OG&E 2011 Annual Report Download - page 88

FERC Order No. 1000, Final Rule on Transmission Planning
and Cost Allocation
On July 21, 2011, the FERC issued Order No. 1000, which revised
the FERC’s existing regulations governing the process for planning
enhancements and expansions of the electric transmission grid in a
particular region, along with the corresponding process for allocating
the costs of such expansions. Order No. 1000 applies only to "new
transmission facilities," which are described as those subject to evalua-
tion or reevaluation (under the applicable local or regional transmission
planning process) subsequent to the effective date of the regulatory
compliance filings required by the rule, which are expected to be filed
during the third quarter of 2012. Order No. 1000 leaves to individual
regions to determine whether a previously-approved project is subject
to reevaluation and is therefore governed by the new rule.
Order No. 1000 requires, among other things, public utility
transmission providers, such as the SPP, to participate in a process that
produces a regional transmission plan satisfying certain standards, and
requires that each such regional process consider transmission needs
driven by public policy requirements (such as state or Federal policies
favoring increased use of renewable energy resources). Order No. 1000
also directs public utility transmission providers to coordinate with
neighboring transmission planning regions. In addition, Order No. 1000
establishes specific regional cost allocation principles and directs public
utility transmission providers to participate in regional and interregional
transmission planning processes that satisfy these principles.
On the issue of determining how entities are to be selected to
develop and construct the specific transmission projects, Order No. 1000
directs public utility transmission providers to remove from the FERC-
jurisdictional tariffs and agreements provisions that establish any federal
"right of first refusal" for the incumbent transmission owner (such as
OG&E) regarding transmission facilities selected in a regional transmis-
sion planning process, subject to certain limitations. However, Order
No. 1000 is not intended to affect the right of an incumbent transmission
owner (such as OG&E) to build, own and recover costs for upgrades to
its own transmission facilities, and Order No. 1000 does not alter an
incumbent transmission owner’s use and control of existing rights of way.
Order No. 1000 also clarifies that incumbent transmission owners may
rely on regional transmission facilities to meet their reliability needs or
service obligations. The SPP currently has a "right of first refusal" for
incumbent transmission owners and this provision has played a role
in OG&E being selected by the SPP to build various transmission
projects in Oklahoma.
OGE Energy is continuing to evaluate Order No. 1000 and cannot
at this time determine its precise impact on OG&E. Nevertheless, at
the present time, OGE Energy has no reason to believe that the imple-
mentation of Order No. 1000 will impact OG&E’s transmission projects
currently under development and construction for which OG&E has
received a notice to proceed from the SPP.
Enogex FERC Section 311 2007 Rate Case
On October 1, 2007, Enogex made its required triennial rate filing at the
FERC to update its Section 311 maximum interruptible transportation
rates for Section 311 service in the East Zone and West Zone. Enogex’s
filing requested an increase in the maximum zonal rates and proposed
to place such rates into effect on January 1, 2008. A number of parties
intervened and some also filed protests. Enogex did not place the
increased rates set forth in its October 2007 rate filing into effect but
rather continued to provide interruptible Section 311 service under the
maximum Section 311 rates for both zones approved by the FERC in
the previous rate case. A final settlement was filed with the FERC on
August 5, 2010. With the filing of Enogex’s Section 311 2009 rate case
discussed below, the rate period for the 2007 rate case became a limited
locked-in period from January 2008 through May 2009. On October 13,
2011, the FERC issued an order in this matter approving the settlement
agreement, providing that Enogex’s rates from its previous rate case
remain in effect and that the MEP lease agreement discussed below
would be addressed in Enogex’s Section 311 2009 rate case. This
matter is now closed.
Enogex FERC Section 311 2009 Rate Case
On March 27, 2009, Enogex filed a petition for rate approval with the
FERC to set the maximum rates for its new firm East Zone Section 311
transportation service and to revise the rates for its existing East and
West Zone interruptible Section 311 transportation service. In anticipa-
tion of offering this new service, Enogex had filed with the FERC, as
required by the FERC’s regulations, a revised Statement of Operating
Conditions Applicable to Transportation Services to describe the terms,
conditions and operating arrangements for the new service. Enogex
made the Statement of Operating Conditions filing on February 27, 2009.
Enogex began offering firm East Zone Section 311 transportation serv-
ice on April 1, 2009. The revised East and West Zone zonal rates for the
Section 311 interruptible transportation service became effective June 1,
2009. The rates for the firm East Zone Section 311 transportation service
and the increase in the rates for East and West Zone and interruptible
Section 311 service were collected, subject to refund, pending the FERC
approval of the proposed rates. A number of parties intervened in both
the rate case and the Statement of Operating Conditions filing and some
additionally filed protests. On January 4, 2010, the FERC Staff submitted
an offer proposing various adjustments to Enogex’s filed cost of service.
On April 27, 2010, Enogex submitted comments to the FERC Staff stat-
ing that it would agree to the offer, contingent upon all parties agreeing
to support or not oppose. On October 4, 2011, Enogex filed a settlement
agreement with the FERC which included a proposed refund to shippers
of $2.1 million related to the increase in the rates for East and West Zone
and interruptible Section 311 service which were collected, subject to
refund, pending the FERC approval of the proposed rates. This refund
was made to shippers in January 2012. On December 16, 2011, the
FERC issued an order approving the settlement agreement. Also, as
discussed below, the MEP lease agreement was addressed in this
rate case.
86 OGE Energy Corp.