Canadian utility owner Fortis Inc. expects to launch a court challenge to a U.S. Federal Energy Regulatory Commission ruling that deemed its U.S. power transmission company is not fully independent.
The FERC ruling on Novi, Mich.-headquartered ITC Holdings Corp.'s relationship with its parent in October 2018 led to the reduction of a return-on-equity adder at three of the company's subsidiaries to 25 basis points from 50 basis points. After an unsuccessful request for a rehearing of the ruling in July, Fortis CFO Jocelyn Perry said it may be headed to a U.S. court. The regulator ruled that ITC's status as an independent operator had changed after it was bought by Newfoundland and Labrador-headquartered Fortis in 2016.
"FERC ordered last October that ITC was no longer fully independent, and reduced the incentive adder," Perry said on an Aug. 2 conference call. "ITC is now considering its options, including potentially appealing to the U.S. Court of Appeals."
Fortis runs ITC "on a stand-alone, independent basis," CEO Barry Perry said last year after the initial ruling was made. The company owns gas and electricity utilities in Canada, New York and Arizona along with ITC, which runs electric transmission systems in several states. In highlighting developments in the second quarter on the Aug. 2 call, the CEO said a plan to upsize a planned Arizona wind farm will add upwards of C$200 million to the company's capital spending in 2019. The Oso Grande Wind Project will now have a capacity of 247 MW when it comes online by the end of 2020.
"We previously included this project in the plan as a 150-MW project, and the increased capacity resulted in more than [C]$200 million of additional capital spending in 2019," Barry Perry said. "Once completed, it will become Tucson Electric Power Co.'s largest renewable energy resource."
Separately Aug. 2 Fortis reported second-quarter 2019 adjusted net earnings attributable to common equity shareholders of C$235 million, or 54 Canadian cents per share, compared with C$251 million, or 59 Canadian cents per share, a year earlier. The S&P Global Market Intelligence consensus normalized earnings estimate for the quarter was 57 Canadian cents per share.