Dive Brief:
- Utilities around the country are watching a dispute between Kansas City Power & Light (KCP&L) and Missouri utility regulators over transmission costs for a power plant in Mississippi, because the crux of the issue is state-federal jurisdiction. The utility has taken its case to the U.S. Supreme Court, which has not accepted the case yet but has asked the U.S. solicitor general for an opinion on it.
- KCP&L bought the plant when it acquired power company Aquila in 2008, and later decided to include the plant in its rate base to supply Missouri customers. The state Public Service Commission approved that choice, but disapproved including the costs of transmission from Mississippi in the utility’s rates. The costs were approved, however, by the Federal Energy Regulatory Commission (FERC). Missouri's disallowing them is violating clearly established law, KCP&L says.
- The Edison Electric Institute told the Supreme Court that the Missouri Public Service Commission’s position against the transmission costs is one that could “spread like a virus to other states,” sticking utilities with costs that FERC properly approved for inclusion in customer rates.
Dive Insight:
Fights over state-federal authority are nothing new to electric utilities, governed as they are by laws with finely drawn jurisdictional lines. The high court has decided cases in favor of FERC authority in the past when utilities complained of costs “trapped” by states refusing to accommodate the federal agency’s decisions. KCP&L argues its problem is like those cases. The Missouri PSC says it is different, because it involves a voluntary decision by the utility, not a utility complying with a FERC order. As the power system gets more complex, fine points of jurisdiction get thornier. For KCP&L, the costs in this one instance amount to $5 million per year for many years to come.