Washington Energy Report > Troutman Sanders LLP

FERC to Investigate Formula Rate Protocols in MISO

On May 17, 2012, FERC instituted an investigation pursuant to section 206 of the Federal Power Act (“FPA”) regarding the protocols used by transmission owners in the Midwest Independent Transmission System Operator’s, Inc. (“MISO”) when calculating their annual formula transmission rates.  The investigation centers around whether the formula rate protocols used by MISO and transmission owners in the region are sufficient to ensure just and reasonable rates.

After issuing several recent orders regarding the recovery of transmission rate incentives through formula rates, FERC conducted an analysis of MISO’s formula rate protocols.  FERC’s analysis concluded that MISO’s formula rate protocols may be deficient.  FERC’s three areas of concern are: (1) the scope of participation regarding who can participate in the information sharing process; (2) the transparency of the information exchange, what information is exchanged; and (3) the ability to challenge the transmission owners’ implementation of the formula rate.

FERC determined that formula rate protocols used by MISO and its transmission owners limit the scope of participation by limiting the ability of certain parties to obtain information from transmission owners i.e., customers and state commissions.  Further, FERC concluded that the protocols may not provide parties with enough information to form the basis for any challenge to the formula rate.  And lastly, FERC stated that MISO’s tariff may need to be revised to allow for interested parties to pursue various means of dispute resolution outside of filing a formal complaint with FERC.

FERC has ordered a paper hearing regarding the matter.  Initial briefs are due 30 days after publication in the Federal Register, reply briefs are due 21 days after the sue date of initial briefs.  FERC also established a refund effective date as of the date the notice of the investigation is published in the Federal Register. 

A copy of the order can be found here.