PNM Required to pay time value refunds
In Docket No. ER22-1395, Public Service of New Mexico (PNM) filed two, late-filed, non-conforming, long-term firm point-to-point transmission service agreements (TSAs) with PacifiCorp and Tri-State Generation & Transmission Association, Inc. (Tri-State) under PNM’s Open Access Transmission Tariff (Tariff), with service commencing on December 1, 2005, and January 1, 2008, respectively. PNM stated that it discovered the non-conforming TSAs in the process of performing a comprehensive review of its TSAs and internal processes for identifying and filing jurisdictional agreements with the Commission. PNM noted that it was filing a report of the late-filed agreements to the Commission’s Office of Enforcement. On the same date, in Docket No. ER22-1396-000, PNM filed 13 non-conforming, long-term, firm, point-to-point TSAs with several customers, entered into on various dates from July 1, 2005, to June 1, 2019.
FERC’s initial orders in these two cases (PNM I and PNM II) directed PNM to refund the time-value of monies actually collected for the time period during which the rates were charged without Commission authorization. The orders directed PNM to make time-value refunds within 30 days for the TSAs, and to file a refund report within 30 days thereafter, and make a showing in the refund report, to the extent that time-value refunds would result in a loss. On June 16, 2022, PNM requested rehearing, arguing that the time-value refunds, which it claimed would require it to pay its customers more than $7 million as a result of PNM I and in excess of $28 million as a result of PNM II, are unlawful, substantial and punitive.
On rehearing, FERC continued to find that refunds are required for PNM I. FERC stated that its policy and precedent requiring refunds for late-filed agreements is well settled. FERC stated that time-value refunds serve two purposes, in connection with the Commission’s statutory obligations: (1) to protect customers, including against unduly preferential treatment, and (2) to incentivize public utilities to comply with the filing requirements of FPA section 205.
As for PNM II, FERC continued to find that PNM was under an obligation to file the 13 TSAs. However, they clarified in the order on rehearing that, even though PNM was required to file the TSAs, based upon the circumstances in the case, FERC relieved PNM of its obligation to provide time-value refunds with respect to the 13 TSAs. Section 35.1(g) of the Commission’s regulations requires that …”[a]ny individually executed service agreement for transmission, cost-based power sales, or other generally applicable services that deviates in any material respect from the applicable form of service agreement contained in the public utility’s tariff and all unexecuted agreements under which service will commence at the request of the customer, are subject to the filing requirements of this part.” Here, as PNM’s 13 TSAs deviate from the standard language of its pro forma TSA, the TSAs are necessarily non-conforming. In Order No. 2001, the Commission stated that “if an agreement does not precisely match the applicable standard form of service agreement . . . it is necessarily nonconforming and must be filed individually for Commission approval.” Notwithstanding, FERC relieved PNM of its financial obligations as PNM had been maintaining a log detailing when it waived the deposit requirement of contracts (the issue with the 13 TSAs). FERC stated that while the requirement to maintain a log arguably provides an alternative means for Commission oversight of PNM’s exercise of discretion under that Tariff provision, FERC concludes that the requirement, in and of itself, did not relieve PNM of its filing obligations under section 205 of the FPA given that the agreements are, as discussed above, nonconforming. Nonetheless, as PNM maintained a log to record waiver of the applicant deposit and that log was available for the Commission to review, there may have been confusion as to whether the agreements also needed to be filed to ensure Commission oversight.
12/7/2022 10:31:15 pm
It seems to be a pretty straight forward case. I'm glad it is being resolved. QUOTE=On rehearing, FERC continued to find that refunds are required for PNM I. FERC stated that its policy and precedent requiring refunds for late-filed agreements is well settled. FERC stated that time-value refunds serve two purposes, in connection with the Commission’s statutory obligations: (1) to protect customers, including against unduly preferential treatment, and (2) to incentivize public utilities to comply with the filing requirements of FPA section 205.
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Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.