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case number 22-1059 et al.

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Tanaska Clear Creek Wind LLC petitioner versus Federal Energy Regulatory Commission.

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Mr. Super for the petitioner, Ms.

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Pacella for the respondent, Mr. Pinet for the intervener.

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Good morning.

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Good morning, may it please the court.

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David Super with Bracewell.

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On behalf of petitioner Clear Creek Wind, I'd like to reserve two minutes for rebuttal.

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Clear Creek is a wind farm in Missouri that's interconnected to a grid that's operated by Associated Electric.

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But this case is about the rules for allocating costs to address potential impacts from that interconnection, a neighboring grid operated by Southwest.

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And just to provide a very brief overview, I'll be addressing two points on the merits today.

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First, Southwest study, practice of studying

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the Clear Creek project using network service standards resulted in the allocation of costs to Clear Creek that have no relationship to the service being provided to the project in violation of the cost causation requirement and the Federal Power Act.

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Southwest studied the project using network service standards, which assumes that the Southwest system would support full deliverability of the project's load

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on Southwest system during peak periods.

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But the obvious problem with that assumption is that the project is located on an adjacent system and will not serve load on Southwest system.

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In fact, in order number 2023, FERC found that using network service standards for affected system studies results in a mismatch between service and costs in violation of the cost causation requirement.

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And second on the merits,

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Even if using network service standards were appropriate, Southwest's allocation to Clear Creek of 100% of the cost to remedy pre-existing overloads on the Southwest system violates the cost causation requirement because Clear Creek did not cause those overloads and shouldn't have to pay for

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before going further.

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Now, Clear Creek downgraded to the energy resource interconnection service.

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But are you now suggesting that they won't use any of the NRIS system?

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Well, that is correct, Your Honor.

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Because of the study using network service and the allocation of $87 million in network service costs to Clear Creek

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Clear Creek was forced to downgrade to energy only service in order to avoid insolvency.

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Now, you spent $266 million toward the project.

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So if we're looking at cost causation, discuss a little bit about that benefit and burden.

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Like, why put this much money into the facility if there's not some benefit to you?

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Well, Your Honor, Clear Creek is perfectly willing and has agreed

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to pay the $15 million in energy only related service for upgrades to the Southwest system.

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And that's appropriate because that is the level of service that Clear Creek has requested and will receive on associated electric system.

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But it should not be allocated any costs

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due to network resource service, because it has not requested that level of service on the Southwest system, and it won't receive that level of service on the Southwest system.

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Well, you have, I gather, expressed your intent to upgrade to... That is quite right, Your Honor.

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What happens then?

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Well, in the agreements with Associated Electric whereby

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Clear Creek downgraded to energy only service on the associated electric system.

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Clear Creek has the right to reopen that issue and revert to network resource service on the associated electric system.

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And that's an important right.

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Will you then face the cost you're complaining about now?

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Well, Your Honor, that is a question because Southwest has said in its briefs that if

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If Clear Creek were to revert to network service on associated electric system, Southwest would study, would re-study the project using network resource service.

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And that's the fundamental problem that we think is improper in violation of the cost causation requirement.

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And that re-study could very well result in network service costs

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to Clear Creek that we believe are in violation of the cost causation requirement.

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It could come out exactly the same way, right?

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It could, very much, yes.

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And would any of those costs be passed on to your purchasing customers?

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I'm sorry?

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Would any of the costs be passed on to your purchasing customers?

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Well, Clear Creek is not in a position to pay the network service costs of $82 million

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That's why Clear Creek downgraded to energy only service because it was faced with impending insolvency due to that, those ruinous levels of costs.

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And so that's why it had to revert to a lower level of service that is not as favorable to Clear Creek as the network service is.

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We don't have that agreement.

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November, I think it is agreement with them associated.

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That is correct.

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Is there a reason?

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Well, the agreement is confidential to my understanding, but it is in the record.

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I think both sides have pointed out the fact.

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Documents not in the record.

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You mean references to it.

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That it exists.

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That is correct.

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And both sides have pointed out to the fact that

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Clear Creek does have the ability to revert to the greater network service.

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As I read it, you have the ability to request that.

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That is true, your honor.

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What value is that?

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Well, it is valuable because network resource service is a much more valuable level of service.

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Generators on associated electric system who have the network resource level of service allow associated electric to utilize those generators to serve load.

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So it's actually, network resource service is actually a valuable service to associated electric as well as Clear Creek.

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Clear Creek, of course, benefits from the higher level of service, but it's offering a higher level of service to associated electric as well.

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And so there would be incentives for the parties to agree to allow Clear Creek to return to Network Resource Service.

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I'm not sure what you got out of this agreement.

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Does it hold your place in line?

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Well, if we were subject to a restudy based on Network Resource Service, presumably Clear Creek would have lost its place in the queue.

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But, Your Honor, we think that is the fundamental problem, that a project has already been studied based on energy-only service, and Clear Creek is willing to pay that $15 million

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It's our view that we should not be studied under the resource service standard.

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And again, that's what- This is standard in the protocol for Southwest, right?

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I'm sorry?

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This procedure is standard in the protocols internal to Southwest.

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That is correct.

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Southwest utilizes both network resource service and energy resources.

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And I believe FERC has approved it, or yeah, approved it on the ground that it's a prudent measure, a prudent step.

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Well, Your Honor.

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And in this instance where you will yourself say you want to return to network services as soon as possible.

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That is correct.

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It certainly seems like a prudent step.

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To return to network resources.

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No, for that, for Southwest to evaluate, to do the study based on network service.

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Well, Your Honor, Southwest studies Clear Creek utilizing the network service standard

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based on an assumption that Southwest would be utilizing the Clear Creek project to serve load on Southwest's system.

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That's why Southwest does that study now.

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The fundamental problem with that assumption is that it's false.

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Clear Creek has never requested

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network level service on Southwest system.

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Southwest has no obligation to provide that level of service.

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This is your key point, right?

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What you're reserving the right to do is return to network service on associated electric, not on Southwest.

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Your honor, that is 100% correct.

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That's exactly correct.

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We are unable to return to network resource service on our host system, associated electric,

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because Southwest is holding us hostage because it's been studying the project based on network resource standards that, again, apply to a level of service we have not asked for and will not receive on Southwest.

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So the obstacle for you on that claim, just taking it on its face, is that in these orders,

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FERC said that it had just very recently, in two other orders, approved this practice, allowing the transmission organization to decide whether to assess this type of situation under network or energy resource.

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And in your opening brief, I didn't see where you addressed those two orders that FERC relied on.

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Well, the order in our opening brief was the notice of proposed rulemaking.

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The final rule was issued about a month after our initial brief.

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And of course, we did point to that final order in our reply brief.

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But I think that the... And the final order is prospective only.

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And your argument is that it was arbitrary and capricious even before that rule was final.

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That's exactly right, Your Honor.

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We're not asking for this court

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to retroactively apply order number 2023, in addition to the recent denial of the hearing request on order number 2023.

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We do have access through, so we're attached to associated electric.

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That's the only way in.

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That is exactly correct.

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And this case is about assessing what impacts our use on associated electric have on Southwest.

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And the question is, what standard does Southwest use to study our impacts?

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And our argument is, they're studying us based on a standard that we don't receive from them and haven't requested.

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And I think Order 2023 by FERC is very important,

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And again, we're not asking this court to retroactively apply order 2023.

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But in that order, FERC adopted the exact arguments we've made in this case.

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FERC has said in that order that the use of network resource service for an affected system study results in a, quote, mismatch between service and costs.

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Every single one of the arguments we made in this case, FERC has now adopted in order 2023.

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So we're not asking you to retroactively apply that order, but we are asking you to reach the same decision that FERC reached in order 2023 in this case.

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Because FERC has made no bones about it.

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It has said that studying and doing an affected system study utilizing energy only service

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addresses all of the potential reliability concerns that may arise.

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It's not necessary to study an affected system using network resource service.

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And to do so is creating a violation of the cost causation requirement because there is a fundamental mismatch between the costs paid and the services provided.

