Winter Storm Uri, still hanging around the necks of Oklahoma Corporation Commissioners over their decision to allow utilities to extend historic natural gas charges to rate payers for the next quarter of a century, has also been a lingering problem for the Southwest Power Pool and a Missouri electric cooperative.
That is, until recently when the Eighth Circuit Court of Federal Appeals ruled in favor of Southwest Power Pool, the electric group of which Oklahoma and 13 other states are members.
The federal appeals court upheld a decision by the Federal Energy Regulatory Commission regarding the SPP’s legal battle with the Associated Electric Cooperative, Inc. which supplies electricity to 51 local electric cooperatives in Missouri, Iowa and Oklahoma serving nearly 935,000 member homes, farms, schools and businesses.
Here’s how the Federal Appeals Court explained the development of the legal case and the final ruling.
During Winter Storm Uri, Southwest Power Pool, Inc. (Southwest contacted Associated Electric Cooperative, Inc. (the Cooperative) to purchase emergency energy. The Cooperative provided the energy, and Southwest compensated the Cooperative according to their existing written contract, known as the Tariff, filed with the Federal Energy Regulatory Commission (FERC). The Cooperative claimed the payment was insufficient and not in line with a separate oral agreement made during the storm. Southwest refused to pay more than the Tariff rate, leading the Cooperative to file a lawsuit in federal district court for breach of contract and equitable claims.
Southwest petitioned FERC for a declaratory order asserting primary jurisdiction over the dispute and confirming that the payment was appropriate under the Tariff. FERC agreed, and the Cooperative’s petition for rehearing was denied. The Cooperative then sought review from the United States Court of Appeals for the Eighth Circuit, which denied the petitions, affirming FERC’s primary jurisdiction and the applicability of the Tariff rate.
The United States District Court for the Western District of Missouri granted Southwest’s motion to dismiss the Cooperative’s complaint, agreeing with FERC’s jurisdiction and the Tariff’s control over the payment terms. The district court also denied Southwest’s motion for attorneys’ fees and costs. The Cooperative appealed the dismissal, and Southwest appealed the denial of attorneys’ fees.
The United States Court of Appeals for the Eighth Circuit reviewed the district court’s dismissal de novo and affirmed the decision, agreeing that FERC had primary jurisdiction and the Tariff controlled the payment terms. The court also affirmed the district court’s denial of attorneys’ fees, finding that the relevant contract provision did not apply to this dispute and that the district court did not abuse its discretion.