As previously reported, in late 2015, FERC initiated a Section 206 investigation of the New England electric transmission formula rate. After over two and one-half years of settlement negotiations with the six New England state regulators and municipal customers in Massachusetts, along with FERC trial staff, the New England Transmission Owners filed a settlement in August 2018 that was agreed to by all the New England state regulators. The Massachusetts municipal customers and FERC trial staff filed comments opposing the settlement. Recently, the Settlement Administrative Law Judge issued his comments on the contested settlement. He first recognized that settlement judges certify only uncontested settlements and that the substantive determinations necessary to certify a contested settlement are not appropriately made by a settlement judge, as the settlement judge may well be privy to confidential, non-record information and may have had off-the-record discussions about the merits of issues with not all parties present. FERC’s Rule 603 does not empower settlement judges to make substantive findings regarding a contested offer of settlement or to certify a contested offer of settlement. Accordingly, FERC will consider the settlement using the Trailblazer approach for reviewing contested settlements. Under Trailblazer, FERC may approve a contested settlement under one or more of the following four approaches: (1) the Commission may make a decision on the merits of each contested issue; (2) the Commission may determine that the settlement provides an overall just and reasonable result; (3) the Commission may determine that the benefits of the settlement outweigh the nature of the objections, and the contesting parties’ interests are too attenuated; or (4) the Commission may determine that the contesting parties can be severed. I expect that FERC will issue its order within the next several months in this matter.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates.