 02:
So imagine, like, let's say there's a bridge in Alaska.

[00:22:26] Speaker 02:
It's really expensive for the Alaskans.

[00:22:28] Speaker 02:
And so the government says, okay, we're gonna put Alaska into the same zone as Florida.

[00:22:35] Speaker 02:
And this will be great because the Floridians, there are a lot of Floridians, they're gonna cover most of the cost of the bridge.

[00:22:40] Speaker 02:
The Floridians would say, we don't use the bridge, we shouldn't have to pay for it.

[00:22:45] Speaker 02:
And the government can't say, well, we already put Alaska into your zone, so the benefits to Alaska count for you too.

[00:22:52] Speaker 06:
I mean, it seems a little bit more like,

[00:22:55] Speaker 06:
Usually, bridges in Alaska are paid for by Alaska tax dollars.

[00:23:01] Speaker 06:
A bridge breaks in Alaska.

[00:23:02] Speaker 06:
It's got to be rebuilt.

[00:23:04] Speaker 06:
The state government says, we're going to rebuild the bridge.

[00:23:07] Speaker 06:
And somebody who lives 500 miles away in Alaska says, well, that's not fair.

[00:23:11] Speaker 06:
I'm never going to use the bridge.

[00:23:13] Speaker 06:
It's just like part of being in a state.

[00:23:15] Speaker 06:
Sometimes upgrades help other people more than it helps you.

[00:23:19] Speaker 06:
And again, I get, if you're at a giant RTO,

[00:23:24] Speaker 06:
We don't we don't always say that this is the right, this is the rule, this is the method, but I thought that kind of like the whole point of having relatively small zones was so that when something on the east side of the zone needs repair.

[00:23:39] Speaker 06:
you know, everybody in the zone pays for it.

[00:23:42] Speaker 02:
Your honor, even if you think that's sort of the strong form of what a zone is, you still here have this placement.

[00:23:49] Speaker 02:
And so the effect is what you're doing is you're going to say, I don't care that the NYXA assets were not planned the way the entire rest of this zone was.

[00:23:59] Speaker 02:
You're going to say, I don't care that 99% of the power flowing in them serves NYXA and doesn't go anywhere else.

[00:24:05] Speaker 02:
And it's one third of 1% of the rest that is served by you.

[00:24:08] Speaker 02:
I don't care about any of that.

[00:24:09] Speaker 06:
The numbers are on your side.

[00:24:13] Speaker 02:
So you're setting all that aside.

[00:24:16] Speaker 02:
And so even if you think, I would never entertain someone inside of a zone suddenly popping up and saying, hey, this thing that was jointly planned for me that I've been paying for for decades,

[00:24:27] Speaker 02:
shouldn't have to pay for it anymore because I've discovered that, you know, it served me this fraction.

[00:24:32] Speaker 02:
Then it serves me this fraction.

[00:24:33] Speaker 02:
Now you don't, you don't have to accept that to say when the question is something, should something new go into a zone?

[00:24:41] Speaker 06:
Let me ask you about that.

[00:24:42] Speaker 06:
I am curious about this.

[00:24:43] Speaker 06:
What if when zone 10 was created, it included all the assets, not Nick's assets and Nick's assets and everything was integrated.

[00:24:54] Speaker 06:
Uh, so if, if, if that,

[00:24:56] Speaker 06:
had been what existed.

[00:24:58] Speaker 06:
I think the cost shift that you're complaining about today would have just been built into the original rate, correct?

[00:25:04] Speaker 02:
If they had agreed to do that, yes.

[00:25:06] Speaker 02:
Now, when they originally made the zones in SPP- Who's the they who would make the zone?

[00:25:12] Speaker 02:
They would be, I think, proposed by SPP and approved by FERC.

[00:25:16] Speaker 06:
Yeah, but the zones- And if FERC approved it, do you think that would have been an arbitrary and capricious action?

[00:25:21] Speaker 02:
We would have had this fight then about whether- You would have been saying the exact same thing.

[00:25:25] Speaker ?:
Yes.

[00:25:26] Speaker 02:
Because they would have been saying there should be a multi-owner zone.

[00:25:30] Speaker 02:
So most of the zones, including this one originally, were just drawn around the areas covered by one transmission owner.

[00:25:37] Speaker 02:
So it was easy, because everybody in those zones was already paying for everything.

[00:25:40] Speaker 06:
And this goes back to, I guess, one of my earlier questions.

[00:25:43] Speaker 06:
Maybe NICSA should just never have been allowed in the zone.

[00:25:48] Speaker 02:
Maybe, but the fact is that isn't the same analysis.

[00:25:52] Speaker 02:
I don't think it's right to say, well, we should have objected to the NYXA load continuing to pay a fair share as it always had.

[00:26:00] Speaker 02:
That's not a reason why we can't object now when they're bringing this expensive asset in.

[00:26:04] Speaker 06:
You can't object now to NYXA being in the zone.

[00:26:07] Speaker 06:
That should have said it.

[00:26:08] Speaker 02:
Correct.

[00:26:09] Speaker 02:
But we shouldn't have, I mean, there always was going to be the addition, this is a separate transmission owner who owns the NYXA assets being added to the zone.

[00:26:19] Speaker 02:
This is the time to challenge it.

[00:26:20] Speaker 06:
And I know you don't agree with this and it may be that there's not a legal principle to support it.

[00:26:26] Speaker 06:
It may be that you should win, but it just seems a little weird that once NYXA is in the zone, the non-NYXA crowd pays for a non-NYXA

[00:26:39] Speaker 06:
costs, operating costs.

[00:26:42] Speaker 06:
And NICSA pays for the non-NICSA operating costs and the NICSA operating costs.

[00:26:50] Speaker 02:
Well, I don't think that it is that strange because there can be more than one rate.

[00:26:56] Speaker 02:
I mean, rate payers and

[00:26:58] Speaker 02:
You can be subject to more than one rate creating different service to yourselves.

[00:27:03] Speaker 02:
The key is they showed up with this asset that they built and they had long been paying for.

[00:27:07] Speaker 02:
So in terms of what the city of Nixa has been paying before they joined Zone 10, after they joined Zone 10, you're talking about a relatively flat line of what they're paying.

[00:27:18] Speaker 02:
I mean, adjustments, but a relatively flat line.

[00:27:21] Speaker 02:
When the Nixa assets were added, what they had been, they had been paying for both, for all of history.

[00:27:28] Speaker 02:
When the NYXA assets are added, all of a sudden, their costs go greatly down.

[00:27:34] Speaker 02:
And this is a great success in expanding RTOs because, great, this small, expensive thing is being spread over a larger group.

[00:27:41] Speaker 02:
That makes them happy.

[00:27:42] Speaker 02:
They're happy to come in.

[00:27:44] Speaker 02:
But the fact is, the cost causation principle is being lost in all of this.

[00:27:48] Speaker 04:
So were their rates wildly higher than everybody else's before this?

[00:27:53] Speaker 02:
I don't know how much higher the combined wholesale or retail rates were in Nixa.

[00:28:02] Speaker 02:
I know that ultimately the addition of this load has decreased their rates dramatically.

[00:28:08] Speaker 02:
They were paying 1.8.

[00:28:09] Speaker 04:
It sounds like it must be a lot because I think I read somewhere this increased everybody else's rates by 20%.

[00:28:15] Speaker 02:
22%.

[00:28:16] Speaker 02:
Which is huge.

[00:28:17] Speaker 04:
So this one little town was paying all of that by itself?

[00:28:20] Speaker 04:
So maybe this is good because maybe those citizens shouldn't be paying whatever 10 times the rates in the rest of the zone.

[00:28:26] Speaker 02:
Well, I don't believe that the record draws a comparison like that, but what they're paying for is the expensive asset that they built without anyone else that serves them.

[00:28:37] Speaker 02:
I mean, again, it's a third of 1% of the power in the rest of this zone that flows through the NYXA assets.

[00:28:43] Speaker 04:
Then why is it increasing your costs so much if it's so small?

[00:28:48] Speaker 02:
Well, the whole area is fairly small.

[00:28:50] Speaker 02:
I mean, I think we're talking about a few hundred thousand people.

[00:28:53] Speaker 02:
And we're talking about one aspect of the wholesale rates here, which is what FERC has jurisdiction over.

[00:28:59] Speaker 02:
So translating it all the way down into retail and households is a whole different matter, which is not sort of FERC's bailiwick.

[00:29:08] Speaker 02:
But so we're talking about a wholesale rate increase of 22%.

[00:29:11] Speaker 02:
And apples to apples, vastly more than the 8% in the NPPD case.

[00:29:18] Speaker 06:
Your clients are municipalities.

[00:29:21] Speaker 06:
Am I right about that?

[00:29:22] Speaker 02:
Primarily, yes.

[00:29:23] Speaker 02:
And transmission owners?

[00:29:27] Speaker 02:
They are customers in this scenario.

[00:29:31] Speaker 02:
They're customers.

[00:29:34] Speaker 02:
So they're buyers of the power on this wholesale rate from SWPA, the transmission owner in this zone.

[00:29:44] Speaker 06:
I'll ask my question, and you tell me if I misunderstand who your clients are.

[00:29:48] Speaker 06:
Um, if you represent municipalities, do they anticipate integrating?

[00:29:54] Speaker 06:
Well, do they have their own facilities right now that are not integrated into all of zone 10?

[00:30:00] Speaker 06:
No, none of them do.

[00:30:02] Speaker 02:
I am not aware of any facility in zone 10 that was built separately outside of SWPA, the broad transmission owners process to serve any one city.

[00:30:14] Speaker 06:
And what if there was a, you know, heaven forbid, some kind of natural disaster and it took out a bunch of transmission, you know, facilities outside of NICSA.

[00:30:25] Speaker 06:
And so I was like, oh, well, geez, it's going to cost a million dollars to rebuild those.

[00:30:36] Speaker 06:
Would the cost of that get put into the general license plate rate that all of zone 10 pays?

[00:30:43] Speaker 02:
If something happened to facilities in Zone 10 and they had to be rebuilt, then I presume yes.

[00:30:50] Speaker 06:
And NYXA would be among the cities that pay that.

[00:30:56] Speaker 02:
And they'd be among the beneficiaries, yes.

[00:30:59] Speaker 06:
And would they be benefiting as much as the

[00:31:02] Speaker 02:
localities closer to where the actual there there would be a joint planning process in which they could say well you shouldn't build it that way you should build it in a way that would benefit us more maybe build something bigger with more voltage to benefit us or build something different and if they didn't like it when it was built anyway they could say we we shouldn't have to pay guess your argument is if the disaster hit facilities that actually could be um left destroyed without

[00:31:32] Speaker 06:
effective NYXA.

[00:31:34] Speaker 06:
Then,

[00:31:36] Speaker 06:
the cost of repairing them should not be built into the general license plate rate.

[00:31:43] Speaker 02:
There would be a discussion.

[00:31:44] Speaker 02:
I mean, if the replacements were built, they would be part of the rate.

[00:31:48] Speaker 02:
But there would be a fight about that, I think, about what should be built and how it should be built.

[00:31:52] Speaker 03:
And who actually makes the decision on that?

[00:31:56] Speaker 02:
The transmission owner and SPP, the broader RTO, I think, would be making decisions on that.

[00:32:04] Speaker 02:
The transmission owner or owners?

[00:32:05] Speaker 02:
Well, it would SWPA is the is the dominant transmission owner in the in zone 10.

[00:32:13] Speaker 02:
There is also whoever owns the next assets to the extent that they would be relevant to this.

[00:32:18] Speaker 03:
So if we have the situation that Judge Walker is imagining, let's imagine that the NYXA assets were actually built within zone 10.

[00:32:28] Speaker 03:
And you have what's it called?

[00:32:31] Speaker 03:
Something bright.

[00:32:33] Speaker 03:
And SWPA, two transmission owners were in zone 10 from the beginning.

[00:32:38] Speaker 03:
Everything they've built has gone through the process that you described.

[00:32:41] Speaker 03:
Natural disaster.

[00:32:42] Speaker 03:
Stuff is wiped out.

[00:32:47] Speaker 03:
near some other city in Zone 10, and the NICSA public says, we don't need that.

[00:32:56] Speaker 03:
That doesn't affect our power at all.

[00:32:57] Speaker 03:
We never had any thing.

[00:32:59] Speaker 03:
We don't want to pay for it.

[00:33:00] Speaker 03:
And the transmission orders in the SPP say, sorry, you're going to.

[00:33:09] Speaker 03:
Do you think on your theory that the NICSA

[00:33:13] Speaker 03:
load-bearing people should prevail, because it's not cost causation from their perspective.

[00:33:22] Speaker 03:
It's not fair.

[00:33:23] Speaker 02:
I think I can imagine a scenario where that is going, where yes, where the answer is yes.

[00:33:29] Speaker 02:
Now, I think as a practical matter, if you're talking about some meaningful piece of transmission line somewhere in zone 10 going down, what would actually happen when they go to study it is they would find that it provides meaningful benefits, certainly more than

[00:33:42] Speaker 02:
than no benefits or trivial benefits by comparison to the pay that is provided.

[00:33:48] Speaker 03:
Why is this so unique?

[00:33:49] Speaker 03:
If you have a different city in the other corner of zone 10, and it's mainly putting that city being able to access the adjacent zone, the next assets.

[00:34:00] Speaker 02:
I mean, there is no question that the next assets are fairly unique factually.

[00:34:06] Speaker 02:
I mean, just the fact that they were built by someone else

[00:34:09] Speaker 02:
sort of right in the middle of where SWPA was building all these other things with everyone in mind is sort of telling about who they serve.

[00:34:16] Speaker 02:
But most, I mean, in generally speaking, the grid provides meaningful assets, provides meaningful benefits to everyone.

[00:34:25] Speaker 02:
But we've done the studies here that show, well, in this case, the NICSA assets do not provide meaningful benefits to anyone else.

[00:34:31] Speaker 02:
I mean,

[00:34:32] Speaker 02:
And FERC is admitting, I think, the key facts there.

[00:34:35] Speaker 02:
We found like one in 38,000 scenarios where multiple other outages would create importance by the NICSA assets to someone else in zone 10.

[00:34:46] Speaker 02:
And FERC agrees with that, I think, at 396 of the joint appendix.

[00:34:49] Speaker 02:
We found that one third of 1% of the power serving the rest of zone 10 flows through the next assets for basically agreed with that they say oh well that amounts to a few hundred or 1000 houses.

[00:35:02] Speaker 02:
Well that's describing the same fact you know it's a third of 1% so that.

[00:35:06] Speaker 02:
I think it's important in thinking about this case that the NYX assets are a pretty unique bird, both in the way that they were originally created and in who they serve by comparison to the rest of the grid.

[00:35:21] Speaker 03:
Can you give us a little more facts on that?

[00:35:25] Speaker 03:
We know that the grid is integrated.

[00:35:29] Speaker 03:
And if there's an excess load somewhere, it can be rerouted.

[00:35:34] Speaker 03:
And so something that isn't right near you can actually sometimes be important.

[00:35:40] Speaker 03:
Certainly.

[00:35:41] Speaker 03:
What is distinctive about this particular line that makes those kind of benefits

[00:35:46] Speaker 02:
So I think the key, Your Honor, may be that, so we're talking about 10 miles of transmission line.

[00:35:53] Speaker 02:
It's pretty short.

[00:35:54] Speaker 02:
It's 69 kilovolts, so it's pretty small.

[00:35:57] Speaker 02:
And the needs of NICSA drink up what flows into the NICSA assets, which is probably also fitting with why they're built that way.

[00:36:06] Speaker 02:
So for instance, in the Joint Appendix, I believe at 243,

[00:36:11] Speaker 02:
The other side's witness is asked.

[00:36:13] Speaker 02:
So you're conceding that the majority of what goes into the NYXA assets is consumed by NYXA.

[00:36:19] Speaker 02:
Yes.

[00:36:20] Speaker 02:
And there's other evidence as well on that.

[00:36:27] Speaker 02:
So in the joint appendix 103 and 104, the expert is talking about how it's less than one third of 1% of load in the other parts of zone 10 is served by the NYXA assets.

[00:36:39] Speaker 02:
And the chart, I was looking for this, Joint Appendix 291 is the chart.

[00:36:44] Speaker 02:
They talk about the shift factors, and they've got 0.29.

[00:36:46] Speaker 02:
They break it down into houses, which is imperfect, because there's industrial load and other things.

[00:36:51] Speaker 02:
But it's fair to break it down that way.

[00:36:53] Speaker 06:
Can I ask you to respond to what you do in your brief to a degree?

[00:36:57] Speaker 06:
And then we'll let you sit down.

[00:36:59] Speaker 06:
There's a quote from Long Island Power.

[00:37:03] Speaker 06:
Maybe the first sentence quickly, and then my question is joined by the second.

[00:37:07] Speaker 06:
But while FERC may create different rules for different kinds of projects, the regulator need not always carve out exceptions for arguably distinct subcategories of projects.

[00:37:17] Speaker 06:
And here's the descendants I want to ask about.

[00:37:19] Speaker 06:
Nor must a regulator always consider cost allocation rules on a project by project basis, which would unravel the framework of anti-tariffs established by order number 1,000 and approved by the court.

[00:37:31] Speaker 06:
So how do you square that sentence?

[00:37:33] Speaker 02:
OK, so Your Honor, what's going on, I think, in that quote is this.

[00:37:36] Speaker 02:
FERC was setting broad rules.

[00:37:38] Speaker 02:
Okay, it was designing rules.

[00:37:39] Speaker 02:
Over 100 kilovolts is going to be this.

[00:37:42] Speaker 02:
Over 230 is going to be this.

[00:37:44] Speaker 02:
And the other side came in and said, well, there are certain examples that don't fit within your rules.

[00:37:48] Speaker 02:
And the court was saying, look, the rules overall are good, but certain examples don't fit.

[00:37:53] Speaker 02:
But this is not FERC setting out a broad rule.

[00:37:56] Speaker 02:
This is a zonal placement.

[00:37:58] Speaker 02:
I mean, it's just like NPD.

[00:38:00] Speaker 06:
The broad rule is, in a zone, you do license by method, period.

[00:38:06] Speaker 02:
That is...

[00:38:07] Speaker 02:
But this is about the addition of the assets to the zone, whether the assets should be brought into that construct or not.

[00:38:14] Speaker 02:
And so given that, all we're asking is the same, I mean, in NPPD and in city of Lincoln for that matter, both FERC and the court looked the cost shift in the eye and said, okay, your costs are gonna go up by 8%, but does that make sense?

[00:38:29] Speaker 02:
And that's what FERC is refusing to do here.

[00:38:31] Speaker 02:
It's not saying your costs are going up by 22% and here's why that makes sense.

[00:38:36] Speaker 02:
It's saying, no, we're gonna use the benefits to NICSA as a reason why you should pay.

[00:38:41] Speaker 06:
You are asking FERC to

[00:38:44] Speaker 06:
consider cost allocation rules on a project by project basis in this instance?

[00:38:51] Speaker 02:
We are asking them to consider the scope of the proposal made which we didn't design.

[00:38:54] Speaker 02:
It's to add the NICSA assets so we should be able to say there are no benefits from the NICSA assets.

[00:38:59] Speaker 06:
How is that different than considering cost allocation rules on a project by project basis?

[00:39:06] Speaker 02:
It's different in that you don't have to say every case is always going to be project by project or to allow that there could be challenges that pop up out of nowhere on a project by project basis to say when someone proposes to add something, whether it's 10 miles or 1,000 miles, and it's going to jack up someone's cost by 22%, I'm going to force FERC to look that in the eye and say why it's justified.

[00:39:31] Speaker 02:
And that's all that we're asking for.

[00:39:34] Speaker 02:
Thank you.

[00:39:36] Speaker 03:
Thank you.

[00:39:38] Speaker 03:
Mr. Schaerner.

[00:39:59] Speaker 05:
May it please the court, Houston Schaerner for respondent Federal Energy Regulatory Commission.

[00:40:03] Speaker 05:
And I'd like to begin and some of these alternatives we've been discussing and why, despite my friend's suggestion, this is not really an adequate situation to take a one off exception to the general structure of license plates rates.

[00:40:14] Speaker 05:
I particularly like to start with the subzone placement.

[00:40:16] Speaker 05:
The idea of a subzone rate is a potential disaster.

[00:40:20] Speaker 05:
While they say it could happen here that might be feasible administratively in one sense to develop a rate for these assets, you have to think about how this would generalize if it becomes the norm for zone emplacements.

[00:40:29] Speaker 05:
Because we know that there are going to be other entities out there.

[00:40:32] Speaker 05:
Many of them are coming off these expiring Southwest Power Administration contracts.

[00:40:35] Speaker 05:
These zones are hundreds of miles long.

[00:40:37] Speaker 05:
They likely have a lot of different types of transmission infrastructure.

[00:40:40] Speaker 05:
And there are other large zones out there as well.

[00:40:41] Speaker 05:
So it's not just a zone 10 problem.

[00:40:44] Speaker 05:
So if you have an asset-specific subzone,

[00:40:46] Speaker 05:
And that becomes the policy for adding new assets to each zone.

[00:40:49] Speaker 05:
You have a stack of individual sub-zonal rates to use those assets across those zones.

[00:40:54] Speaker 05:
And any individual customer that wants to order transmission service, whether it's from a point in another zone or just a network resource customer who says, bring me power from wherever, they're going to have to think about what assets their power moves across.

[00:41:07] Speaker 05:
And then you're going to have to put together these individual asset-specific rates and stack them like pancakes.

[00:41:13] Speaker 05:
which means it's going to be wildly unpredictable and likely much more cost and efficient.

[00:41:16] Speaker 05:
That's the sort of the battle days before things like Order 2000 and license plates rates, where the commission made sort of a grand bargain compromise to say, hey, yes, there will be some cost shifting necessarily within the license plate within the zone.

[00:41:29] Speaker 05:
That's OK, largely because it will be reciprocal and it'll work out in the wash and ex ante, it benefits everybody.

[00:41:34] Speaker 05:
But if we go back to really pre-integration days, things like these ozone rates are just going to be an administrative nightmare.

[00:41:40] Speaker 05:
And that's exactly what the commission meant when it talked about the number of permutations escalating wildly in the rehearing order.

[00:41:47] Speaker 05:
That would be JA page 451.

[00:41:49] Speaker 06:
You know if there are other previously private facilities that have been incorporated into zone 10

[00:41:59] Speaker 05:
I am not aware of any.

[00:42:00] Speaker 05:
These may be the first.

[00:42:02] Speaker 05:
I can't say definitively, but I can't tell you that there's a clear case.

[00:42:05] Speaker 06:
Do you know if there are any outside of zone 10?

[00:42:12] Speaker 05:
I believe, by private facility, you mean a facility that was outside of the SPP construct.

[00:42:19] Speaker 05:
I believe that would be Nebraska Public Power District.

[00:42:21] Speaker 05:
I believe they were outside an SPP zone, but I could be wrong on that one.

[00:42:25] Speaker 05:
And that's my recollection of the case.

[00:42:28] Speaker 06:
FERC said they were allowed to integrate, but it did seem like FERC's found more benefits to the equivalent of the non-NICSA part of the zone than FERC found here.

[00:42:40] Speaker 05:
It's certainly true that the record on benefits is very different, but in that case, the assets joining the zone were simply much, much larger in scale, I think by an order of magnitude, maybe two orders of magnitude.

[00:42:49] Speaker 05:
And there was simply, because of that, a huge amount of integration with the

[00:42:55] Speaker 05:
current grid.

[00:42:55] Speaker 05:
And so the benefits did scale up.

[00:42:57] Speaker 05:
But importantly, the costs also scale up.

[00:42:59] Speaker 05:
So the balance was roughly commensurate as well.

[00:43:01] Speaker 05:
And we don't have the same level of costs in this case, even if the benefits are lower.

[00:43:05] Speaker 06:
The NPPD case says FERC must articulate more benefits than the no benefits or trivial benefits rejected in Illinois Commerce.

[00:43:17] Speaker 06:
And I don't know if this means you lose, but

[00:43:23] Speaker 06:
It does seem like the benefits to non-NICSA customers are true.

[00:43:29] Speaker 05:
No, I wouldn't agree with that whatsoever.

[00:43:30] Speaker 05:
And the witnesses didn't testify to that effect.

[00:43:32] Speaker 05:
The ALJ, in particular, credited the witness testimony from Grid Alliance and from SPP and concluded, and this is in paragraphs 122 to 130 of the initial decision, that the benefits specifically to zone 10 are substantial.

[00:43:47] Speaker 05:
And there are several types of it.

[00:43:48] Speaker 05:
Since the integration benefits would be better planning,

[00:43:50] Speaker 05:
more efficient central dispatch, i.e., how to route power, how to find cheaper power from different generation sources to different load.

[00:43:57] Speaker 05:
You have power transfers, and the evidence clearly establishes that the NICSA assets can be used to transfer power to other resources in Zone 10, as well as maintenance benefits.

[00:44:07] Speaker 05:
And I have more to say at that in a moment than I can reply to some of the reply brief there.

[00:44:10] Speaker 05:
But then you also, of course, have the reliability benefits, which are more limited in NICSA, as the commission noted.

[00:44:16] Speaker 05:
But these other benefits, as described in Forming Order Paragraph 68,

[00:44:20] Speaker 05:
They accrue to the entire zone, to everyone in the zone.

[00:44:24] Speaker 05:
That's largely because they improve the capability of SPP to administer the zone itself.

[00:44:28] Speaker 05:
They're not based on necessarily a prediction of individual use.

[00:44:31] Speaker 06:
How much harder is it for SPP to administer the zone if the NICS assets are not integrated?

[00:44:38] Speaker 05:
Well, we know they would not discover certain maintenance outages, and we know that they can take maintenance outages on at least a few certain assets.

[00:44:45] Speaker 05:
And on that point, by the way, the response in the reply brief is that the benefits accrue to zone 3 assets.

[00:44:51] Speaker 05:
But while that may be true mostly, there is at least one zone 10 direct benefit.

[00:44:55] Speaker 05:
That's Zoukalis at JA73.

[00:44:58] Speaker 05:
But benefits to zone 3 assets, because the two zones are next to each other, can also be benefits to zone 10.

[00:45:03] Speaker 05:
And this is at JA120 and 122.

[00:45:05] Speaker 05:
That's Mr. Zoukalis.

[00:45:07] Speaker 05:
As well as you just look at the map in our brief on page 13, there's also GA 257 and 258, you will see that SWPA generation from Table Rock goes through the NYXA assets in the zone three near the James River power station, where it then reaches paths to other parties within zone 10, so it could come back around.

[00:45:25] Speaker 06:
This is not this case, but I'm curious if your answer might help me.

[00:45:29] Speaker 06:
think through the more legal questions in this case as opposed to the fact-defendant questions.

[00:45:35] Speaker 06:
What if it really were the case that the benefits to non-NICSA customers here were trivial?

[00:45:43] Speaker 06:
And FERC said, well, the point is, in a zone, everybody is going to pay a license plate method rate.

[00:45:53] Speaker 06:
And so this is just in the nature of what it means to be in a zone.

[00:46:00] Speaker 05:
Would that be a winner or a loser?

[00:46:02] Speaker 05:
That would certainly be a different case in the commission.

[00:46:04] Speaker 05:
I can't totally speak for the commission, but I would say you should look at pair of 66 of the affirming order.

[00:46:10] Speaker 05:
I think the commission tried to put some guardrails around that scenario and really tried to go halfway to meet the petitioners on their request here because they said, we're going to look at benefits to zone 10 as an entirety, but we're also going to add a production by making sure that the benefits are at least somewhat distributed beyond just in one individual customer.

[00:46:25] Speaker 05:
And you also see that specifically with the reliability benefits and why the commission did not rely on those roughly commission finding.

[00:46:33] Speaker 03:
Was there any benefit to zone three and why wasn't the asset assigned partly to zone three?

[00:46:39] Speaker 05:
There is some benefit to zone 3, but again, as I just remarked, the Zucales testimony at J121, 122, and 273 establishes that those benefits often bound back to zone 10.

[00:46:52] Speaker 05:
And by the way, that was also conceded by the ARCMA witness before the administrative law judge.

[00:46:56] Speaker 05:
That's ALJ, initial decision paragraphs 106 and 130, J180 and 190.

[00:47:02] Speaker 05:
But it's also, even if there are zone 3 benefits that don't accrue to zone 10, that's simply irrelevant.

[00:47:06] Speaker 05:
Because as long as the,

[00:47:09] Speaker 05:
that's all they need to show you.

[00:47:15] Speaker 05:
But to answer you had another question, Judge Pillar, I think about why they weren't placed in zone three.

[00:47:21] Speaker 05:
Well, I think the problem is that the city of Nixa itself, when it,

[00:47:25] Speaker 05:
When it transitioned from direct transmission service from the Southwestern Power Administration to SPP and particularly network service, if you wanted to get power from across the entire SPP network, it had no other option under SPP tariff attachment AD than to enter zone 10.

[00:47:40] Speaker 05:
There's no other option for that.

[00:47:42] Speaker 05:
And that's going to be true of other municipalities coming off of the same Southwestern Power Administration contracts.

[00:47:48] Speaker 06:
Can you explain the difference between a license plate rate and a postage state rate?

