Stoel Rives Team Secures FERC Victory For McKenzie Electric Cooperative

Stoel Rives has notched a significant win for client McKenzie Electric Cooperative (MEC) in a Federal Energy Regulatory Commission (FERC) proceeding determining that electric supplier Basin Electric Power Cooperative unlawfully structured the rates paid by its members. The FERC administrative law judge agreed with MEC’s argument that Basin’s rates were “not just, reasonable, or lawful under the Federal Power Act” because they included hundreds of millions of dollars in non-utility losses and other costs related to Basin’s for-profit coal gasification and fertilizer subsidiary, Dakota Gasification Company (DGC).

"We are thrilled to have helped secure this win for our client. This FERC litigation had many of us stationed in Washington, D.C., for months on end last year. The 830-page initial decision showcases the magnitude of this matter, by ordering customer refunds totaling $471.5 million,” Stoel Partner Jason Johns said.

FERC administrative law Judge Scott Hempling’s Initial Decision determined that Basin, once it became FERC jurisdictional in late 2019, did not conform its rate-setting practices to the requirements of the Federal Power Act. Judge Hempling’s lengthy decision made clear that “[a] utility may not include in electricity rates any cost, loss, gain, or anything else, that is associated with the business operations or financial condition of an affiliated nonutility business.” That rule applies to all utilities, whether or not they are organized, like Basin, as a member-owned cooperative.

Judge Hempling’s Initial Decision will now be reviewed by the full Commission, which will issue a final decision in the matter.

Both energy lawyers and litigators represented McKenzie Electric Cooperative in this proceeding, including Jason Johns, Jessica Bayles, Jeremy Sacks, Per Ramfjord, Rachel Lee, Maddie DeGeorges, and Melan Patel.