On August 27, 2019, FERC affirmed its earlier rejection of PJM Interconnection, L.L.C.’s (“PJM’s”) proposal to, in certain circumstances, exempt incumbent transmission owners from executing a Designated Entity Agreement pursuant to the Regional Transmission Expansion Plan (“RTEP”) process set forth in Schedule 6 of its Operating Agreement, but not to exempt other transmission developers from this requirement (“August 27 Order”).  The August 27 Order on rehearing and compliance affirmed FERC’s conclusion in a July 2018 order that incumbent and non-incumbent transmission owners are similarly situated, and that incumbent transmission owners would be given a competitive advantage in PJM’s RTEP process if they were exempted from executing the Designated Entity Agreement.  The August 27 Order also accepted revisions to PJM’s Operating Agreement to provide a 60-day window for an incumbent transmission developer that PJM identified as a Designated Entity in its RTEP process to accept the designation.
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On July 18, 2019, FERC affirmed on remand its prior approval of Pacific Gas and Electric Company’s (“PG&E”) request for a return-on-equity (“ROE”) incentive adder to its transmission rates (“RTO-Participation Incentive”) for its ongoing membership in the California Independent System Operator Corporation (“CAISO”).  In its decision, which followed from a 2018 remand from the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), FERC reasserted its jurisdiction over such transmission incentive questions and determined that, absent a relevant mandate under California law requiring PG&E’s participation in CAISO, the RTO-Participation Incentive was warranted because it induces PG&E to continue its CAISO membership.
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On June 24, 2019, FERC issued an order rejecting, without prejudice, Midcontinent Independent System Operator’s (“MISO”) and the MISO Transmission Owners’ (“MISO TOs”) proposal to allocate MISO’s share of the costs of certain interregional economic transmission projects with PJM Interconnection, L.L.C. (“PJM”) and Southwest Power Pool, Inc. within the MISO footprint (“Interregional Cost Allocation Proposal”).  FERC explained that it rejected the Interregional Cost Allocation Proposal because it referenced and relied on certain provisions contained within a related, regional cost allocation proposal that FERC rejected as inconsistent with cost causation principles in a concurrently-issued order (see July 18, 2019 edition of the WER ).  The June 24 order also rejected MISO’s submission of the Interregional Cost Allocation Proposal in a compliance filing in a separate complaint proceeding.  FERC directed MISO to submit a new compliance filing either to confirm that an existing cost allocation method will apply to interregional projects, or to propose a new cost allocation method for these projects.
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On June 24, 2019, FERC rejected the Midcontinent Independent System Operator, Inc.’s (“MISO”) and the MISO Transmission Owners’ (collectively, “Filing Parties”) tariff revisions regarding cost allocation for regional and local economic transmission projects, finding that the cost allocation methodology related to the Filing Parties’ newly proposed Local Economic Project category was inconsistent with the cost-causation principle.  FERC rejected the Filing Parties’ filing as a whole based on the above finding, however FERC did provide guidance on other portions of the filing, stating that it did not find such other aspects of the filing to be unjust and unreasonable.
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On June 20, 2019, FERC issued an Order on Voluntary Remand from the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) directing PJM Interconnection, L.L.C. (“PJM”) to refund certain line loss over-collection amounts to certain virtual traders.  Upon re-examining its refund authority in light of recent court precedent, FERC determined that it has greater discretion to order refunds in cost allocation and rate design proceedings than it previously had determined.
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On June 11, 2019, FERC accepted Republic Transmission LLC’s (“Republic”) proposed transmission formula rate (“Formula Rate”) that will be incorporated into Midcontinent Independent Transmission System Operator, Inc.’s (“MISO”) tariff when Republic becomes a transmission owner in MISO.  Additionally, FERC granted Republic’s request for authorization to allow future affiliates or subsidiaries of Republic that undertake transmission projects in the MISO region to apply the Formula Rate, as well as the transmission rate incentives previously granted to Republic (“Incentives”).
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On June 11, 2019, FERC accepted, suspended for five months, and set for hearing Southern California Edison Company’s (“SoCal Edison”) revised transmission owner tariff and formula rate (“Formula Rate”), which includes an increased base 2019 transmission revenue requirement (“2019 TRR”).  SoCal Edison’s proposed rate increase is intended to account for the increased financial risks associated with wildfires in California.   
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On May 28, 2019, FERC issued an order approving Commonwealth Edison Company’s (“ComEd”) proposal to modify its formula transmission rate (“Formula Rate”) to recover its portion of the costs to construct, operate, and maintain the Superconductor Cable Development Project (the “Project”).  FERC also approved ComEd’s request for a transmission rate incentive to recover 100 percent of its prudently incurred costs if the Project is cancelled or abandoned for reasons outside ComEd’s control (“Abandonment Incentive”).  FERC found that the Project is properly treated as transmission plant, and thus eligible for recovery in ComEd’s Formula Rate and that the Commission’s approval of ComEd’s requested Abandonment Incentive is appropriate for the Project, which reflects an innovative use of an advanced technology that will improve system reliability.
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On May 14, 2019, FERC granted in part, and denied in part, United Illuminating Company’s (“United Illuminating”) request for approval of three transmission rate incentives for investments in the Pequonnock Substation Project (“Project”).  United Illuminating asked FERC to approve three transmission incentives: (i) a 50-basis point return on equity (“ROE”), (ii) an Abandoned Plant Incentive, and (iii) a Construction Work in Progress (“CWIP”) Incentive.  United Illuminating also requested waivers of several of FERC’s regulatory requirements, including the requirements related to anti-competitive impacts of CWIP recovery and the requirement to file Statement BM under section 35.13(h)(38) of the Commission’s regulations.   In the May 14 Order, FERC granted United Illuminating’s requested Abandoned Plant and CWIP Incentives and its waiver requests, but denied the requested ROE Incentive adder.

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On April 26, 2019, PPL Electric Utilities Corporation (“PPL Electric”) petitioned the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) for review of two FERC rehearing orders that replaced the cost allocation method by which PJM Interconnection, L.L.C. (“PJM”) assigns responsibility for a portion of costs for certain facilities that address stability-related reliability issues.  Specifically, FERC’s rehearing orders changed the cost allocation method used for certain facilities, including the Artificial Island Project (“Artificial Island”), that are located in the PJM region.
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