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That order is pending petitions for review.

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That is correct, Your Honor.

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It's an abeyance at the moment.

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We don't even know whether it will ever take effect.

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Well, I do agree that that issue is now pending before this court.

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However, I would posit that this case is now the lead case far ahead of that one on this exact issue.

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And so this case could be influential on that one.

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In the other proceeding?

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I'm sorry?

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Are you objecting in the other proceeding?

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Are we objecting to the result of order?

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No, we think that FERC got it right in order 2023.

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So you're there just as an intervener?

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We should.

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We should.

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We haven't yet.

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But we're asking for this court to do the same thing that FERC has now done in Order 2023 for the exact same reasons that we raised in our brief.

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That there is no reason to study an affected, to do an affected system study based on network resource service.

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Can you operate under NRIS with respect to AECI, but then ERIS with respect to the Southwest at the same time?

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No, Your Honor, because in order to get network resource service on associated electric system,

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Southwest has taken the decision.

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It must study the impacts of our interconnection request using the network resource.

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And what other generators do you hold responsible when you're talking about that it's not fair to you to bear all of the costs?

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Well, that's kind of another issue that the other problem with FERC's orders in this case is they approve Southwest's allocation to Clear Creek of 100% of overloads that were caused by other parties.

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And Clear Creek should

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pay for its portion of those overloads.

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But in one instance, the Nashua transformer, there were pre-existing overloads that were three times greater than Clear Creek's incremental impact.

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But is it their argument that you are the but for cause that your particular impact causes the need for the upgrades?

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Really two answers to that question, Your Honor.

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That first, the but for

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policy is a FERC policy, and it doesn't supplant the requirement of cost causation, which is fundamental to the Federal Power Act, as this Court has recognized.

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But the other point is that FERC has never really explained how Clear Creek could be the but for cause of an upgrade when there are

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greater pre-existing overloads on that facility.

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Because those overloads didn't require additional infrastructure.

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Well, then... Overloads over a rating, which is obviously a prudent ex ante rating, and it turns out the system is working reasonably well with what they call an overload.

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Well, Your Honor, in the case of the National Transformer, there were pre-existing overloads up to the level of 110%.

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And then Clear Creek comes along and adds 3%.

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And so,

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I understand that.

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You're the marginal customer.

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It's just marginal cost causation.

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It's a fundamental utility regulation principle across all of these schemes.

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Well, Your Honor, I think this court has rejected schemes where one party that causes one third of the overload is required to pay 100% of the costs and the parties who caused two thirds of that overload get away sky free.

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What case are you thinking?

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Well, I'm thinking of Consolidated Edison.

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That's just totally different.

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That was the case with the huge zones, right?

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I mean, that was like astrology.

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Well, Your Honor, I do think that that case focused on the fact that the de minimis process being used in that case, which admittedly was different, produced absurd results.

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And I think the split there.

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What's your better case?

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Well, Old Dominion is another case that recognizes

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the cost causation requirement.

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And there, this court recognized that a party that was receiving only 50% of the benefit of a particular project should not have to pay for 100% of the costs.

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Was that a planning case?

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I'm sorry?

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Was that a capacity planning?

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There was a transmission case.

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There was a transmission, an interconnection?

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It was not an interconnection case.

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But in our view, Your Honor,

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policies that underlie transmission are the same that underlie interconnection.

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That's not the commission's view.

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That's not just this case.

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That has been their distinction they've maintained.

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I think in the Entergy case, this court said that

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Interconnection was just a subset of transmission.

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You also benefit.

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I think the example was used that there were 24 constraints in another setting.

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You're right, your honor.

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Yes, that that's the that's the we've been kind of calling that the wind some you lose some approach that Southwest applies to its de minimis practice.

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And the idea is that because there are

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Other overloads where clear Creek may not trip the 3% to minimus threshold that's considered somehow a benefit, but the problem with that is.

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Burke does nothing to say whether those alleged wins are in any way roughly commensurate with the $87 million in known costs the loss that clear Creek is suffering based on.

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the overloads where it is being required to pay 100% of the costs.

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So there's no roughly commensurate analysis being done by Southwest and FERC in that situation.

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It truly is just, well, you win some here, you lose some there, but no attempt to- You're not arguing cost causation.

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You're arguing some kind of equitable proportionality.

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Well, this is actually a response to FERC's argument on cost causation.

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They say,

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That's just explaining how it works, right?

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You know, the next person that requires, next connection that requires an upgrade on those will pay for your capacity.

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That's just an inevitable consequence of how they operate.

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Well, the fact that it is an inevitable consequence of the operation of Southwest's de minimis practice, Your Honor, I would suggest doesn't mean that it satisfies the cost causation requirement because

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If you've got a situation where the accumulation of pre-existing overloads grows to some unlimited amount, but no pre-existing customer trips the 3% threshold, and then along comes some unlucky customer who does, there's no cost causation basis upon which that subsequent unlucky customer should have to pay for the entire overload that's been caused by many parties.

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And that is a fundamental violation of the cost causation requirement.

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You're just exploiting their terminology because it's an overload.

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It's functioning properly, and now you need something that would require upgrading the CSTAR.

[00:19:44] Speaker 04:
Well, Your Honor, if there's a 10% overload, 10% over the rated capacity in Clear Creek adds 3% to that overload.

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If the 10% isn't causing any kind of reliability problems, then there's a question whether there's an overload problem to begin with that needs to be corrected by Clear Creek.

[00:20:01] Speaker 05:
Well, as I say, if you're just exploiting that term overload, it's obviously load.

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Well, I'm not sure.

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Over a rating that was ex ante, and that was probably prudence at the time.

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But it turns out, perhaps with later efficiencies or something, they could carry more.

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Well, I'm not sure I'm exploiting the term overload.

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I mean, there is a 10% overload on the Nashua transformer that presumably is causing a reliability problem.

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Oh, but they said it isn't.

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then if it isn't, then why does Clear Creek's 3% addition to that 10% overload all of a sudden cause the... At some point, obviously there will be a reliability problem.

[00:20:39] Speaker 04:
Well, I think that's where it becomes so arbitrary because they decide there's a reliability problem when some unlucky customer happens to have a 3% impact.

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And it's completely arbitrary.

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You could have 15 customers with a 2.9% impact and a 50% overload beyond capacity.

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And yet one customer with a 3%

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de minimis threshold somehow trips that problem and all of a sudden you have a reliability problem.

[00:21:05] Speaker 03:
You asked for a vacator as well.

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Is that your only acceptable remedy and what would you find to be the fundamental flaws in the commissions?

[00:21:13] Speaker 04:
Well, Your Honor, we would ask for vacator and remand back to FERC.

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And the problems we identify here, number one, Southwest

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was incorrect and FERC was incorrect in allowing Southwest to study the Clear Creek interconnection using the network service standard, a level of service that Clear Creek has not requested and will never receive on the Southwest system.

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That's number one.

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Number two, the fact that Southwest is requiring Clear Creek to pay 100% for pre-existing overloads that

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clear clear did not cause at least in their entirety and that other customers of the grid will will benefit from.

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And third fact that Southwest and FERC are using this arbitrary 3% de minimis threshold to justify requiring the unlucky customer who comes along to have to pay for

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pre-existing overloads on Southwest system.

[00:22:19] Speaker 07:
Council, in this situation, is there a practical difference between us vacating and not?

[00:22:25] Speaker 07:
If we were to agree with you on one of these grounds, we remand.

[00:22:28] Speaker 07:
Is there actually a difference between vacating?

[00:22:30] Speaker 07:
It seems like you've effectively been denied what you want already.

[00:22:34] Speaker 07:
And normally, vacator matters when there's sort of ongoing reliance on an approval.

[00:22:40] Speaker 04:
Yeah, I'm quite confident that my client would be satisfied with a remand and an instruction to FERC that Southwest is not to use

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the improper network resource standard in studying the clear grid project.

[00:22:59] Speaker 07:
And then on the cost allocation issue, I just want to understand a little better what exactly you're proposing.

