By Amanda Durish Cook
FERC has declined to involve itself in a dispute over whether Consumers Energy must transfer ownership of transmission assets to its former subsidiary.
The commission said last week it does not have “exclusive jurisdiction” over whether Consumers Energy must transfer reclassified transmission assets to Michigan Electric Transmission Co. (EL17-48). METC argued that under a 15-year-old Distribution-Transmission Interconnection Agreement with Consumers, it had the ownership rights on several of Consumers’ distribution facilities reclassified as transmission facilities by NERC in 2012.
Consumers transferred its then-existing transmission facilities to subsidiary METC in 2001, then sold METC to Michigan Transco Holdings in 2002. As part of the sale, Consumers and METC signed the Distribution-Transmission Interconnection Agreement, which stipulates that “should future system modifications result in the reclassification of assets, the parties agree to convey ownership of those assets to the appropriate party.” Consumers argued that it should keep possession of the disputed assets because the reclassification was not caused by a “physical system modification.” METC was acquired by ITC Holdings in 2006.
FERC said the transmission ownership issue was a matter of contract interpretation that should be left to the courts. The commission also said there was no merit to Consumers’ argument that FERC is uniquely positioned to decide whether the assets should be transferred in because of its expertise in NERC reliability issues, the Federal Power Act and promoting competition in transmission development.
“The outcome of this matter appears to turn on interpretation of the parties’ intentions and construction of the [agreement] rather than any determination requiring the commission’s special expertise,” FERC said.
The commission also said the disagreement was a one-off situation that would be unlikely to create precedent because the company’s agreement was uncommon. “The [agreement] is a unique, bilateral, interconnection agreement covering a transaction in which a generation and distribution company sold its transmission assets to a third party. … [It] is not a standard or common provision in interconnection agreements. Thus, the outcome of this proceeding would not determine a general policy … and the resolution of the contractual dispute here likely will have little effect beyond the parties involved.”