On December 20, 2018, FERC issued a series of nine orders addressing how certain public utilities calculate accumulated deferred income tax (“ADIT”) balances in their transmission formula rates. The orders were the result of separate proceedings under Section 206 of the Federal Power Act (“FPA”), which FERC initiated after concluding in a June 21, 2018 order (“June Order”) that the use of its former “two-step” ADIT averaging methodology may be unjust and unreasonable. Continue Reading FERC Addresses ADIT-Related Formula Rate Calculations for Certain Utilities
On December 11, 2018, FERC approved the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed tariff revisions to remove the service territory of Entergy New Orleans, LLC (“Entergy New Orleans”) from Cost Allocation Zone 9 to its own new Cost Allocation Zone 12 (“Proposal”). FERC found that the Proposal was just and reasonable because it would result in an allocation of costs that is at least roughly commensurate with MISO’s Transmission Expansion Plan (“MTEP”) economic project benefits. Continue Reading MISO to Establish New Rate Zone for Entergy New Orleans
On October 15, 2018, FERC issued two orders involving rate of return on equity (“ROE”): the first was an order directing parties in two proceedings involving the base ROE of the transmission owning members of the Midcontinent Independent System Operator, Inc. (“MISO”) to submit briefs concerning a proposed change in FERC’s approach to determining the base ROE of public utilities previously outlined in Martha Coakley v. Bangor Hydro-Elec. Co. (“Coakley Briefing Order”) (see October 25, 2018 edition of the WER); the second was an order providing guidance regarding the effect of the Coakley Briefing Order on pending proceedings involving base ROE issues that have been set for hearing and settlement judge procedures.
On November 5, 2018, FERC granted in part and denied in part a rehearing request (“Rehearing Order”) filed by Ameren Services Company (“Ameren Services”), on behalf of its affiliate Ameren Transmission Company of Illinois (together with Ameren Services, “Ameren”) of a FERC order (“February 13 Order”) denying Ameren’s request pursuant to Order No. 679 for a 100 basis point incentive rate of return on equity (“ROE Incentive”) for the Illinois Rivers and Mark Twain components (“Components”) of the Grand Rivers Project (“Project”). In the February 13 Order, FERC denied Ameren’s requested ROE Incentive for the Components, largely because of construction progress made to date on the Illinois Rivers component. In the Rehearing Order, FERC granted rehearing in part with respect to the Mark Twain component because that component is not substantially complete and, because based on its own merits, the Mark Twain component continues to face risks and challenges that warrant an ROE Incentive. FERC denied rehearing with respect to the Illinois River component, however, upon finding that given the substantial completion of the Illinois Rivers component and limited remaining risks and challenges Ameren faces with respect to that component, Ameren’s requested ROE Incentive for Illinois River failed to meet the nexus test. Continue Reading FERC Grants Rehearing in Part, Grants Transmission ROE Incentive Adder
On October 31, 2018, FERC approved three proposed revisions to the Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”) of the Midcontinent Independent System Operator, Inc. (“MISO”). These revisions establish categorical time limits to expressly bar settlement disputes submitted after these specified time periods (“Time Bar Revisions”). The proposed Tariff revisions became effective November 1, 2018. Continue Reading FERC Conditionally Accepts MISO Tariff Revisions Establishing Time Limits to Settlement Disputes and Adjustments
On October 31, 2018, FERC denied a request from a group of wind generation developers (“Wind Generation Developers”) for rehearing of FERC’s order denying a complaint which alleged that the interconnection process under the Midcontinent Independent System Operator, Inc.’s (“MISO”) Open Access Transmission, Energy, and Operating Reserve Markets Tariff (“Tariff”) is unjust and unreasonable because certain wind generators would not receive a Generator Interconnection Agreement (“GIA”) in time to receive Federal Production Tax Credit (“PTC”) benefits. Notably, FERC found that interconnection customers are not guaranteed that MISO will meet its projected deadlines and that most interconnection customers in the study cluster that was the subject of the complaint will be eligible for GIAs in time to receive PTC benefits. Continue Reading FERC Affirms Denial of Complaint Alleging MISO Interconnection Process Delays
On October 16, 2018, FERC proposed a new method to determine whether a utility’s return on equity (“ROE”) remains just and reasonable under section 206 of the Federal Power Act (“FPA”). Specifically, FERC discussed three additional methods, along with the well-known and traditionally used Discounted Cash Flow (“DCF”) analysis, and proposed to average the results to come to an equitable ROE. This new method will apply to successive complaints filed against the New England Transmission Owners (“NETOs”), regarding the justness and reasonableness of their existing ROE. Briefs related to this proposal are due on December 17, 2018. Continue Reading FERC Proposes Change in ROE Methodology, Directs Briefing
On October 12, 2018, FERC rejected without prejudice a proposal submitted by Midcontinent Independent System Operator, Inc. (“MISO”) and a group of MISO Transmission Owners (“MISO TOs”) (together, “Filing Parties”) to add a new Schedule 50 to MISO’s Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) that would enable MISO TOs to recover reasonable expenses, including overhead costs, associated with operation, maintenance, and repair of a transmission owner’s interconnection facilities (“TOIF”). FERC rejected the proposal without prejudice because it relied on estimated construction costs of the TOIF without the requirement to support the reasonableness of such estimated costs.
On September 20, 2018, FERC denied rehearing and partially granted clarification of its order regarding Multi-Value Project (“MVP”) rate pancaking charges between PJM Interconnection, L.L.C. (“PJM”) and the Midwest Independent Transmission System Operator, Inc. (“MISO”). In the underlying order, FERC determined that because MISO’s transmission projects benefited the existing MISO-PJM system, the limitation on rate pancaking imposed by FERC in 2003 and 2010 was no longer reasonable. Continue Reading FERC Denies Rehearing, Partially Grants Clarification on MVP Rate Pancaking Order
On September 20, 2018, FERC dismissed Nevada Hydro Company, Inc.’s (“Nevada Hydro”) request that (1) the Lake Elsinore Advanced Pumped Storage (“LEAPS”) facility is a transmission facility and (2) LEAPS is entitled to cost-based rate recovery under the California Independent System Operator Corporation’s (“CAISO”) Transmission Access Charge. FERC found that Nevada Hydro’s request is premature because LEAPS has not been studied in the CAISO Transmission Planning Process (“TPP”) to determine whether it addresses a transmission need identified through that process, and, if such a need were met, how the facility would be operated. Continue Reading FERC Finds Request to Treat Pumped Storage as Transmission Facility Premature