The Federal Energy Regulatory Commission has rejected an Ameren Corp. subsidiary's request for additional incentives to build two portions of the Grand Rivers transmission project in the Midcontinent ISO region.
While FERC generally approves many of the incentive rate requests that come before, it refused to do so here given the rather unusual facts of the case, including that many of the hurdles to the construction of the two transmission legs in question have already been overcome. The Feb. 13 order found that Ameren Transmission Co. of Illinois failed to show that the remaining risks and challenges associated with the two projects warranted the extra incentives.
Ameren Transmission in December 2017 asked FERC to approve a 100-basis-point incentive adder to its return on equity for the Illinois Rivers and Mark Twain portions of the Grand Rivers project. Ameren Transmission agreed to limit the ROE incentive to the previous estimated $1.32 billion cost to build the Illinois Rivers segment and the $277.6 million estimate to build the Mark Twain segment.
FERC Order 679 allows a public utility to seek rate incentives for transmission investment if the applicant can show the infrastructure is needed for reliability or will lower power costs through reduced transmission congestion. Ameren Transmission argued the risk-reducing incentives FERC had already granted the company did not fully address the growing challenges the Illinois Rivers and Mark Twain segments face, including public opposition, ongoing and potential litigation and changes in state laws.
But FERC said the development of the two transmission segments was far enough along that the permitting risks were "small." It noted, as did the Organization of MISO States and the Missouri Public Service Commission, that the transmission company has already paid for 77% of the combined estimated costs to build the Illinois Rivers and Mark Twain segments, including 89% of the expected costs of the much larger Illinois Rivers segment.
FERC noted that Ameren Transmission had already obtained county approvals in Missouri for a new route for the 96-mile, 345-kV Mark Twain line. The county approvals paved the way for the Missouri Public Service Commission to grant a certificate of public convenience and necessity for the Mark Twain transmission line and a related substation on Jan. 10.
In addition, the order said Ameren Transmission has partly completed the standard Illinois state approval process for the Illinois Rivers segment, which consists of about 375 miles of 345-kV line and 10 new or expanded substations running across 19 counties in Illinois and Missouri. Abandonment incentives are meant to address project uncertainties tied to the state regulatory and environmental certificate process, but FERC determined that the line's "permitting risks are mitigated by the abandonment incentive previously granted" by the agency.
FERC Chairman Kevin McIntyre did not participate in the decision, most likely because he was conflicted due to his previous activities as a lawyer. (FERC docket ER18-463)