On February 24, 2022, the Office of the Ohio Consumers’ Counsel (OCC) filed a complaint (Complaint) against American Electric Power Service Corporation (AEPSC), American Transmission Systems, Inc. (ATSI), and Duke Energy Ohio (Duke) (together, Ohio TO) alleging that they are ineligible for a 50-basis point adder to the authorized return on equity (ROE) for participation in a Transmission Organization (RTO Adder). This filing occurred many months after a FERC Order finding that The Dayton Power and Light Company did not qualify for an RTO Adder as under Ohio law participation in a transmission organization was not voluntary but required.
FERC found that the Office of the Ohio Consumer Counsel (OCC) has shown that the rates for Ohio Power and AEP Ohio Transmission (AEP companies) are unjust and unreasonable because the Commission specifically granted them an RTO Adder under section 219 and that their continued participation in a Transmission Organization is mandatory in Ohio. FERC also found that OCC has not met its burden of showing the rates for Duke and ATSI in Ohio are unjust and unreasonable as the Commission did not specifically grant them an RTO Adder under section 219, and their rates were instead the products of comprehensive settlements. FERC ordered AEP to make a compliance filing, within 30 days of the date of this order and to remove the RTO Adder from their rates effective February 24, 2022. Commissioner Danly dissented from the order, stating that the Federal Power Act does not limit incentives to only those utilities that “voluntarily” join a transmission organization and that FERC improperly added this non-statutory requirement in Order No. 679 and had no authority to do so then or now. In his concurring statement, Commissioner Christie refers to the RTO Adder as “FERC candy” and states that in April 2021, he voted that the RTO Adder would be in effect for a transmission for three years then disappear. The rulemaking considering transmission incentives, including the RTO Adder, is ongoing at FERC.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.