The Times They Are A-Changin' – A New Era For FERC And Transmission ROEs?

The absence of a quorum at the Federal Energy Regulatory Commission from February to August 2017, the addition of four new commissioners and a new chairman, and two federal court rulings with potentially widespread implications have all contributed to a growing portfolio of prominent cases at FERC involving electric transmission ROEs. These cases are presenting multiple opportunities for the newly reconstituted commission to reshape ROE policy and fundamentally alter its approach to calculating ROEs for electric transmission.

Counting transmission owners in ISO-New England, or ISO-NE, and the Midcontinent Independent System Operator, or MISO, the electric transmission ROEs of approximately 60 individual companies are or were at stake in at least 20 pending or recently completed cases at FERC identified by Regulatory Research Associates, an offering of S&P Global Market Intelligence. These companies are located in every Regional Transmission Organization and Independent System Operator, or RTO/ISO, in the country except the Electric Reliability Council of Texas, or ERCOT.

Litigation at FERC involving transmission ROEs for electric utilities typically arises in three standard commission processes: protests filed by customers or other stakeholders in traditional rate cases (e.g. Pacific Gas and Electric) or formula rate filings (e.g. PECO Energy) initiated by a utility, and formal stand-alone complaints against utilities initiated by customers or other stakeholders (e.g. ISO-NE, MISO). This report examines recent FERC ROE decisions and pending cases in all three types of cases since the February 13, 2017 report entitled FERC Electric Transmission ROEs: Trends & Controversies – 2017 Update.

In the process of updating and refreshing the February 2017 report, RRA undertook a broad analysis of FERC ROE policy and recently completed and pending transmission ROE cases at the commission. In Part I of the updated analysis, published on March 23, 2018, RRA provides an overview of FERC's ROE policies and the April 2017 Emera Maine v. FERC decision of the U.S. Court of Appeals for the D.C. Circuit, as well as a summary of recently concluded cases at FERC involving electric transmission ROEs. The cases examined in Part I of the report are summarized in the table below.

In Part II of the analysis, published on March 27, 2018, RRA examines the lengthy list of pending transmission ROE cases at FERC that could produce a significant shift in the commission's transmission ROE policies and practices in the coming months. The cases examined in Part II of the report are summarized in Table 2 below.