Docket No. ER22-682
I agree with the portion of the majority order curing the error of the February 2022 Order that accepted a redundant billing provision. But I dissent in part from today’s order for the same reasons I dissented from the February 2022 Order: DEP has failed to put forward a rational theory connecting its proposed amended capacity charge methodology to the costs it incurs to serve NCEMPA.[1] As I stated in my dissent to the Commission’s February order, “a basic floor before accepting and suspending a proposed rate in this context should be that the filing party puts forward at least a general theory for how the proposed charges match costs, as supported by accompanying evidence.”[2]
Today’s order states that “the filing raised no issues of material fact regarding whether DEP justified proposing a rate that deviates from the 12-CP methodology and that considers instead [Net Coincident Peak] usage.”[3] While I agree with this statement, that is because I believe it is clear that DEP has failed to justify its proposed rate. To the extent the Commission proceeds with a hearing, however, the better course would be to include this question within the scope of that hearing.
Today’s order appropriately clarifies that DEP retains its section 205 burden to demonstrate that its proposed rate is just and reasonable.[4] Yet it repeats the error of the February 2022 Order in adhering to its inadequately supported conclusion that DEP has justified a shift from the 12-CP methodology. The evidence the Commission cites simply fails to support this conclusion. NCEMPA is correct that the order lacks a rational basis.
The sum total of the majority’s argument that such a showing has been made is (1) that the Commission has, on other occasions, “permitted transmission providers to ‘consider factors beyond system peak (i.e., CP) to allocate demand charges and has previously accepted modification to a 12-CP methodology where the applicant sought to address cost shifting due to load control measures,’”; and (2) “that other wholesale customers of DEP have agreements that depart from the 12-CP methodology.”[5] Yet while it is true that in other instances the Commission has approved a modification to a 12-CP methodology, nothing cited by the Commission addresses why, in this case, DEP justified such a modification.
As NCEMPA explains, given that the parties negotiated the Amended FRPPA based on the 12-CP methodology and expressly allowed NCEMPA customers to avoid costs by reducing their consumption during the 12 coincident peaks, the onus was on DEP to demonstrate that a modification was necessary.[6] In other words, DEP was required to demonstrate “a supervening change in circumstances or Commission policy” requiring a new approach to capacity charges under the contract.[7] That other customers negotiated different contracts does not constitute such a changed circumstance, given DEP’s practice of negotiating individualized contracts with its different wholesale customers. And the Commission cites no evidence from DEP demonstrating that its costs of serving NCEMPA in fact depended not only on usage during coincident peaks, but on NCEMPA’s usage at non-coincident peak times.[8]
Given this lack of evidence, I would not have set the issue for hearing. Doing so without examining whether the shift from 12-CP is justified compounds this harm.
For these reasons, I respectfully dissent in part.
[1] See February 2022 Order, 178 FERC ¶ 61,145 (Clements, Comm’r, dissenting).
[2] Id. at P 10.
[3] Majority Order at P 28.
[4] See id.
[5] Id.
[6] NCEMPA Request for Rehearing at 11 (citing Feb. 29 Order, at P 42 (“The Commission has stated that substantive ratemaking principles, such as demand allocation, once established for a particular company, should continue to be applied in subsequent cases unless there is a supervening change in circumstances or Commission policy requiring a different conclusion.”)).
[7] February 2022 Order at P 42.
[8] While the majority reasons that in other cases, a modification has been determined to be warranted where necessary to prevent cost shifting, it does not conclude that cost shifting was occurring in this instance or cite any evidence in support of that conclusion.