[00:23:04] Speaker 07:
If we could use Nashua as an example, are you saying there's at least, well, there could be many different versions of it.

[00:23:10] Speaker 07:
You could be saying that it's reasonable to require an upgrade when a 3%

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contribution comes in, but the upgrade should somehow be calibrated to that 3%.

[00:23:21] Speaker 07:
Or you could be saying, we should actually go and charge the prior de minimis contributors to contribute to the bigger upgrade.

[00:23:31] Speaker 07:
It could be many other things.

[00:23:33] Speaker 04:
And the second part of that question is very complicated.

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I think our first proposal is this.

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The usage of the network resource service, that

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accounts for all of the network.

[00:23:46] Speaker 07:
I understand that.

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Talking about your complaint about this application of the de minimis threshold.

[00:23:51] Speaker 04:
Yes, I think, Your Honor, the thing to do there is to require Southwest and FERC via Section 205 of the Federal Power Act or Section 206 to revisit Southwest's process for doing these kinds of allocations because a system whereby

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an interconnection customer is being required to remedy pre-existing overloads that far exceed that customer's contribution is a violation of the cost causation requirement.

[00:24:29] Speaker 04:
And it is incumbent upon the agency and Southwest to figure out a better way to do it.

[00:24:39] Speaker 04:
My time is up.

[00:24:42] Speaker 03:
We'll save two minutes for rebuttal unless you have questions now.

[00:24:45] Speaker 03:
Okay, thank you.

[00:24:45] Speaker 04:
Thank you.

[00:24:53] Speaker 02:
Good morning, Your Honors.

[00:24:54] Speaker 02:
Beth Pacella for the Commission.

[00:24:56] Speaker 02:
I think I'm going to start with the use of network resource interconnection service standards.

[00:25:05] Speaker 02:
The commission has already found that Southwest use of NRIS standards is just and reasonable and have found that in the Mid-Continent case.

[00:25:15] Speaker 02:
And so, so Tanaska's burden here is to show that that's no longer true.

[00:25:25] Speaker 02:
And the commission explained that it's appropriate for Southwest to use

[00:25:29] Speaker 02:
to study the interconnections effect on the system using the higher level interconnection service to NASCA requested to ensure that the transmissions that Southwest system will remain reliable and that there will be proper cost allocation.

[00:25:47] Speaker 02:
Energy resource service only allows South, to NASCA to put its generation on associated electric system on an as available basis.

[00:25:59] Speaker 02:
And the NRIS service allows them to do it basically as a firm service, continually.

[00:26:05] Speaker 02:
As much generation as they have, they can put on the system.

[00:26:08] Speaker 02:
And the effects are certainly different on Southwest system, whether it's ERIS service or NRIS service.

[00:26:17] Speaker 02:
We know that.

[00:26:19] Speaker 02:
And the Kelly affidavit explained that Southwest does this to ensure that its system can accommodate

[00:26:26] Speaker 02:
the level of interconnection service requested, not that there will be deliverability on Southwest system.

[00:26:32] Speaker 02:
And the commission always in the Mid-Continent case at paragraph 60, the commission explained that, let me find that.

[00:26:52] Speaker 02:
The commission explained that

[00:26:55] Speaker 02:
TANASCA, that the study does not, that SPP does not study the effective system interconnection as if the generator's output will be delivered on SPP system.

[00:27:08] Speaker 02:
It studies it as if it's gonna be delivered on the host system.

[00:27:12] Speaker 02:
And that's in paragraph 60 of Mid-Continent 171 FERC 61275.

[00:27:16] Speaker 02:
The commission explained Southwest's effective system study sinks the interconnection

[00:27:23] Speaker 02:
connection requests into the host system's footprint.

[00:27:26] Speaker 02:
So it's the effects of sinking it into the deliverability on the host system that still causes these effects on the Southwest system.

[00:27:35] Speaker 02:
The flows happen automatically on Southwest system, just by virtue of the deliverability happening on the host system.

[00:27:44] Speaker 02:
And that's why Southwest studies it under this higher level NRIS service.

[00:27:49] Speaker 02:
So in the 20... Please, please.

[00:27:52] Speaker 07:
In the 2023 order,

[00:27:54] Speaker 07:
FERC has now ruled that SBP shouldn't do that.

[00:27:59] Speaker 02:
That's right.

[00:28:00] Speaker 07:
And the way you just explained it made it sound sort of inevitable that network resource standards should be used.

[00:28:06] Speaker 07:
So what's changed?

[00:28:07] Speaker 02:
So a different record, your honor.

[00:28:09] Speaker 02:
And let me first say, and I'm sure you know this already, but I can't, as FERC's lawyer here, not point out that that is what the commission has said in order 2023 is literally irrelevant here.

[00:28:20] Speaker 02:
The court cannot, I mean,

[00:28:23] Speaker 02:
In Brooklyn Union gas, for example, as we pointed out in our brief and in the McLeod decision, talked about in the Brooklyn Union gas decision, the court absolutely said the subsequent decisions are irrelevant in any event.

[00:28:37] Speaker 02:
We will not reach out to examine a decision made after the one actually under review.

[00:28:43] Speaker 02:
The court said an agency's decision is not arbitrary and capricious just because it decided something different later.

[00:28:51] Speaker 02:
understanding and I'm happy to talk about it, but it really is irrelevant here, but.

[00:28:56] Speaker 02:
If it weren't irrelevant, it isn't.

[00:28:58] Speaker 02:
It just Commission had a different record.

[00:29:01] Speaker 02:
You know it was a rulemaking and it didn't involve just the record here.

[00:29:04] Speaker 02:
It involved all kinds of matters and that again will be addressed by the court on review later on.

[00:29:10] Speaker 07:
In addition to that, as can I ask about the other issue and unless

[00:29:17] Speaker 07:
So one thing Bear Creek says is that the way you've justified imposing all these costs on them is, well, you're the first interconnector that required an upgrade.

[00:29:29] Speaker 07:
And what they say in response is, but your way of determining when an upgrade is required is arbitrary.

[00:29:35] Speaker 07:
Because for example, you can have a 10% overage, a 10% contribution, and the policy says no upgrade is required.

[00:29:45] Speaker 07:
But if the first interconnector had been a 3.1% instead of 2.9%, the policy would say an upgrade is required.

[00:29:53] Speaker 02:
What the commission explained about that is that the use of the de minimis threshold

[00:30:00] Speaker 02:
is consistent with cost causation because it's consistently applied to everybody.

[00:30:06] Speaker 02:
And it does matter that it cuts both ways.

[00:30:08] Speaker 02:
I mean, that's not just a side point.

[00:30:10] Speaker 02:
That's part of it.

[00:30:11] Speaker 02:
It's consistently applied and it cuts both ways.

[00:30:14] Speaker 02:
So an interconnection customer and

[00:30:17] Speaker 07:
And so put aside the couple of ways point you agree.

[00:30:20] Speaker 07:
It seems very odd that a one interconnect or one generator responsible for 30% of this overage is being charged for 100% of the cost.

[00:30:32] Speaker 02:
No, no, it isn't your honor.

[00:30:33] Speaker 02:
That's what I would love to hear because the because use of a diminished threshold is appropriate.

[00:30:39] Speaker 02:
The Commission found that the use of de minimis threshold is.

[00:30:43] Speaker 07:
Using a de minimis threshold to say when someone comes in with a very small addition to say we're not going to require them to pay for an upgrade makes a lot of sense.

[00:30:54] Speaker 07:
It's a different question whether it makes sense to tag the last person in line who comes in after 10%, 20%, 30% overages and then says well you've got a 3.1% and everyone else had 2.9 so you're going to pay for an upgrade to account for

[00:31:11] Speaker 07:
31% of a capacity upgrade.

[00:31:15] Speaker 02:
So that's that's literally how de minimis thresholds work.

[00:31:19] Speaker 07:
You could attribute the costs in other ways.

[00:31:21] Speaker 07:
You could say, uh, we're going to let those de minimis contributions add up until our annual planning process says they're actually creating a reliability.