[00:47:55] Speaker 06:
And I ask because some of our precedents talk a lot about postage state rates and I take it here we have a license plate.

[00:48:01] Speaker 05:
Yes, the labels are not really helpful really at all.

[00:48:05] Speaker 05:
The best thing is that

[00:48:07] Speaker 05:
They are both geographic in some sense, but license plate rates are geographic in a sense that they looked at sort of an area and said, you know, there's a lot of common commonality here.

[00:48:16] Speaker 05:
They're sort of close enough and have some relation to where you can presume some level of benefits.

[00:48:21] Speaker 05:
And we know there'll be some cost shifts because not everybody uses the exact assets the same.

[00:48:25] Speaker 05:
That's order 2000.

[00:48:26] Speaker 05:
But, you know,

[00:48:27] Speaker 05:
Ex ante, you can expect most people in this area to sort of benefit reciprocally from other cost shifts.

[00:48:34] Speaker 05:
Other people in the zone will benefit from their assets.

[00:48:36] Speaker 05:
That's a license play rate.

[00:48:38] Speaker 05:
Close to stamp rate, it's really just a much wider scale.

[00:48:40] Speaker 05:
It's over the entire region.

[00:48:41] Speaker 05:
So in ICC, I think that was PGM.

[00:48:44] Speaker 05:
Here would be SPP.

[00:48:45] Speaker 05:
So you have a much, much broader geographic area where that presumption wouldn't necessarily hold.

[00:48:49] Speaker 05:
And the rates aren't necessarily tied to usage of those assets.

[00:48:53] Speaker 05:
They might be based on something entirely different.

[00:48:56] Speaker 05:
I think Judge Pan asked

[00:48:57] Speaker 05:
how they got their names, do you happen to know?

[00:49:00] Speaker 05:
I don't go far enough back to be able to tell you.

[00:49:04] Speaker 05:
Judge Posner mentions, I think the post is hamper rates.

[00:49:06] Speaker 05:
It's sort of like the mail service.

[00:49:07] Speaker 05:
It can go anywhere.

[00:49:08] Speaker 05:
But why does that differentiate from license plates?

[00:49:10] Speaker 05:
I guess license plates are sort of like states.

[00:49:12] Speaker 05:
You know, you get it from an area where they tell you the county maybe in some states.

[00:49:16] Speaker 05:
But I'm wildly guessing on that one.

[00:49:20] Speaker 05:
I will go back and find that out, though, someone for this.

[00:49:23] Speaker 04:
Are there a bunch more of these bilateral agreements that are going to expire and create similar situations going forward?

[00:49:30] Speaker 05:
I believe it would be fair to expect that there's a bunch.

[00:49:33] Speaker 05:
Knowing that a bunch is a loosely defined word, we certainly expect that there's some.

[00:49:38] Speaker 04:
Specifically in zone 10?

[00:49:40] Speaker 05:
Specifically in zone 10, yes.

[00:49:41] Speaker 05:
I believe they would be listed in the SPP tariff, but I'm not certain of that.

[00:49:46] Speaker 06:
I thought you said there were none.

[00:49:50] Speaker 05:
I'm sorry, there were no municipalities that would be coming off these contracts?

[00:49:56] Speaker 04:
My question was, in this case, there was a bilateral agreement for the city of Nixa, and once that expired, there was a term in the tariff that said the load has to go to zone 10.

[00:50:10] Speaker 04:
Correct.

[00:50:10] Speaker 04:
Are there more of those coming?

[00:50:12] Speaker 05:
I believe so.

[00:50:13] Speaker 05:
I believe that's referred to in paragraph six of the initial decision and other paragraphs around there.

[00:50:18] Speaker 05:
I couldn't give you a count though, but I believe the record indicates that we should expect at least some more.

[00:50:23] Speaker 05:
And there's also no reason why that problem can't generalize elsewhere as well.

[00:50:26] Speaker 04:
But it seems to me like a central tenant of your opposing friend's position is that this is a very unique situation that we have here with the city of Nixon, the Nixa assets, and he's not trying to undermine the entire, you know,

[00:50:42] Speaker 04:
license plate system, but he's just saying this just particular asset is different from all these others.

[00:50:48] Speaker 04:
And I take it you to be saying, no, no, this happens all the time.

[00:50:51] Speaker 04:
This is the way we do it.

[00:50:52] Speaker 04:
This is how we integrate new assets.

[00:50:54] Speaker 04:
I'm just trying to understand how unique are these assets.

[00:50:58] Speaker 05:
I couldn't give you a fraction.

[00:50:59] Speaker 05:
I mean, I don't believe, but we certainly disagree on the benefits from these assets.

[00:51:03] Speaker 05:
We do not think that the benefits are limited entirely to NYXA or that they're really special from other assets in some ways.

[00:51:10] Speaker 05:
They are unique in that they

[00:51:11] Speaker 05:
They have certain special unique benefits because they link zones together.

[00:51:14] Speaker 05:
And that's important.

[00:51:16] Speaker 05:
And they link balancing authorities.

[00:51:17] Speaker 05:
And that's in paragraph 67.

[00:51:18] Speaker 05:
But I don't think there's any reason to expect that this couldn't recur in the future.

[00:51:22] Speaker 05:
And that's part of the problem here is that even though they got into the zone on one criteria, and some people have to come into the zone where they can't help it, they want to change the rules going forward.

[00:51:33] Speaker 05:
So they preserve the beneficial cost shifting.

[00:51:35] Speaker 05:
but never don't have to sort of reciprocate in all the other way that comes in what disadvantaged position.

[00:51:41] Speaker 05:
That's true for the city of Nixa, but probably true for others, which frankly is probably why you see lots of these large indicated transmission owners who are not involved in zone 10 behind this case because they want to stop that reciprocal call shipping.

[00:51:54] Speaker 06:
So I think I maybe realize that I asked Mr. Fitzgerald a narrower question and Judge Pan asked you a broader question that might explain the different answers, but I had asked Mr. Fitzgerald

[00:52:07] Speaker 06:
any of the municipalities he represents anticipate integrating their own facilities into the zone 10 system and and he said he thinks no and then i think judge pan asked you if he'd like do any municipalities in zone 10 anticipate integrating their facilities into zone 10 and you said yes and so is the difference that

[00:52:30] Speaker 06:
the ones that anticipate doing it are in zone 10, but they're not his clients?

[00:52:37] Speaker 05:
Oh, I understood the difference that she was asking about integration of load.

[00:52:40] Speaker 05:
So the demand side or I thought I understood your question to be about the assets or the sort of what you might think of as a supply side.

[00:52:48] Speaker 04:
I was kind of asking about both because my understanding is once these bilateral agreements run out, the load comes.

[00:52:57] Speaker 04:
But then if they're assets, you're going to do something with those two.

[00:53:00] Speaker 05:
Yes, and I'm not sure there's any reason to to believe there wouldn't be that the zone itself, I believe hundreds of miles long.

[00:53:05] Speaker 05:
That's part of their arguments.

[00:53:06] Speaker 05:
Some of the other zones are large as well.

[00:53:08] Speaker 05:
There are.

[00:53:08] Speaker 05:
Yes, there are some power administration assets out there.

[00:53:11] Speaker 05:
But, you know, what a utility have built a 10 mile transmission line somewhere in Arkansas, Missouri or possibly, you know, you know that, you know, anyone in particular city.

[00:53:23] Speaker 05:
Unfortunately, I don't have a record citation as well.

[00:53:26] Speaker 05:
But I haven't.

[00:53:26] Speaker 05:
I don't think the record rules that out, certainly.

