Dive Brief:

• The U.S. Supreme Court declined to hear Kansas City Power & Light Co.'s appeal of a lower court's affirmation of the Missouri Public Service Commission order denying the utility the right to recover FERC-approved transmission costs, estimated at $100 million over 20 years, for delivering power 500 miles from a natural gas plant in the Mississippi Delta to western Missouri customers.
• The ripple effects of the ruling could jeopardize billions of dollars in interstate transmission costs, according to utility advocate Edison Electric Institute, because it may allow state utility commissions to deny recovery of Federal Energy Regulatory Commission-approved transmission costs, creating risk in the increasingly common acquisition by utilities of distantly-sited natural gas and wind generation.
• The 320-megawatt Crossroads Energy Center natural gas peaking plant was acquired in 2008 by Great Plains Energy Inc., the parent of KCP&L, as part of its purchase of Aquila, Inc. and added to the rate base of what is now called KCP&L-Greater Missouri Operations, which serves 312,000 customers in western Missouri. 

Dive Insight:

The Missouri PSC decided to allow KCP&L-GMO to purchase power from Crossroads but concluded the $5 million yearly interstate transmission cost at FERC-approved rates wasn't "just and reasonable" because the plant was only used to meet summer peak demand whereas the utility was paying for transmission access all year and passing that cost on to its customers.

KCP&L argued the decision to disallow FERC-approved transmission costs violated the supremacy clause of the U.S. Constitution, which gives federal law jurisdiction over state law.

 The Missouri PSC argued Aquila had been stuck with the Crossroads Energy Center until it was shifted to KCP&L-GMO’s books as a Missouri facility and, as such, shouldn’t pay interstate transmission costs and, therefore, shouldn’t pass those costs to its customers.