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Electric Power

Parties seek time for settlement talks under new FERC return on equity policy

Parties seek time for settlement talks under new FERC return on equity policy


FERC grid ROE policy seen creating logjam for pending disputes

FERC guidance generates schedule conflicts for key witnesses

Washington — Parties in a pending transmission rate dispute are seeking time for settlement talks, hinting that once-deadlocked cases could be settled under a new US Federal Energy Regulatory Commission policy for setting return on equity for transmission investment.

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The move is also significant because it highlights the tight timelines to apply the policy across a variety of regions, including New England, the Midcontinent Independent System Operator and the South.

Specifically, East Texas Electrical Cooperative and others asked a FERC administrative law judge to extend the deadline for an initial decision in their ROE complaint case to December, 20, 2019, instead of April 30, 2019, in part to accommodate settlement talks.

The motion cited FERC's November grid ROE guidance, which determined it is not necessary to keep pending ROE cases on hold in the wake of the new policy. FERC also issued guidance saying it expects parties in pending cases to address the merits and application of the policy in their proceedings.

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"In light of these developments, the participants wish to renew settlement discussions but cannot do so meaningfully if the initial decision due date remains the same," ETEC and other parties said in a joint emergency motion (EL17-76) posted Monday. "The pressure of expedited litigation over an expanded set of issues would greatly restrict the participants' ability to dedicate time and resources to pursuing settlement."


FERC's November guidance has created a procedural logjam that generates scheduling conflicts for witnesses that will be testifying in multiple cases, the parties said. The motion outlined a string of overlapping deadlines for witnesses for cases in MISO, New England, and the South.

The ETEC case stems from a 2017 complaint about the transmission ROE of four companies with operations in Arkansas, Louisiana, Oklahoma and Texas. The companies, which are members of the Southwest Power Pool and owned by American Electric Power, are: Public Service Company of Oklahoma, Southwestern Electric Power, AEP Oklahoma Transmission and AEP Southwestern Transmission. The complaint said the companies' current base ROE of 10.7% is unjust and unreasonable.


In October, FERC outlined a proposed policy that would set transmission ROE using several different models rather than relying solely on the discounted cash flow methodology. The approach creates a wider band of acceptable ROEs, making room for a higher total ROE after incentives are added.

FERC first outlined the policy in an order relating to New England transmission owners, but in November, FERC issued an order and guidance saying parties in ROE proceedings in MISO and elsewhere should weigh in on how the policy would apply in their cases as well.

Christi Tezak, managing director at ClearView Energy Partners, said she expects the ALJ to grant the unopposed motion by ETEC and the other parties. Shifting the initial decision from April to December suggests a real opportunity for settlement, and FERC has historically favored settlements, she added. It will take a while, however, for it to be clear whether settlements will materialize under the new policy, Tezak said.

-- Kate Winston,

-- Edited by Valarie Jackson,