[00:53:28] Speaker 03:
What made the difference between the adverse determination as to the proposed settlement and the approval of the integration of the transmission assets?

[00:53:40] Speaker 05:
I think in the remand order, it's 41, Paris 41 and 43, or 41 to 43.

[00:53:45] Speaker 05:
The commission simply says the record on benefits is simply not developed enough, that we don't know how this is going to shake out.

[00:53:52] Speaker 05:
We don't know what the benefits to zone 10 customers as a whole are.

[00:53:56] Speaker 05:
And I believe they mentioned the record issue in Para 41 and then specify again that needs to be to all zone 10 customers in 43.

[00:54:03] Speaker 05:
I've seen over my time.

[00:54:09] Speaker 05:
If I could add one more point on sort of the, which I think may need to correct the record on.

[00:54:14] Speaker 05:
existing structure of the zone.

[00:54:16] Speaker 05:
My understanding is when NYXA did join the zone, the city of NYXA added its load to the zone, we know for certainty that its load was added to this.

[00:54:27] Speaker 05:
Sorry, it was paying by a load ratio share.

[00:54:29] Speaker 05:
But it's not clear to me from the record, including the JA sites at 353 and 354,

[00:54:34] Speaker 05:
that they were necessarily funding assets that were specifically used by, say, ARCMO for this case.

[00:54:39] Speaker 05:
They may have been funding, may have been paying a contract with SWPA for certain amounts before then, but I'm not sure that necessarily equates to them funding these zone 10 rates.

[00:54:47] Speaker 05:
And the zone 10 rates do not include all of the SWPA assets at the moment.

[00:54:51] Speaker 03:
And that cuts how?

[00:54:53] Speaker 03:
I appreciate the rigor of that answer, but I'm not sure how to.

[00:54:57] Speaker 05:
So I think the implication is, it's not, my friend made a claim that he doesn't think that the zone 10 rates necessarily went down, that there was any extra cost borne by NYXA, but I'm not sure there's any clear reason why that's true.

[00:55:10] Speaker 04:
So I just have a general question about why this kind of small set of assets, 10 miles worth, is so expensive that it would increase people's

[00:55:20] Speaker 04:
rates by 20%.

[00:55:21] Speaker 04:
And then that implies to me that before this whole, I guess, plan to integrate it occurred that the NYXA citizens were paying wildly higher rates.

[00:55:34] Speaker 04:
Like, is that correct?

[00:55:35] Speaker 04:
That these are just really expensive assets?

[00:55:38] Speaker 05:
I'm not necessarily the record establishes that.

[00:55:39] Speaker 05:
I think to go back to the first part of your question, why they like to frame it in terms of 22%, the rate impact.

[00:55:45] Speaker 05:
The Zone 10 rates only include a very small subset of the revenue requirement for the Southwestern Power Administration.

[00:55:52] Speaker 05:
Much of the revenue requirement to fund Southwestern Power Administration assets are currently outside the Zone 10 rates.

[00:55:58] Speaker 05:
So the current incumbents tend to pay much lower rates based on a certain number of SWP assets.

[00:56:03] Speaker 05:
But that may change going forward in the future.

[00:56:05] Speaker 05:
But at the moment, they tend to enjoy lower rates.

[00:56:08] Speaker 05:
But the NICSA assets, I'm not sure, are obviously more expensive at some sort

[00:56:12] Speaker 03:
So, if I'm translating correctly, the reason they like to express that as a percentage is because it's actually not a lot of money.

[00:56:17] Speaker 03:
This is a relatively small transmission segment, and the rates that the existing zone 10 rate pairs are paying, this segment of them for the shared transmission is actually pretty low.

[00:56:32] Speaker 05:
Yes, I believe so.

[00:56:33] Speaker 05:
For the SWPA system, I may get the number slightly higher.

[00:56:36] Speaker 05:
I think it's close to like 50 million for the total revenue required, but only maybe like

[00:56:39] Speaker 05:
7 million or 4 million that's actually rolled into the zone 10 rates.

[00:56:43] Speaker 05:
That's why they like the percentages.

[00:56:45] Speaker 05:
But the cost shift, as the commission concluded, is only 1.8 million.

[00:56:51] Speaker 05:
If I can make one more point on the joint planning process, as my friend noted, it's going to be including the incumbents, including incumbent transmission owners, but also the municipalities that are incumbents in the zone 10 right now.

[00:57:02] Speaker 05:
Given their litigation position, I don't see any reason to the extent the process is democratic to expect the Arco cities or others on tenant comments to try to build some sort of asset uniquely benefits next or even even really benefits next at all.

[00:57:15] Speaker 05:
Because if they had to the extent they have input in that process, they're going to do it just in the way they're affecting this way.

[00:57:20] Speaker 05:
I think an important point to remember there also is that zone 10 is largely linear and is, I believe, hundreds of miles long.

[00:57:26] Speaker 05:
And because of that, any individual asset, especially any individual 10-mile stretch of an asset, as the NICS assets are ultimately like, will not necessarily directly serve, say, Doppler Bluff, or Perryville, or many of the other cities that are coming into zone 10.

[00:57:44] Speaker 03:
So I was actually going to ask, and I'm glad you brought this up, about your colleague

[00:57:51] Speaker 03:
lean pretty hard on the fact that this asset was developed outside of the planning process.

[00:57:58] Speaker 03:
And your response to that, which was more nuanced, maybe packed into the comments you just made, but can you just directly respond to whether you, how would you respond to his point that it would be totally different if once the load had joined, once the Nixa city load had joined,

[00:58:20] Speaker 03:
zone 10, there was a need to build a facility like this 10 miles of transmission line, and it was subjected to a process.

[00:58:33] Speaker 03:
Your response to that is?

[00:58:35] Speaker 05:
Well, partly what I just said, you shouldn't expect the Arcmo incumbents to be any more sort of accommodating at the city of Nixa, because they're going to say they're not going to use those assets.

[00:58:43] Speaker 05:
And there's no clear indication, given the geography of the zone, that there will be a project that satisfies that.

[00:58:49] Speaker 03:
But it would be built anyway because Southwest Powerful would realize that these rate payers need transmission.

[00:58:56] Speaker 05:
Right.

[00:58:57] Speaker 05:
To the extent that the cost causation principle shows benefits.

[00:58:59] Speaker 05:
And I mean, that's case here.

[00:59:00] Speaker 05:
I think probably a more fundamental point to the issue here about sort of who built them originally and what the subjective intent behind the assets were when they originally created or someone invested in them.

[00:59:12] Speaker 05:
That's simply irrelevant.

[00:59:13] Speaker 05:
because the cost causation principle simply looks at benefits and costs.

[00:59:16] Speaker 05:
And that's determined who caused, who sort of caused the costs in a sense, not literally, but not necessarily.

[00:59:22] Speaker 03:
Right, but he's saying that you wouldn't have this project in this form because a process would have been engaged early and it would have been maybe bigger and so it could have

[00:59:35] Speaker 03:
done other things for people elsewhere in the zone.

[00:59:38] Speaker 03:
And as it was built, it was built bespoke just for NYXA.

[00:59:42] Speaker 03:
And that's a reason to see bringing it on board as serving a more parochial interest.

[00:59:49] Speaker 03:
Because by its nature, it didn't go through that process.

[00:59:53] Speaker 03:
And so it didn't reflect the multiple interests that a project that has gone through that process is more likely to reflect.

