On August 9, 2019, in Docket No. ER19-2568, Pacific Gas and Electric Company (PG&E) filed a request to recover, through its formula rate, 50 percent of the prudently-incurred costs that it incurred associated with the development of its Diablo Canyon Voltage Support Project (DCVS Project) and its Atlantic – Placer 115kV Transmission Line Project (Placer Project), which were ultimately abandoned. On October 10, 2019, FERC found that PG&E has demonstrated that it qualifies to recover 50 percent of the prudently-incurred project costs for the DCVS Project ($1.1 M) and the Placer Project ($0.3 M) based on the facts and circumstances presented in this proceeding, consistent with Opinion No. 295. Specifically, FERC found that the transmission projects for which PG&E seeks abandonment cost recovery were cancelled based upon CAISO’s determination that the projects were no longer necessary. Thus, we conclude that the abandonment of the two projects was beyond PG&E’s control and that the costs incurred appear to be prudent and have not been shown to be unjust and unreasonable. Protesters objected to PG&E’s proposed 40-year amortization period. In its reply comments, PG&E agreed to change the amortization period to one year. FERC authorized a one-year amortization period, which will reduce potential overall costs by avoiding years of carrying costs and, accordingly, will reduce the impact on PG&E’s overall revenue requirement. FERC explained that the RTO/ISO participation adder does not apply to abandoned transmission projects, which are not turned over to the operational control of an RTO/ISO.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates.