Baltimore Gas and Electric Requests alignment of the Annual true-up adjustment for its transmission formula rate
On October 26, 2020, Baltimore Gas and Electric (BGE), a subsidiary of Exelon, filed in Docket No. ER21-214 revisions to its transmission formula rate to align calendar year revenue and revenue requirement in its Projected Annual Transmission Revenue Requirement and in its Annual True-up Adjustment. To accomplish this alignment, BGE seeks to adjust the true-up mechanism in its Formula Rate to: (1) use actual revenues, rather than projected revenues, for a 12-month period as the basis for the true-up; and (2) true-up those actual revenues for a given January to December time period to actual costs for that same January to December time period, instead of truing up revenue projections for a June to May time period to actual costs for the January to December time period, as is done in BGE’s current transmission formula rate. This timing adjustment revision is consistent with FERC precedent and have been implemented for several utilities, including Potomac Electric Power Company, Delmarva Power & Light Company and Atlantic City Electric Company (all Exelon subsidiaries).
The filing also revises the method for developing the forecasted revenues for the upcoming year, which are used to establish BGE’s projected revenue requirement – the basis for its transmission rates. Under the new methodology, BGE will use projected values for plant, accumulated depreciation, depreciation and amortization expense, other income tax adjustment expense, and accumulated deferred income taxes (“ADIT”) for the upcoming year when developing its projected transmission revenue requirements. All rate base items in the projected and true-up revenue requirements will also be calculated using the average of 13 monthly balances with the exception of ADIT, which will use a simple average.6 Non-plant related rate base items and capital structure will continue to use historical data; however, this data will be 13-month average balances as opposed to year-end balances as done with the current Formula Rate. To adhere to tax normalization rules, ADIT would reflect the application of proration rules. Historical data will still be used for non-plant related rate base components of the projected revenue requirement (e.g., prepayments, reserves, materials and supplies), other expenses (e.g., Operating & Maintenance expenses and Taxes Other Than Income Taxes) and capital structure, as these items tend to have less year-to-year variability compared to plant-related items.
michigan electric transmission requests recovery in its transmission formula rate for up to $15 m for ev charging pilot
On November 16, 2020, in ER21-424, Michigan Electric Company (MET) applied to FERC for authorization to recover in electric transmission rates: (1) up to $15 million in costs associated with the construction of new transmission facilities and the deployment of advanced technology to support the development of new electric vehicle (EV) infrastructure in the State of Michigan (EV Infrastructure Pilot Project or Pilot Project); and (2) recovery of 100 percent of abandoned plant costs in the event the EV Infrastructure Pilot Project is abandoned for reasons beyond MET’s control. MET’s EV Infrastructure Pilot Project will facilitate the development and deployment of publicly accessible Direct Current Fast-Charging (DCFC) EV stations to serve long-haul medium- and heavy-duty commercial vehicles, trucks, and buses, and will provide data and information needed to assess how electrification trends and the deployment of EV infrastructure may impact the operation and reliability of the interstate transmission grid regulated by FERC. METC can already recover the costs of the Pilot Project through its existing formula rate. However, the 2009 Smart Grid Policy Statement allows applicants like METC to submit a section 205 filing to provide “the assurance of cost recovery” and to mitigate against the risk of “future review and challenge.”
On November 19, 2020, in EL14-12, FERC issued an Order on Rehearing regarding the MISO TO’s ROE. FERC determined:
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.