[00:31:30] Speaker 07:
That is how it works.

[00:31:31] Speaker 07:
Your honor.

[00:31:32] Speaker 07:
That is why isn't that what happened in this case?

[00:31:34] Speaker 02:
Because it didn't end up being a reliability problem on the system as a whole.

[00:31:39] Speaker 02:
interconnection customers have to pay for network upgrades that are necessary to accommodate their own interconnections.

[00:31:45] Speaker 02:
So, and as long as they are above a de minimis standard.

[00:31:49] Speaker 02:
And so, and if the de minimis uses, you know, the de minimis upgrade effects added up to enough to cause a reliability system, a reliability problem on the system, it would be part of the

[00:32:07] Speaker 02:
And so there is that is packed that is packaged into all of that I appreciate that so I guess what's troubling which remains elusive to me is why.

[00:32:24] Speaker 07:
If they come in with a 3% increase, why aren't they required to make an upgrade that offsets that 3%?

[00:32:32] Speaker 02:
That is what they're doing.

[00:32:34] Speaker 02:
They are making an upgrade.

[00:32:36] Speaker 02:
They're not complaining that the upgrade is too broad.

[00:32:38] Speaker 02:
There's no argument here, and there could have been one.

[00:32:43] Speaker 07:
So is this the same exact upgrade at the same exact cost, whether there was a 3% overage or a 13% overage?

[00:32:54] Speaker 07:
In other words, that seems to be their whole complaint, is that the upgrade gets bigger as the overage goes up, and you require them to do this kind of an upgrade instead of this kind of an upgrade.

[00:33:06] Speaker 02:
I don't think they're saying that the upgrade gets bigger.

[00:33:07] Speaker 02:
I think that they are solely responsible for the upgrade.

[00:33:12] Speaker 02:
I've not seen any complaint in this case that the upgrade is larger than it would need to be to accommodate their argument.

[00:33:20] Speaker 02:
And perhaps they were.

[00:33:22] Speaker 02:
I don't know.

[00:33:22] Speaker 02:
I've not seen that argument.

[00:33:23] Speaker 05:
If Tishner here is correct, and you were to be able to charge them only if they're taking it from 110 to 113 of the rated capacity, then

[00:33:44] Speaker 05:
then you would go back, I guess you would have to go back to the previous people who came in without paying for upgrade facilities and say, surprise, you've been on the system for a while, but now you're going to be charged an additional, whatever, tens of millions of dollars.

[00:34:01] Speaker 02:
That's right, Your Honor.

[00:34:02] Speaker 02:
I mean, it defeats the whole purpose of using the de minimis threshold in the first place.

[00:34:06] Speaker 02:
And so really, I think.

[00:34:07] Speaker 05:
Well, it also strikes me as creating significant problems

[00:34:13] Speaker 05:
for the inframarginal customers who might not have requested service had they borne that kind of a price tag.

[00:34:23] Speaker 02:
That's right.

[00:34:23] Speaker 02:
And that's not provided for.

[00:34:24] Speaker 02:
And the tariffs go back to prior queued customers, too.

[00:34:29] Speaker 05:
I mean, what would happen if it was even viable?

[00:34:32] Speaker 05:
Would it just result?

[00:34:34] Speaker 05:
I shouldn't say just.

[00:34:34] Speaker 05:
Would it result in that going into their rates?

[00:34:42] Speaker 05:
I mean, the additional expenditure would go into their rate base, right?

[00:34:47] Speaker 02:
I guess it would go into their rate base, but the point is, it seems like retroactive rate making.

[00:34:51] Speaker 02:
Well, yes.

[00:34:52] Speaker 05:
I mean, where's the filed rates at?

[00:34:53] Speaker 02:
Right.

[00:34:58] Speaker 02:
Judge Garcia, I just want to say, you can't really separate out the part about it cuts both ways.

[00:35:04] Speaker 02:
And I know for purposes of discussion, that's fine.

[00:35:07] Speaker 02:
That is part of the commission's decision-making.

[00:35:09] Speaker 02:
That's what makes it roughly commensurate.

[00:35:11] Speaker 02:
It's consistently applied.

[00:35:13] Speaker 02:
Minimum threshold is consistently applied.

[00:35:15] Speaker 02:
And it cuts both ways.

[00:35:18] Speaker 02:
And roughly commensurate doesn't require that the commission does a, oh, well, it ends up for sure being even for you exactly even over time.

[00:35:27] Speaker 02:
This is how it works.

[00:35:29] Speaker 02:
And it's a practical, as the commission has found, just unreasonable way

[00:35:34] Speaker 07:
I just want to make sure I understand your answer on something earlier.

[00:35:37] Speaker 07:
Yes, Your Honor.

[00:35:38] Speaker 07:
So it seemed to me that there was a shared assumption in the briefs that like in some practical sense what Clear Creek is required to pay for is more because there were pre-existing overages.

[00:35:51] Speaker 02:
They are paying more.

[00:35:52] Speaker 07:
Not that it's just 100% of what they would have been responsible for, even if they were first, but that it takes more money to remedy 13% overage than a 3% overage.

[00:36:06] Speaker 07:
Is that correct?

[00:36:07] Speaker 02:
You know, I apologize that I just, that wasn't addressed on the record here.

[00:36:13] Speaker 02:
I just don't know the answer to that.

[00:36:14] Speaker 05:
There's one piece of evidence that bears on this.

[00:36:19] Speaker 05:
Some of the upgrade involved buying

[00:36:22] Speaker 05:
upgrading lineage.

[00:36:24] Speaker 05:
And the cost of that is per mile.

[00:36:27] Speaker 05:
The cost of putting a step up transformer is fixed.

[00:36:32] Speaker 02:
That's right.

[00:36:33] Speaker 05:
It's not responsive to degrees.

[00:36:35] Speaker 05:
It's lumpy capital.

[00:36:37] Speaker 05:
And if it costs $10 million, there's no way to just put in a third of it.

[00:36:41] Speaker 05:
You have to put in the whole thing.

[00:36:43] Speaker 05:
But with mileage, it's obviously clearly responsive to the distance.

[00:36:47] Speaker 02:
That sounds right to me.

[00:36:48] Speaker 02:
I just don't know the answer.

[00:36:51] Speaker 02:
But what I can say is, I have not seen an argument from Clear Creek saying that

[00:36:58] Speaker 02:
The upgrade should have been smaller.

[00:37:01] Speaker 02:
You either have an NRIS upgrade or you don't have an NRIS upgrade, is the way I've understood the case and that's my understanding.

[00:37:10] Speaker 02:
The orders don't speak to that.

[00:37:12] Speaker 03:
What did the prior contributors?

[00:37:15] Speaker 03:
their any responsibility once you've asked their peak free to pay for the upgrade?

[00:37:21] Speaker 02:
No, they do not.

[00:37:23] Speaker 02:
But they pay for their own.

[00:37:25] Speaker 02:
But they well, it is really an illusory benefit because they get the they get the interconnection without having to do any upgrades anyway, because they don't they're at the butt for cause of the upgrade.

[00:37:38] Speaker 03:
Now, why did the actual upgrade cost change over the course of four years?

[00:37:43] Speaker 03:
It seemed like 11 times or so.

[00:37:44] Speaker 03:
You start out at 33 million, got as high as 763 million, back down to 100 million.

[00:37:50] Speaker 03:
I mean, why would that not be?

[00:37:51] Speaker 02:
I can't explain the 760 million, that one.

[00:37:54] Speaker 02:
So part of it was originally, and again, it's not being litigated here, but Southwest improperly left out 4.5 gigawatts

[00:38:07] Speaker 02:
service.

[00:38:07] Speaker 02:
So that was left out of the NRIS part of the original study.

[00:38:12] Speaker 02:
And when the, when Southwest was able to, when higher queued interconnections dropped out, Southwest appropriately did a restudy and the commission found it was appropriate for them to do it properly.

[00:38:27] Speaker 02:
It wouldn't have changed.

