FERC Approves $2 Million Settlement between Enforcement Staff and Xcel for Improper Use of Firm Network Integrated Transmission Service

On January 17, 2011, 2011, FERC issued an order approving a $2,000,000 settlement between the Office of Enforcement and Xcel Energy Inc., related to the use of firm network integrated transmission service ("NITS") for the purchase and sale of electricity between two of its operating subsidiaries, Public Service of Colorado ("PSCo") and Southwest Public Service Company ("SPS").  PSCo and SPS are interconnected through the Lamar Tie Line, which has a capacity of 210 MW.  After conducting an investigation, Enforcement Staff concluded that Xcel violated the Xcel OATT and the SPP OATT by improperly using firm NITS for the purchase and sale of electricity between PSCo and SPS across the Lamar Tie.  As a member of SPP, SPS is subject to the SPP Tariff.  Enforcement Staff determined that under the Xcel and the SPP OATTs an entity is not eligible to use NITS unless the resources used to provide the energy qualify as network resources, which include owned, purchased and leased generation designated by the customer to serve network load.  In addition, the load being served must be properly designated as network load.  Enforcement Staff determined that the use of NITS for the purchase and sale of electricity between PSCo and SPS constituted a violation of the Xcel and SPP OATTs because: (i) the resources used in the transactions between SPS and PSCo did not qualify as designated network resources; and (ii) the respective loads to be served on the PSCo and SPS systems did not qualify as designated network loads.  Enforcement Staff concluded that, under these circumstances, SPS and PSCo should have used point-to-point transmission service to bring energy across the other utility's system (and secondary network service to bring energy across its own system).

Xcel agreed to pay a civil penalty of $2,000,000 and to submit semi-annual compliance monitoring reports to the Office of Enforcement for one year, with the option of a second year at Enforcement's discretion.  Xcel accepted the facts stipulated in the Settlement Agreement but neither admitted nor denied that its actions violated the Federal Power Act, Commission rules or regulations, or the Xcel or SPP OATTs.  In approving the settlement, the Commission considered the factors set forth in section 216A(b) of the FPA and the Revised Policy Statement on Penalty Guidelines but determined that a downward departure from the Penalty Guidelines was warranted.  The Commission noted that Xcel had demonstrated a commitment to remedying the violations on a prospective basis by working with SPP to file revisions to the Xcel and SPP OATTs that would provide for NITS across the Lamar tie.  The Commission also recognized the unique circumstances surrounding the PSCo and SPS merger and the construction of the Lamar Tie, including the fact that FERC had conditioned its 1997 approval of the merger upon the use of transmission service across the Lamar Tie under a single OATT.

The Commission has imposed substantial penalties in the past for similar OATT violations.  Specifically, Idaho Power Company, MidAmerican Energy Company, SCANA, and PacifiCorp have all faced civil penalties for allegedly misusing network transmission service under their respective OATTs.  The Commission's order approving the $2,000,000 settlement with Xcel demonstrates that the Commission continues to regard these violations very seriously.

To access the Order approving Stipulation and Consent Agreement, click here.

For more information, please contact Toni Frost at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 202-296-1500.