The Federal Energy Regulatory Commission (FERC) has issued a Notice of Inquiry (NOI) to examine the rate recovery, reporting and accounting treatment of industry association dues and certain civic, political and related expenses, as well as whether additional transparency is needed with respect to defining donations for charitable, social or community welfare purposes.
The Commission also is requesting comments on whether any changes are necessary to ensure those expenditures are properly accounted for and recovered in rates regulated by FERC.
FERC’s NOI seeks comment on 22 questions focused in three areas:
- Delineation of recoverable and non-recoverable industry association dues by member utilities for rate purposes;
- Increased transparency in industry association expenses and segments of industry association dues charged to utilities as well as utilities’ and industry associations’ expenses from civic, political and related activities; and
- A framework for guidance should the Commission determine action is necessary to further define the recoverability of industry association dues charged to utilities and/or utilities’ expenses from civic, political and related activities.
FERC generally allows utilities to recover a portion of their industry association dues, but certain expenses, such as the portion of dues relating to industry association lobbying, are generally supposed to be excluded from the costs passed on to customers.
The NOI explains that FERC does not have a “bright-line rule” delineating between recoverable expenses and those excluded from rate recovery. Instead, FERC allows regulated entities to determine the portion of their industry association dues to include in recoverable accounts, based on information provided by the industry associations about their activities and associated costs. Currently, the Commission generally considers the appropriate delineation between the two classes of expenses on a case-by-case basis, determined based on the facts presented.
Initial comments on the NOI are due 60 days after the date of publication of the NOI in the Federal Register. Reply comments are due 90 days after the date of publication in the Federal Register.