[01:00:02] Speaker 05:
sure there could be there could always be some better project you could imagine the next assets being better in some way but all that matters here for the purpose is this case this does the record show that there are benefits to zone 10 as a whole from these assets and are those benefits roughly commensurate to the 1.8 million dollar cost shift and that's the entirety of the question the histories are relevant to that thank you thank you then we have uh intervener is wrinkle

[01:00:45] Speaker 07:
Yeah, please.

[01:00:45] Speaker 07:
The court, Elizabeth tranquil on behalf of us, Irving or Southwest Power Pool.

[01:00:52] Speaker 07:
I just want to follow up on a couple of things that Mr Shayner pointed out.

[01:00:55] Speaker 07:
First was a question, I think, from you, Judge Walker about whether there were any examples of assets joining existing transmission zones and particularly zone 10.

[01:01:04] Speaker 07:
There's a case pending at FERC regarding adding additional assets to zone 10, and there are numerous examples of other transmission assets that were constructed outside of the initial zoning, zonal planning construct that have been added to transmission zones.

[01:01:18] Speaker 07:
There are examples out there of this happening.

[01:01:20] Speaker 06:
Do you know if NYXA has taken a position on that pending petition?

[01:01:24] Speaker 07:
The City of NYXA?

[01:01:25] Speaker 07:
I don't know.

[01:01:26] Speaker 07:
And I think it's important to note that the City of NYXA no longer owns the transmission assets that are at issue here.

[01:01:32] Speaker 07:
But yes, I don't know whether NYXA has taken a position on that or not.

[01:01:37] Speaker 07:
And then I think, Judge Penn, you are asking about whether other load has converted since this case, or whether other load from SWAPA has converted into zone 10.

[01:01:47] Speaker 07:
And yes, it has.

[01:01:48] Speaker 07:
During the pendency of this case, there has been additional load from the Southwest Western Power Administration that has converted to zone 10.

[01:01:55] Speaker 07:
And did assets come to you?

[01:01:57] Speaker 07:
I'm not sure about that.

[01:02:00] Speaker 07:
We aren't familiar of the particulars of the contracts associated with Southwestern and their specific transmission customers.

[01:02:08] Speaker 07:
But at some point, I would assume that there may be.

[01:02:11] Speaker 03:
Is it typical for load and assets to come into a zone at different times because of the nature of the contractual arrangements prior to integration?

[01:02:25] Speaker 07:
It's difficult to say whether that would be a common occurrence.

[01:02:29] Speaker 07:
When you have a transmission customer who previously owned transmission assets and then divested those assets for one reason or another, there's not an opportunity for SPP to really evaluate that relationship.

[01:02:46] Speaker 07:
And SBP uses a total placement process to evaluate the benefits to the zone in which that transmission asset is going to be placed when it converts.

[01:02:56] Speaker 07:
to SPP's central.

[01:02:58] Speaker 03:
So one question I had, and I don't even know if this bears anything more than atmospherically, just trying to understand the nature of the beast.

[01:03:06] Speaker 03:
So you have a transmission goes around the city of Nixa.

[01:03:10] Speaker 03:
It is anticipating that its load will be, as its bilateral contract expires, per that contract, its load is going to be integrated into the

[01:03:20] Speaker 03:
Zone 10, it owns this asset.

[01:03:24] Speaker 03:
It divests itself of it, meaning it sells it and gets money.

[01:03:27] Speaker 03:
Right.

[01:03:28] Speaker 03:
Yes.

[01:03:28] Speaker 03:
I mean, the city gets a lot of money.

[01:03:33] Speaker 03:
And what's that?

[01:03:35] Speaker 03:
That's like into the city budget, back to ratepayers.

[01:03:38] Speaker 03:
We don't know.

[01:03:38] Speaker 03:
We don't know.

[01:03:40] Speaker 03:
And then the.

[01:03:43] Speaker 03:
the new owner of it gets the benefit of being folded into zone 10 and having captive rate payers pay for it?

[01:03:54] Speaker 07:
Well, it's not a foregone conclusion that it would be rolled into zone 10.

[01:03:57] Speaker 07:
SPP applies its zone placement process to determine the proper zone in which the asset should be placed.

[01:04:03] Speaker 07:
And that involves looking at several different factors, including the embeddedness of the assets, their integration with the transmission system,

[01:04:12] Speaker 07:
and the benefits that could come from that.

[01:04:13] Speaker 07:
And then also the nature of the transmission service prior to the conversion.

[01:04:17] Speaker 07:
And so in this case, sorry.

[01:04:19] Speaker 03:
It seems like, would it be a different, the equities feel like they would be different if NICSA hadn't sort of cashed this thing out, then maybe it isn't different, because then they would just have the same valuable asset that would be being paid for by NICSA.

[01:04:32] Speaker 03:
everybody in zone 10.

[01:04:34] Speaker 07:
I think it would be the same.

[01:04:35] Speaker 07:
I mean, if you have a transmission asset that is outside of the SPP integrated system and you wish to place that asset under SPP's functional control, the question at the end of the day is what zone should that asset be placed in?

[01:04:49] Speaker 07:
And the just and reasonable outcome here is that the SPP determined and for concluded that the proper zone to place these assets in was zone 10.

[01:04:56] Speaker 03:
And the reason this happened in two steps is, just to recap, is because of the nature of the contract and its expiration put the load in.

[01:05:04] Speaker 03:
Correct.

[01:05:04] Speaker 03:
And then separately, there was a question about whether to bring in the.

[01:05:08] Speaker 03:
Correct.

[01:05:09] Speaker 07:
Yes, the asset, the conversion of the load from Southwestern Power Administration contract and the determination about whether to place the assets into zone 10 were completely separate determinations.

[01:05:21] Speaker 04:
So is there a scenario in which, as

[01:05:23] Speaker 04:
SVP could have just not taken these assets and then Nexa would have just kept paying for them as they always happen.

[01:05:29] Speaker 04:
If you had not taken control of the assets, everything would have been just like it was when there was a bilateral agreement.

[01:05:36] Speaker 07:
Yes, that's contrary to Commission precedent and policy of generating an integrated transmission network.

[01:05:44] Speaker 07:
It's a good thing to have transmission assets integrated into the wider transmission system.

[01:05:52] Speaker 07:
But yes, if the owners of the NYXA assets had not

[01:05:58] Speaker 07:
sought to convert those assets to and become a member of SPP and the benefits that come with that they had not actually gone forward with that and instead just continued to serve NYXA directly without joining the RTO then yes.

[01:06:13] Speaker 03:
And then anybody who wants to use that for example pass through power and maybe because this is a lower capacity line it's not a big but if you have a line then you as uh Mr. Shannon was saying you have to sort of stack the costs and kind of

[01:06:28] Speaker 07:
Calculate who's using what when and exactly sort of complicated exactly and and that goes to this idea of pancake rate making which I think Mr. Mr. Fitzgerald sort of touched on the subzonal construct and why and and we submit that that's not.

[01:06:43] Speaker 07:
the way that zonal rates are supposed to work.

[01:06:46] Speaker 07:
First of all, it would be discriminatory to SPP, or to the city of Nixa rather, because SPP does not employ any sort of subzonal construct in its rate design.

[01:06:54] Speaker 07:
And it also would result in the city of Nixa paying both its low ratio share of the cost of transmission revenue in zone 10, plus the addition of the Nixa assets all by itself.

[01:07:07] Speaker 07:
And that's, you know, clearly unjust and unreasonable.

