Jersey Power and light files settlement for transmission formula rate

On February 2, 2021, in Docket No. 20-2277, Jersey Central Power and Light (“JCP&L”) filed a settlement agreement establishing a transmission formula rate that it filed in October 2019.  At that time, JCP&L had in effect a stated transmission rate.  The new transmission formula rate is effective January 1, 2020.  The amount of difference between the settled transmission rates versus that allowed by the Commission to go into effect based upon the JCP&L filing will be included in the annual true-up adjustments for 2020 and 2021 and not refunded directly to customers.  The settlement provides for the following:
 

1. A base return on equity of 9.7% with an additional 50 basis points for JCP&L’s participation in PJM for a total ROE of 10.2%;
2. JCP&L will reduce ratebase for incentive compensation liability balances in Account 242;
3. OPEB costs are a fixed item in the formula and can be changed by a single-issue rate filing;
4. There are various provisions for excluding pension and OPEB items from rate base for a period and there are specific ADIT exclusion items stated in the settlement;
5. JCP&L has requested that the 2021 revenue requirement under the transmission formula rate be put into effect pending the Commission acting on the settlement; and
6. The transmission formula rate includes cash working capital and prepayments.