In FERC Docket No. ER21-424, on November 16, 2020, Michigan Electric Transmission Company, LLC (METC) filed an application for an order authorizing METC to recover up to $15 million in transmission-related infrastructure costs associated with its electric vehicle (EV) charging infrastructure project (Pilot Project) pursuant to the Commission’s 2009 Smart Grid Policy Statement. METC requested that, if the Commission finds that its application does not satisfy the Smart Grid Policy Statement criteria, the Commission alternatively consider its application under FPA section 205 independent of the Smart Grid Policy Statement. METC also requested that the Commission authorize METC to recover 100% of abandoned plant costs if the Pilot Project is abandoned for reasons beyond METC’s control. In April 2021, FERC denied METC’s request as FERC found the request premature because it is unclear whether some or all components of the Pilot Project are subject to the Commission’s transmission-related ratemaking authority under the FPA (will the assets be FERC jurisdictional). FERC provided guidance to METC in its order. It stated that METC could, in a subsequent filing: (1) specify the location of the DCFC stations; (2) confirm whether the AC-to-DC converter will be included in the Pilot Project; (3) demonstrate that METC can legally own the proposed facilities; and (4) demonstrate that its facilities qualify as transmission (by providing either (a) sufficient information for the Commission to evaluate the proposed assets according to the Seven Factor Test, including information such as the configuration and voltage level of the proposed assets, or (b) a recommendation from the Michigan Commission on the classification of the proposed assets that evaluates them according to the Seven Factor Test).
In Opinion No. 575 issued by FERC on May 20, 2021, in ER13-1508 through 1513, FERC set an ROE of 10.37% for the sales of capacity and energy among the Entergy Operating Companies. FERC determined the ROE based upon the revised base ROE methodology that it adopted in Opinion 569, 569A and 569 B (the MISO ROE case). Entergy submitted the Unit Power Sales Tariff (Tariff), which contained an ROE component, on May 17, 2013. The Tariff established a general rate schedule for making unit power purchases or power sales between any of the Entergy Operating Companies. Entergy explained that the Tariff would ensure that the six then-existing Service Schedule MSS-4 transactions in which Entergy Arkansas is obligated to sell capacity and energy to the other Entergy Operating Companies continue after Entergy Arkansas withdrew from the Entergy System Agreement and, along with the other Entergy Operating Companies, joined MISO. The Tariff would also govern any new agreements for capacity and energy sales between Entergy Arkansas and the other Entergy Operating Companies, and sales between other Entergy Operating Companies if and when they withdraw from the System Agreement.
FERC ordered a 10.37% base ROE in the Tariff effective December 19, 2013and directed Entergy to submit a refund report and refunds.
Background: Historically, the Entergy Operating Companies’ generation and transmission facilities operated as a single system under the Entergy System Agreement. Service Schedule MSS-4 of the System Agreement governed the purchases and sales of energy and capacity among the Operating Companies. On April 25, 2011, the Entergy Operating Companies announced a proposal to join MISO, with a target implementation date of December 19, 2013, to coincide with Entergy Arkansas’ withdrawal from the System Agreement. Prior to its withdrawal from the System Agreement in 2013, Entergy Arkansas made sales to Entergy Louisiana and Entergy New Orleans under Service Schedule MSS-4. Entergy committed to make an FPA section 205 filing by mid-2013 to establish an “MSS-4-like” rate schedule to govern ongoing sales of energy and capacity between Entergy Arkansas and the other Entergy Operating Companies at cost-based rates outside of the System Agreement. This case involved the MSS-4-like rate schedule.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.