[01:07:10] Speaker 06:
You mentioned at the very beginning,

[01:07:13] Speaker 06:
couple of examples of, you know, assets coming on local localities assets coming on board jumping up.

[01:07:21] Speaker 01:
Yes.

[01:07:22] Speaker 06:
Can you can you give any specifics of like, how would I find those that petition or petitions you're talking about?

[01:07:28] Speaker 07:
Well, there's currently I can certainly get this to you, Your Honor, but there is currently like a letter or something.

[01:07:32] Speaker 03:
But go ahead.

[01:07:33] Speaker 07:
Yes, absolutely.

[01:07:34] Speaker 07:
There's currently a case pending at FERC involving People's Electric, where they're seeking to convert transmission assets that were previously outside of the SPP transition system.

[01:07:45] Speaker 07:
And there are other examples as well, which I unfortunately don't have in front of me, but I can certainly get those to you.

[01:07:49] Speaker 07:
Thanks.

[01:07:52] Speaker 07:
Thank you.

[01:07:53] Speaker 07:
Thank you.

[01:08:02] Speaker 02:
Just a couple of quick points, your honor.

[01:08:05] Speaker 02:
So I just want to be clear that my friend's view of the law, Ferck's view of the law here, is really checkmate against ever studying the impact of this on the rest of zone 10.

[01:08:20] Speaker 02:
So we can talk about, OK, it's a 22% rate increase.

[01:08:24] Speaker 02:
It's $1.6 million.

[01:08:26] Speaker 02:
It's 90% of the costs.

[01:08:28] Speaker 02:
But their view is, because they've already put NICSA in, none of that matters.

[01:08:33] Speaker 02:
So it could be 100% cost increase.

[01:08:35] Speaker 02:
It could be 300%.

[01:08:37] Speaker 02:
As long as the NICSA assets are important to NICSA, they're saying they can put those costs onto everybody else.

[01:08:44] Speaker 02:
And that just isn't right.

[01:08:46] Speaker 02:
We ask for the same test that was applied in NPPD, the only circuit precedent.

[01:08:53] Speaker 02:
And then City of Lincoln, really the only sort of zonal placement type precedent that I'm aware of from the Court of Appeals.

[01:09:02] Speaker 02:
Now, second, there was a bit of discussion of benefits supposedly to others outside of the city of Nixa.

[01:09:08] Speaker 02:
And I want to be clear that FERC has never said that the benefits beyond the city of Nixa warrant the rate increase in this case.

[01:09:17] Speaker 02:
They have never said that.

[01:09:18] Speaker 02:
They say every time we object and say, well, those really are benefits to Nixa.

[01:09:23] Speaker 02:
You know, integration, that means you keep the lights on in Nixa.

[01:09:26] Speaker 02:
They say, well, we're allowed to consider Nixa in this analysis.

[01:09:30] Speaker 03:
They're doing neither.

[01:09:31] Speaker 03:
They're doing the zone 10 load as a whole, which is both.

[01:09:36] Speaker 03:
They're not just looking at NICSA.

[01:09:38] Speaker 03:
I mean, you say they functionally are, because in your view, but that's a little bit bootstrapping.

[01:09:42] Speaker 03:
In your view, that's who it serves.

[01:09:44] Speaker 03:
And they're not separating out, as you would have them, all the non-NICSA incumbent zone 10 load.

[01:09:50] Speaker 03:
But they are looking at zone 10 benefits to zone 10 rape rivers as well, because that's the unit now.

[01:09:58] Speaker 02:
I mean, they are looking at the zone, but that is heavily informed by the incredibly important benefit.

[01:10:04] Speaker 02:
They're always gonna find it justified, even if the zone were far bigger, far smaller, as long as you can look at NYXA.

[01:10:11] Speaker 02:
I mean, without the NYXA asset, they need the NYXA assets and no one says they don't.

[01:10:16] Speaker 02:
So if you're gonna do the analysis with them in it, you're going to come up with all sorts of, it doesn't matter what happens in the rest of the zone.

[01:10:23] Speaker 03:
And I take it you're also chafing against the notion that the benefits of integration

[01:10:28] Speaker 03:
themselves, which aren't quantified in great terms.

[01:10:32] Speaker 03:
I hear those to be bearing very heavily on SPP and on FERC.

[01:10:39] Speaker 03:
Again, you could say the same thing.

[01:10:41] Speaker 03:
Well, then, every case.

[01:10:43] Speaker 02:
Yes.

[01:10:43] Speaker 02:
And I mean, the general benefits, things like integration, when you pull them apart from the strong concrete benefits to NYXA, I mean, that's like rate making word salad.

[01:10:57] Speaker 02:
You can say integration is good because you want everything integrated.

[01:11:01] Speaker 03:
What's your rebuttal on the pancake rate point?

[01:11:04] Speaker 02:
So the pancake rate point, as I understand it, is that it's wrong for NYXA to pay for its own assets as well as the rest of zone 10.

[01:11:13] Speaker 02:
Is that the argument?

[01:11:15] Speaker 03:
I think they're saying that the implication of your argument is there will be a lot more of a patchwork, less integrated, and that we'll go back to having rates be pretty complex, and depending on where the power has flowed, and that that is a whole irrationality of its own.

[01:11:37] Speaker 02:
So, okay, your honor.

[01:11:39] Speaker 02:
So the whole idea, though, of this creating a big messy patchwork is premised on the idea that there are a bunch of other municipalities out there with their own assets that have to be considered like this and they don't exist.

[01:11:51] Speaker 03:
It doesn't have to be municipalities, you know.

[01:11:55] Speaker 02:
Or other kinds of look.

[01:11:58] Speaker 02:
Right, so, but I think the key is when these contracts are ending and load is joining if the load is joining it previously has paid under a contract for the zone 10 benefits.

[01:12:11] Speaker 02:
The reason why the contracts end and then the load joins

[01:12:14] Speaker 02:
is to prevent a cost shift, to keep the costs where they always have been.

[01:12:18] Speaker 02:
But we're talking here about a new cost shift.

[01:12:21] Speaker 02:
NYXA is an unusual one.

[01:12:23] Speaker 02:
They have this asset, and all we really want is for FERC to tell us whether there are real benefits or not.

[01:12:30] Speaker 04:
We asked questions about that, and it seemed that there might be other people joining who have assets.

[01:12:35] Speaker 02:
I am unaware of any such asset.

[01:12:37] Speaker 02:
I'm saying, I think he is, it's right that other people are joining.

[01:12:41] Speaker 02:
I am unaware of anyone else in this area with an asset that is separately planned.

[01:12:48] Speaker 02:
I'm unaware of any other asset inside of this geographic area that was separately planned, separately designed and separately built by anyone to serve anyone.

[01:12:57] Speaker 02:
And finally, Your Honor, the project by project point you brought up, I would mention that in city of Lincoln, the entire fight about who should pay those costs was about a 10 to 12% ownership stake in a single asset.

[01:13:11] Speaker 02:
And FERC didn't come along and say, it's too small.

[01:13:14] Speaker 02:
You can't object to that.

[01:13:15] Speaker 02:
It's just one asset.

[01:13:17] Speaker 02:
There were serious costs to be shifted there.

[01:13:19] Speaker 02:
And they looked them in the eye and rejected them.

[01:13:22] Speaker 02:
And that's what should ultimately happen here.

[01:13:25] Speaker 03:
Thank you very much.

[01:13:25] Speaker 03:
Thank you all.

[01:13:26] Speaker 03:
Sorry to keep you probably later than you anticipate.

[01:13:30] Speaker 03:
Case is submitted.