Basin Electric transmission rates team finds an opportunity to cut Basin Electric costs

Members of the transmission rates team including Mike Kraft, Basin Electric transmission rates manager; Jeremy Voll, Basin Electric electrical engineer III; Jill Rummel, Basin Electric senior tariff administrator; and JP Maddock, Basin Electric senior engineer.

Basin Electric’s transmission rates team recently saw an opportunity to save the cooperative money, and it paid off in a big way.

The transmission rates team at Basin Electric has an important task; they actively monitor Federal Energy Regulatory Commission (FERC) issues and rules to ensure Basin Electric is following their mandated rules and proactively manage costs as they engage with Basin Electric stakeholders within the confines of their tariffs, or regulatory rules. Since becoming subject to FERC jurisdiction in November 2019, the team noticed the number of transactions across the Missouri Basin Power Project (MBPP) West Side facilities had increased over the past few years, therefore creating more costs for Basin Electric. The team was able to pass these costs along to Basin Electric transmission customers, resulting in approximately $440,000 saved for Basin Electric in 2021 alone.

Part of the mission in the transmission rates group is to understand the FERC rules and how they are applied via the various Open Access Transmission Tariffs (OATT). Basin Electric has a transmission tariff that covers some of their west side facilities. Anyone who wants to pass transmission power over Basin Electric’s MBPP West Side facilities would be considered a transmission customer.

The transmission rates team also works with internal and external stakeholders to verify Basin Electric is paying their fair share, but not overpaying disproportionately to others. During the process of becoming subject to FERC jurisdiction, the team did an analysis of all the costs that were being incurred and verified Basin Electric was getting all the recovered costs they should or could be. FERC applies a just and reasonable standard for rates, but it also has a cost causation principle stating that if a transmission customer is causing a cost to be incurred, then that transmission customer should be assigned that cost.

“When we went through the FERC process, we did a deep dive through everything,” says Jill Rummel, Basin Electric senior tariff administrator. “We noticed there were charges in there considered ancillary, and our OATT says these are able to be passed through to the customer. So then we dug through these charges and implemented a process internally where we split the charges per customer and created the invoices to get them sent out to the customers.”

Ancillary charges consist of costs for services such as scheduling, system control, and dispatch. There are separate charges for requesting and scheduling tags as well as the back-end systems and personnel to support these functions.

The team worked with WAPA-RMR, which is Basin Electric’s tariff administrator for the MBPP West, and Melinda Weninger, Basin Electric accounting administrator, to create a process for passing these costs on to the customer.

“It really comes down to knowing the FERC rules, knowing our OATT, knowing what our costs were, and combining all that to identify these costs that we could pass through,” says Mike Kraft, Basin Electric transmission rates manager. “This was a moment we realized we don’t have to eat these costs as Basin Electric. Since it is being caused by customers, we can pass these costs through to them which saves Basin Electric money.”

“That we were able to see an opportunity and capture it to save Basin Electric over $400,000 annually, which could increase every year, makes this a win for our department and for Basin Electric as a whole,” Rummel says.

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