[00:38:27] Speaker 02:
If they hadn't had the opportunity to do a restudy, that 4.5 gigawatts never would have been considered, but it

[00:38:34] Speaker 02:
In doing it, it was proper.

[00:38:36] Speaker 02:
So that made a big difference.

[00:38:37] Speaker 02:
And then another factor was, I think it's COVID, because it's COVID time.

[00:38:41] Speaker 02:
The costs went up so much because in 2020, the cost of labor and materials were so high.

[00:38:48] Speaker 02:
So it doesn't say it's COVID, but it was during that time period, it was 2020.

[00:38:51] Speaker 02:
So I think that's what caused the cost to go so high in part.

[00:38:56] Speaker 05:
In your brief, in terms of justifying reliance or, pardon me,

[00:39:02] Speaker 05:
approving the company's Southwest Reliance on the NRI's level of service for evaluating cost.

[00:39:14] Speaker 05:
You refer to in two places, this is at 44 and 45, you're a little bit beyond, to the justifications being reliability and cost

[00:39:28] Speaker 05:
Reliability seems, I see how you could say, clearly if they're planning, if they're anticipating a network service when in fact energy service is going to be required, that gives them a cushion, a guarantee that they'll never be overloaded with that.

[00:39:47] Speaker 05:
But why does that improve proper cost allocation?

[00:39:51] Speaker 02:
Because it acknowledges the but for cost aspect, who the but for cause are.

[00:39:55] Speaker 02:
is.

[00:39:56] Speaker 02:
And so if you are causing NRIS level flows on Southwest system, you should be paying.

[00:40:03] Speaker 05:
Okay.

[00:40:04] Speaker 05:
But then if they're requesting only interruptible service, why does that still apply?

[00:40:13] Speaker 02:
If they're requesting only interruptible service, then it would only be studied under

[00:40:17] Speaker 02:
the interest, the RIS level.

[00:40:19] Speaker 05:
Maybe I used the wrong term, but I'm the energy service.

[00:40:21] Speaker 02:
Okay.

[00:40:22] Speaker 02:
Right.

[00:40:22] Speaker 02:
That, that if the, if all they requested was ERS service, Southwest would study it only under ERS service.

[00:40:31] Speaker 02:
It's only if.

[00:40:32] Speaker 05:
But now I thought now they are, they did request it downgraded.

[00:40:36] Speaker 02:
Now they've downgraded.

[00:40:37] Speaker 02:
And so Southwest has explained in its brief that that means, and that's why this case is moot, um, which we haven't talked about, but you know,

[00:40:47] Speaker 05:
If we ask, is the harm to them imminent?

[00:40:51] Speaker 05:
Part of the Lujan.

[00:40:53] Speaker 02:
But it's not because.

[00:40:54] Speaker 05:
Well, since it's quite clear that they want network service and will apply for it.

[00:41:04] Speaker 02:
I understand that, Your Honor.

[00:41:05] Speaker 02:
But it's just speculative.

[00:41:11] Speaker 02:
It's speculative.

[00:41:12] Speaker 05:
That's our point.

[00:41:13] Speaker 05:
It's not.

[00:41:14] Speaker 05:
Well, it's speculative that they need and want network service and they have some kind of arrangement with.

[00:41:22] Speaker 02:
I understand that.

[00:41:23] Speaker 02:
That may not be speculative.

[00:41:24] Speaker 02:
What is speculative is that Associated Electric's third party will agree to change the purchase power agreement and go back up to network service.

[00:41:33] Speaker 02:
And they may or may not need network service from TANASCA at that point.

[00:41:39] Speaker 02:
They might need it.

[00:41:39] Speaker 02:
They might not.

[00:41:40] Speaker 02:
They're buying all of the generators

[00:41:43] Speaker 02:
power, all that they generate, they may not need it at that point.

[00:41:49] Speaker 05:
All right, so that was the basis for your argument on standing.

[00:41:54] Speaker 05:
Just moodness, I mean, yeah.

[00:41:55] Speaker 05:
Our moodness part?

[00:41:56] Speaker 02:
Yeah, which we didn't argue because it happens only.

[00:41:59] Speaker 05:
Now just take that out of the equation.

[00:42:01] Speaker 02:
Okay, sure.

[00:42:02] Speaker 05:
And tell me why it is that planning, pardon me, evaluating the cost for network service is justified

[00:42:12] Speaker 05:
for cost allocation purposes when all they want is energy service.

[00:42:18] Speaker 02:
Now they're responsible only for the energy.

[00:42:21] Speaker 02:
There's one ERIS upgrade, and that's all they're responsible for now.

[00:42:25] Speaker 02:
They never pay the costs to have the upgrades done, the NRIS upgrades done, and they're no longer responsible for them.

[00:42:33] Speaker 02:
Those costs are gone.

[00:42:36] Speaker 02:
That's why it's moot.

[00:42:37] Speaker 02:
I mean, those costs are...

[00:42:40] Speaker 02:
Going down to ERIS service meant that the NRIS upgrades are no longer, they're no longer responsible for them.

[00:42:48] Speaker 02:
Someone else will pay for those if they're necessary.

[00:42:53] Speaker 05:
So all of the petitioners' argument was unnecessary here?

[00:42:59] Speaker 02:
No, it was necessary when, I guess when they, I mean, mootness is an in-time thing, right?

[00:43:05] Speaker 02:
So when they filed their brief, they hadn't yet

[00:43:09] Speaker 02:
gone down to ERIS service only.

[00:43:12] Speaker 05:
No, but they have, before they presented the argument, half an hour ago.

[00:43:16] Speaker 02:
Yes, it is all, it's, yes, there's no more, they have no obligation to pay for these upgrades, for the NRIS upgrades, and they have no problem paying.

[00:43:25] Speaker 05:
So it's only then, in the event that they later switch through associated, come back with network service, that they would incur this cost.

[00:43:35] Speaker 02:
S. P.

[00:43:35] Speaker 02:
P.'

[00:43:35] Speaker 02:
's position is that they and I am I for agrees with that is that they we don't know what those costs would be because they would have to be evaluated at that time as S. P.

[00:43:45] Speaker 02:
P.'

[00:43:45] Speaker 02:
's brief explains the practical effect of.

[00:43:49] Speaker 02:
To ask that clear Creek going from N. R. I. S. service to only E. R. I. S. service means that.

[00:43:56] Speaker 02:
They're not responsible for those upgrades and they're they're taken out of the queue and we don't know what

[00:44:02] Speaker 02:
the situation would be at that point.

[00:44:04] Speaker 02:
Anything could change.

[00:44:06] Speaker 02:
I can't imagine they'd have the exact same upgrades.

[00:44:10] Speaker 02:
It's a period of time later.

[00:44:11] Speaker 02:
Things change.

[00:44:12] Speaker 02:
We don't know what the upgrade level will be.

[00:44:14] Speaker 05:
Why would you say just because the time passes?

[00:44:18] Speaker 02:
Because the factual scenario would be different.

[00:44:22] Speaker 02:
Instead of the grid at that point, their impacts on the grid might be de minimis.

[00:44:31] Speaker 02:
Because the grid will be different.

[00:44:33] Speaker 02:
Because someone else will have paid.

[00:44:36] Speaker 02:
Or just because of the annual changes that happen to the grid.

[00:44:41] Speaker 02:
All kinds of upgrades happen all the time on the grid.

[00:44:43] Speaker 07:
The costs could also go down, right?

[00:44:45] Speaker 02:
Costs could absolutely go down.

[00:44:47] Speaker 07:
And one key difference between standing and mootness is who bears the burden, right?

[00:44:50] Speaker 07:
So maybe if this were the situation before this was started, that uncertainty would count against the petitioners.

[00:44:57] Speaker 07:
But when we're talking about mootness, it's on you and Southwest to show it is unlikely that they will re-pursue network service.

[00:45:10] Speaker 02:
I think, Your Honor, it's unlikely that they

[00:45:13] Speaker 02:
I don't think it's speculative that they might ask for it.

[00:45:16] Speaker 02:
It's just speculative whether they would get it and whether they would have the same package of costs they might have.

