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APPA asks FERC to take cautious stance on petition from transmission group


From the July 30, 2013 issue of Public Power Daily

Originally published July 30, 2013

By Robert Varela
Editorial Director

The Federal Energy Regulatory Commission’s transmission rate policies, including allowed rates of return on equity, "must balance the industry’s financial needs with the corresponding impact on end-use consumers," APPA said. A petition filed by a transmission owners’ group, the Working group for Investment in Reliable and Economic electric Systems (WIRES), "seeks fundamental changes in current commission policies that, if adopted, would skew that balance in favor of the industry, to the detriment of the consumers who must pay the bills," APPA said in July 26 comments.

APPA said it "is very concerned" by some of WIRES’ policy recommendations. For example, the proposal by WIRES that changes to approved equity returns not be considered absent a showing that the challenged rates are contrary to the public interest "is contrary to the just and reasonable standard of the Federal Power Act," APPA said.

Other recommendations that APPA is concerned about include that:
•    Complaints be considered only if the rate falls within the upper tenth percentile of a zone of reasonableness;
•    FERC standardize the "inexplicable differences between establishment of allowed returns for single utilities versus returns for transmission providers within organized markets;"
•    WIRES’ contention that "unpredictable application" of discounted cash flow methodology is creating uncertainty in capital markets;
•    The commission consider the "value" of a transmission project when determining rate of return, even though determining "value" could lead to more uncertainty; and
•    FERC hold the rate of return aspects of individual initial complaint cases in abeyance, even though the commission is statutorily obliged to address these complaints expeditiously.

APPA also "is very concerned about WIRES’ sweeping procedural recommendations—an extremely truncated thirty-day comment period on all of the issues raised in the petition, and an immediate stay on the ROE aspects of proceedings that parties have been litigating for many months." The issues involved are difficult and complex, and not capable of a full airing on such a short timetable, APPA said. A freeze on proceedings at this late stage would be fundamentally unfair to the complainants, the association said.

Should the commission decide to move forward on the WIRES petition, it should provide full due process to APPA and all other affected parties, the association said.

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Senior Vice President, Publishing 
Jeanne Wickline LaBella
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Editorial Director
Robert Varela
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Jeannine Anderson
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