FERC sets limited hearing on utility's true-up charges to Minnesota co-op

WASHINGTON, Nov 2 — The Federal Energy Regulatory Commission (FERC) on Nov 2 set hearing and settlement judge procedures on Southern Minnesota Energy Cooperative's (SMEC) complaint against Interstate Power & Light Company (IPL), limited to whether IPL correctly applied certain inputs to its 2024 and 2025 demand cost true-ups.

In its order in Docket No. EL26-86-000, the commission denied the complaint in part, granted it in part and established a refund effective date of July 1, 2026, the date SMEC filed the complaint.

FERC said the record lacks the information needed to verify a $43.6 million increase in depreciation expense, a $1.2 million negative capacity revenue credit balance in 2024 and the costs of the repowered Franklin County Wind facility in the 2024 true-up.

The commission rejected SMEC's arguments that changed circumstances, undisclosed risks or cost causation principles in connection with a departing customer made IPL's 2024 and 2025 demand costs unjust and unreasonable. It said SMEC benefitted from IPL's retired Lansing Unit 4 coal facility during its operation and that it is reasonable for SMEC to pay a portion of its retirement-related costs.

FERC also denied IPL's motion to dismiss the complaint. IPL had argued that the relief SMEC sought could be granted only prospectively and that, because the agreement terminated in 2025, no prospective relief was possible.

According to the order, SMEC challenges the $2,658,876.68 demand cost component of IPL's 2024 true-up. SMEC alleges that amount is approximately $2 million higher than warranted. IPL said SMEC has a total of $4,532,472 in unpaid true-up costs.

The order directs the Chief Judge to appoint a settlement judge within 30 days. The settlement judge must report on settlement talks within 30 days of appointment.

If the case does not settle and an initial decision is issued by March 31, 2027, FERC said it expects to rule by Dec. 31, 2027.