[00:45:22] Speaker 02:
Theoretically, they didn't end up with no network level costs.

[00:45:29] Speaker 02:
We don't know.

[00:45:29] Speaker 02:
We literally don't know.

[00:45:30] Speaker 02:
But I feel confident in our merits, and I'm not going to belabor the point on mootness.

[00:45:37] Speaker 02:
You are taking the position that the case is moot.

[00:45:40] Speaker 02:
Yes, we are, Your Honor.

[00:45:41] Speaker 02:
Yes.

[00:45:46] Speaker 02:
I'm just looking at my notes to see if I've talked about everything I want to talk about.

[00:45:50] Speaker 03:
Well, just a couple of things.

[00:45:51] Speaker 03:
Yes, Your Honor.

[00:45:52] Speaker 03:
One is that Clear Creek is challenging how you've used the network modeling studies and whether you've been consistent in that regard.

[00:46:01] Speaker 03:
Would you like to speak to that?

[00:46:02] Speaker 03:
I'm sorry.

[00:46:03] Speaker 03:
Well, just the modeling.

[00:46:05] Speaker 03:
Just your whole study with respect to the network modeling, they seem to have challenged that you've been inconsistent in your application as you do these studies.

[00:46:12] Speaker 02:
I don't know what issue that is.

[00:46:14] Speaker 02:
I'm sorry, I'm not getting the question.

[00:46:16] Speaker 02:
I apologize.

[00:46:17] Speaker 02:
What claim is that they're making?

[00:46:20] Speaker 03:
Well, they've just indicated that, I'm sorry, that not commission.

[00:46:24] Speaker 02:
I know what you mean.

[00:46:24] Speaker 02:
I know.

[00:46:25] Speaker 03:
Yes.

[00:46:26] Speaker 03:
Inconsistent in applying the modeling practices and the thresholds just generally.

[00:46:30] Speaker 03:
The SVP has done so.

[00:46:32] Speaker 03:
Do you have any response?

[00:46:33] Speaker 02:
I don't recognize that argument.

[00:46:34] Speaker 02:
I don't know if you're talking about they're being curtailed.

[00:46:37] Speaker 02:
Is it about the curtailment?

[00:46:42] Speaker 02:
I don't I don't think I don't recognize an argument they've made that we're not okay let me just move on from there and then just on vacator you want to respond to that that that would be their request I mean that I think that's your honor's decision we obviously think that order should be affirmed that if it the Commission certainly could give more reasoning if

[00:47:11] Speaker 02:
the court felt that was necessary.

[00:47:12] Speaker 02:
I think the orders actually answer everything that was raised to the Commission on Rehearing.

[00:47:17] Speaker 02:
There are a number of things that weren't raised to the Commission on Rehearing that aren't properly before the court.

[00:47:23] Speaker 02:
But I think that's really up to your honors.

[00:47:29] Speaker 02:
And certainly, obviously, we don't think they catered as appropriate.

[00:47:32] Speaker 02:
But we leave that to you.

[00:47:39] Speaker 02:
Thank you.

[00:47:56] Speaker 03:
All right.

[00:47:57] Speaker 03:
Thank you.

[00:47:57] Speaker 06:
Good morning.

[00:47:58] Speaker 06:
May it please the court.

[00:47:59] Speaker 06:
Matt Bonet for Intervener Southwest Power Pool.

[00:48:01] Speaker 06:
I'd like to start with the question Judge Child you just asked that my colleague, Ms.

[00:48:06] Speaker 06:
Pacella, was not following.

[00:48:09] Speaker 06:
I believe that Tanaska Clear Creek has suggested that SPP has not applied the NRIS or the network resource standard consistently.

[00:48:16] Speaker 06:
It has throughout its interconnection process.

[00:48:19] Speaker 06:
The study that they're talking about in their brief and in the underlying record in this proceeding is a planning study

[00:48:26] Speaker 06:
a conceptual study that SPP and its neighbor Mid-Continent Independent System Operator have decided to pursue outside of the interconnection process.

[00:48:35] Speaker 06:
to identify regional or interregional upgrades that may help alleviate problems along their border.

[00:48:41] Speaker 06:
It has nothing to do with the interconnection process.

[00:48:43] Speaker 06:
Every generator, whether they connect to SPP or whether they connect to a neighbor that requests the higher network level service, is studied under that.

[00:48:51] Speaker 06:
And they're also studied under the energy service to give them an idea of what the cost differences would be.

[00:48:58] Speaker 06:
Judge Child, you also asked a question about why were there so many

[00:49:02] Speaker 06:
different studies and changes in the cost?

[00:49:04] Speaker 06:
Well, the answer is this is a very complex process.

[00:49:08] Speaker 06:
If a generator drops out somewhere, SPP has to determine whether to restudy.

[00:49:12] Speaker 06:
Restudies cause differences in cost, cause differences in flows.

[00:49:16] Speaker 06:
You know, throughout the system, SPP is analyzing the Mid-Continent system, the SPP system, and the AECI system all at the same time.

[00:49:25] Speaker 06:
And typically what happens is, this is not unusual, but typically what happens is the generator waits for the results of the studies before they pursue construction.

[00:49:35] Speaker 06:
In this case, what Tenaska did is they entered an interconnection request with AECI.

[00:49:41] Speaker 06:
They initiated the interconnection process with SPP in August of 2018, and only 16 months later entered commercial operation.

[00:49:50] Speaker 06:
The way they rushed through this process without waiting for the results of the studies

[00:49:53] Speaker 06:
It's no surprise that their interconnection costs have changed.

[00:49:56] Speaker 06:
I mean, that's just the nature of the business.

[00:49:58] Speaker 06:
Most generators wait until they actually have a little bit more certainty about the costs.

[00:50:03] Speaker 06:
If you look at two of the generators that Tanaska complains about, one of them is the white cloud generator, I believe, and the other is a mid-American energy generator.

[00:50:13] Speaker 06:
Those two generators both entered the respective cubes before Tanaska.

[00:50:19] Speaker 06:
But they ended up not coming into commercial operation until after Tanaska.

[00:50:23] Speaker 06:
And the reason for that is they waited for the results of the studies.

[00:50:26] Speaker 06:
Tanaska didn't do that.

[00:50:29] Speaker 06:
With respect to the NRIS, and I apologize for the acronyms.

[00:50:33] Speaker 06:
I know this court doesn't like acronyms.

[00:50:36] Speaker 06:
But in the underlying docket, SPP submitted expert witness testimony to exactly why we apply the NRIS standard to NRIS

[00:50:47] Speaker 06:
requests on neighboring systems.

[00:50:49] Speaker 06:
That's at JA 170 to 171.

[00:50:52] Speaker 06:
FERC credited that testimony in this case.

[00:50:55] Speaker 06:
FERC has to make its decision based on the record.

[00:50:58] Speaker 06:
We had a record basis for explaining why we apply the NRIS standard.

[00:51:03] Speaker 06:
The fact that FERC has now changed its mind 300 years later and is no longer going to allow that under Order 2023 really is not relevant to this case.

[00:51:12] Speaker 06:
I think for the reasons that Miss Pacella mentioned.

[00:51:15] Speaker 06:
In addition, Order 2023 actually, and I believe it's one of the paragraph sites in front of me, Order 2023 actually permits individual transmission providers to come in and explain to FERC why they may need to still apply the higher standards.

[00:51:33] Speaker 06:
So it's not a foregone conclusion that

[00:51:36] Speaker 06:
SPP will not even in the future be able to apply the NRIS standard.

[00:51:40] Speaker 06:
And I'll also note, and I think this was noted, we have that issue on appeal.

[00:51:45] Speaker 06:
So whether that portion of Order 2023 ever goes into effect is still unknown.

[00:51:50] Speaker 06:
So it should have no bearing on this case.

[00:51:52] Speaker 07:
Can I ask, so one thing I would love to hear a little more about is

[00:51:59] Speaker 07:
One, when you apply the de minimis policy in a situation where you have multiple 2.9% upgrades in a row, you can get to, say, a 10% overage.

[00:52:13] Speaker 07:
And the SPCP policy says,

[00:52:15] Speaker 07:
no upgrade is required.

[00:52:17] Speaker 07:
But if the first one had been 3% or 3.1%, it would say upgrade is required.

[00:52:22] Speaker 07:
Can you just as a practical way of when is an upgrade required?

[00:52:27] Speaker 07:
Can you help me understand how that makes sense?

[00:52:29] Speaker 06:
Yeah, I think the trouble with me being able to explain it in practical ways, I'm not an engineer.

[00:52:34] Speaker 06:
But SPP has made an engineering judgment that when a network resource service interconnection customer

[00:52:42] Speaker 06:
who on their whole system has the right to flow power constantly.

[00:52:45] Speaker 06:
It's subject to curtailment only for emergencies is gonna have significant impacts on the SPP system.

[00:52:52] Speaker 06:
The other generators that SPP studied did not have that same impact for whatever reason.

[00:52:57] Speaker 06:
It could be that they didn't request network service.

[00:53:00] Speaker 06:
It could be that where they're located on the grid, the grid is sufficiently fortified that we don't really have to worry about that.

[00:53:07] Speaker 06:
SPP has determined that certain overloads can be managed.

[00:53:10] Speaker 06:
Others can't.

[00:53:12] Speaker 06:
And when you have this sort of stacking, as they suggest, we might get up to 50 or 100%.

[00:53:17] Speaker 06:
That's where the regional planning process comes in.

[00:53:19] Speaker 06:
SPP looks at the region's transmission system, identifies constraints that are going to cause reliability problems, and proposes a regional or even an individual transmission owner solution to that problem.

[00:53:30] Speaker 06:
They don't pay for that.

[00:53:32] Speaker 06:
That's paid for by customers in their transmission server.

[00:53:37] Speaker 06:
SPP has made these determinations on an engineering basis that there are certain overloads that we can manage around.

[00:53:42] Speaker 06:
You can redispatch.

[00:53:44] Speaker 06:
You can take other measures.

[00:53:45] Speaker 06:
You don't necessarily need an upgrade every time there's an overload.

[00:53:49] Speaker 06:
And when those overloads stack up, it doesn't necessarily mean that the next generator in line is going to pay for it because it could end up with a regional planning solution.

[00:53:58] Speaker 07:
OK.

[00:53:58] Speaker 07:
And then the other question is, assume I think it matters whether the upgrade

[00:54:07] Speaker 07:
to remedy a 13% overage is bigger and more expensive than the upgrade to remedy a 3% overage.

[00:54:15] Speaker 07:
Or if it's somehow off the shelf, you either got to put up another line or not that costs exactly the same amount.

[00:54:22] Speaker 07:
Do you know the answer to that?

[00:54:24] Speaker 06:
No, you really have to look at the study and look at solutions.

[00:54:27] Speaker 06:
And in one of the studies that's actually in the record in this case, I'm not sure if it's in the joint appendix,

[00:54:33] Speaker 06:
the consultant went into detail about how they considered alternatives to one of the projects that Tenasca is being asked to pay for and determined that the solution that they came up with was the most cost-effective and cost-effective doesn't always mean cheapest but it you know it's most cost-effective so the fact that there's a 13% overload versus a 9% overload may or may not cause a difference in the upgrade it just depends on the on the situation and the solutions that are

[00:55:02] Speaker 06:
that are identified.

[00:55:06] Speaker 06:
If I could just make one point to Judge Ginsburg's question about, well, if we go back in time now, why is there uncertainty?

[00:55:15] Speaker 06:
The reason that there is uncertainty as to whether the cost that they have now complained about paying they would have to pay is because the system changes.

[00:55:23] Speaker 06:
I mean, the system changes every day.

[00:55:25] Speaker 06:
Generators come online, generators retire, new transmission lines go in, transmission lines are taken out.

[00:55:31] Speaker 06:
The universe of upgrades that to NASCA has been asked to pay for here may or may not ever be built if they don't pay for them.

[00:55:39] Speaker 06:
There may be different upgrades that get identified later if they were to restore their previous level of service.

[00:55:46] Speaker 06:
So what they're complaining about here is the upgrades that they are paying for.

[00:55:52] Speaker 06:
And those upgrades, as Ms.

[00:55:53] Speaker 06:
Pacella pointed out, went away.

[00:55:57] Speaker 06:
They did pay for one energy upgrade, and they signed a

[00:56:02] Speaker 06:
facility construction agreement with the transmission owner.

[00:56:04] Speaker 06:
It was filed at FERC, FERC accepted in February of 2024.

[00:56:08] Speaker 06:
So for at least four years now, they've been operating without having paid for virtually any of the upgrades that were needed to provide their level of network service, which again is an uninterruptible level of service on the AECI system, but it impacts SPP.

[00:56:25] Speaker 06:
And again, that testimony is in the record.

[00:56:28] Speaker 06:
And one final point, just if I may, I know I'm over time, but SPP also presented evidence in this case that in real time, we've actually noticed a problem since the Tonaska Clear Creek facility went online.

[00:56:43] Speaker 06:
And that's at JA 153 and 154.

[00:56:45] Speaker 06:
And I'd invite you to take a look at that to show that this is not just conjecture.

[00:56:49] Speaker 06:
It's not just hypothetical.

[00:56:50] Speaker 06:
SPP has actually been suffering impacts on its system since this generator rushed through the queue and went into commercial operation.

[00:57:00] Speaker 06:
Thank you.

[00:57:09] Speaker 04:
Thank you.

[00:57:10] Speaker 04:
I'll be brief.

[00:57:10] Speaker 04:
I think it's important to keep in mind that all of these upgrades and overloads that we're talking about only exist because Southwest used the wrong system study in assessing the impacts of the Clear Creek project.

[00:57:24] Speaker 04:
Network resource service, which again Clear Creek has not asked for and will not receive on the Southwest system,

[00:57:30] Speaker 04:
Both councils mentioned that order number 2023 is irrelevant.

[00:57:36] Speaker 04:
I think that's untrue.

[00:57:38] Speaker 04:
And FERC has asked this court to basically disregard order number 2023.

[00:57:44] Speaker 04:
And it's relied upon cases like Excel and Brooklyn Union, which do hold that the court should not consider a subsequent agency decision to invalidate a prior decision.

[00:57:58] Speaker 04:
But this court has held,

[00:58:00] Speaker 04:
that it may consider changes in agency policy when considering a current appeal.

[00:58:07] Speaker 04:
And order number 2023 is, without question, a major, major change in policy by FERC.

[00:58:16] Speaker 04:
And I would just cite the court to the Con Ed case, which all of the parties have cited in their briefs.

[00:58:22] Speaker 04:
But on page 284, the court does say, we have sometimes remanded if the agency has changed the rule underlying a decision pending review.

[00:58:30] Speaker 04:
That is clearly what's happened here.

[00:58:32] Speaker 04:
Council for FERC talked about the reliability issues.

[00:58:38] Speaker 04:
Judge Ginsburg, you mentioned the cost causation question and the impacts.

[00:58:42] Speaker 04:
If I may just read you one line from FERC's own order number 2023 that speaks directly to the issue that council raised.

[00:58:51] Speaker 04:
FERC said, we find that any significant impact would generally be captured

[00:58:56] Speaker 04:
an energy-only study, which would ensure that any reliability impacts on the affected system are mitigated to accommodate the interconnection of the affected system interconnection customers proposed generating facility to the host system.

[00:59:12] Speaker 04:
I mean, that's exactly our argument in black and white, and it's the exact opposite of what Council just said.

[00:59:19] Speaker 04:
And this is FERC speaking here.

[00:59:21] Speaker 04:
So the bottom line is we think that FERC has expressly declared

[00:59:26] Speaker 04:
that studying an interconnection request using network service standards results in unjust and unreasonable rates.

[00:59:33] Speaker 04:
And that's exactly what Southwest did here.

[00:59:36] Speaker 04:
So we think that allowing FERC's order to stand in this case would be upholding rates that FERC itself has declared are unjust and unreasonable.

[00:59:47] Speaker 04:
And we think that result really should not stand.

[00:59:52] Speaker 05:
Super.

[00:59:55] Speaker 05:
In the great brief, your response to Ferg's suggestion that the case is moot is along the lines of, yes, we downgraded our request to service only, but it wasn't voluntary.

[01:00:15] Speaker 05:
That's right.

[01:00:16] Speaker 05:
It doesn't have to be voluntary to be moot.

[01:00:20] Speaker 04:
Well, Your Honor.

[01:00:23] Speaker 04:
To my understanding, we've never seen a case where a party has to be, has to render, allow itself to be rendered insolvent in order to preserve and appeal and avoid mootness.

[01:00:36] Speaker 05:
As of right now, your request is for interruptible service.

[01:00:40] Speaker 05:
And all of the large sums of money that are discussed in the briefs are not, you're not obligated to pay.

[01:00:47] Speaker 04:
Well, your honor, right now, today, my client is being deprived

[01:00:53] Speaker 04:
utilizing network resource service, a far more valuable level of service on its host system, associated electric system for one reason.

[01:01:03] Speaker 04:
And that reason is it was ordered to pay $87 million on Southwest system.

[01:01:10] Speaker 04:
And Southwest is going to study my client's interconnection based on an unlawful study standard, the network resource data.

[01:01:19] Speaker 05:
That reason you've downgraded the request.

[01:01:21] Speaker 05:
And you're going to be, by your own representation, likely going to be seeking network service from associated, I don't know when.

[01:01:36] Speaker 05:
Only if this court vacates in romance can we do that.

[01:01:40] Speaker 05:
why you can drop your, you can remain on, well, I'm not sure I understand that.

[01:01:46] Speaker 05:
Why can't you remain taking interruptible service from Southwest?

[01:01:51] Speaker 05:
We can, we're not taking any service from Southwest.

[01:01:55] Speaker 05:
We're not, we're not integrating.

[01:01:57] Speaker 05:
We can only take- Upgrade your request.

[01:02:00] Speaker 05:
And in fact, if you started over, you'd be governed by the new rulemaking.

[01:02:06] Speaker 04:
Well, we're not sure how the rulemaking will turn out, but what our argument is.

[01:02:10] Speaker 04:
This one's not very helpful.

[01:02:11] Speaker 04:
Our argument is that FERC got it wrong in this case, and that allowance.

[01:02:17] Speaker 04:
This case is moot.

[01:02:20] Speaker 04:
Well, respectfully, I don't think the case is moot, because again, I think that Clear Creek is suffering harm.

[01:02:26] Speaker 05:
You said, well, it's not speculative because you're going to seek service, network service.

[01:02:31] Speaker 04:
We cannot do that, though, if we have

[01:02:36] Speaker 04:
the threat of further network service studies hanging over our head, which will result in costs we can't afford to pay.

[01:02:44] Speaker 05:
But it's been represented that these studies will not be the governing studies when you later make your network upgrade request.

[01:02:55] Speaker 05:
We don't know that for certain, but we do know.

[01:02:58] Speaker 05:
Well, they have to study it as of the time you

[01:03:01] Speaker 04:
But they shouldn't have to study it at all.

[01:03:03] Speaker 04:
That's the point.

[01:03:05] Speaker 04:
There's already been an energy-only study.

[01:03:07] Speaker 04:
And we're willing to pay the upgrades based on that energy-only study.

[01:03:11] Speaker 04:
The notion that Southwest is threatening to restudy the project based on network service standards, that's what we say is illegal.

[01:03:22] Speaker 04:
And that's what they're threatening to do.

[01:03:24] Speaker 04:
And that's what this court has the power to prevent.

[01:03:26] Speaker 04:
And that's what FERC says should happen.

[01:03:29] Speaker 05:
pointed to things in the 2023 order, suggesting that that's not what will happen, right?

[01:03:37] Speaker 05:
That what will happen is that you will be evaluated for the service that you request.

[01:03:41] Speaker 04:
Well, Your Honor, that assumes that the order 2020 appeal runs its course.

[01:03:47] Speaker 04:
But as of today, Southwest and today being as represented in an intervener's brief, Southwest is saying that they will restudy

[01:03:58] Speaker 04:
the Clear Creek project based on network resource service if we seek to upgrade our level of service on our host system.

[01:04:09] Speaker 04:
And that's what got us in this problem.

[01:04:11] Speaker 04:
That's what resulted in the $87 million of upgrades.

[01:04:15] Speaker 04:
And until they're told, no, you cannot study Clear Creek using this improper level of service that Clear Creek hasn't asked for and won't receive, we've got a problem.

[01:04:25] Speaker 04:
And that's why I would

[01:04:28] Speaker 04:
urge the court to conclude that this case is not moot.

[01:04:31] Speaker 04:
It's over harm that my client is suffering today.

[01:04:33] Speaker 04:
It's unable to pick up the phone and call associated electric and say we want to upgrade to network resource service because we're going to be studied by Southwest using the improper and we think unlawful level of service, the network resource level.

[01:04:49] Speaker 04:
And that's what resulted in all of the upgrade costs that we're talking about today.

[01:04:58] Speaker 07:
Just one last question on the other issue.

[01:05:02] Speaker 07:
As my question suggested, assume I think it matters whether the upgrade you were required to pay for was more expensive because you were the last in line instead of the first in line.

[01:05:18] Speaker 07:
Is there evidence in the record that that's actually the case?

[01:05:22] Speaker 04:
Your honor, I'm not aware of evidence to the record along those lines either, but I do think it's important to note that

[01:05:29] Speaker 04:
other transmission providers screen out those pre-existing overloads.

[01:05:36] Speaker 04:
And Southwest isn't doing that, of course, and that's what we say creates the situation where we've got this imbalanced overload that we've got to pay 100%.

[01:05:49] Speaker 05:
Are you aware of any prior case, either law case or just instance in which a utility has, provider has built it before knowing what its costs were going to be?

[01:06:04] Speaker 04:
I'm not, I'm not aware of that situation.

[01:06:07] Speaker 04:
That story is quite a bit more complicated than council led on.

[01:06:14] Speaker 04:
I mean, the Clear Creek did commend the construction

[01:06:18] Speaker 04:
about a year after the initial study.

[01:06:20] Speaker 04:
In the initial study, Clear Creek was only assigned energy-only costs.

[01:06:25] Speaker 04:
It was about $30 million.

[01:06:26] Speaker 04:
And then Southwest, based on a higher acute customer dropping out of the queue, did do a restudy.

[01:06:36] Speaker 04:
But in that restudy, they took about a year instead of the required couple of months, I think it is.

[01:06:43] Speaker 04:
They added back 45 megawatts of power that they had just erroneously lost.

[01:06:48] Speaker 04:
And that is why the costs ballooned from $30 million to over $100 million.

[01:06:53] Speaker 04:
I was saying erroneously lost.

[01:06:54] Speaker 04:
You're not referring to the loss of one of the part of the load.

[01:06:58] Speaker 04:
It was on a different system.

[01:07:00] Speaker 04:
But yes, it was 45 megawatts of power that they did not, 4,500 megawatts of power that they did not consider in the initial study.

[01:07:07] Speaker 04:
And that is what caused the network resource services to explode in the re-study.

[01:07:13] Speaker 04:
And yes, that did happen after Clear Creek had begun construction.

[01:07:17] Speaker 04:
That's because some service taker went away.

[01:07:21] Speaker 04:
That's correct.

[01:07:21] Speaker 04:
That's what triggered the restudy.

[01:07:23] Speaker 04:
But what caused the ballooning of costs was the erroneous omission of $4,500.

[01:07:28] Speaker 04:
So those are two different things.

[01:07:30] Speaker 00:
Two different things.

[01:07:31] Speaker 04:
My only point is that that restudy process conducted by Southwest was really defined by negligence and gross errors.

[01:07:43] Speaker 03:
Thank you.

[01:07:44] Speaker 03:
We will take that.