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Future for Texas Ratepayers? Customers File FERC Complaint Over "Unjust and Unreasonable" Transmission Rates in MISO
Several coalitions representing end users and industrial customers have filed a complaint at FERC regarding what complainants argue are "unjust and unreasonable" transmission rates in the Midwest ISO due to the currently used Base Returns on Equity as well as various adders.
Currently, no Texas transmission assets are within the MISO, but the Entergy Texas transmission assets are set to join MISO this December. Once in MISO, a proposed transaction to transfer these transmission assets to a subsidiary of ITC Holdings would remove the PUCT's vertically integrated authority to set transmission rates for the assets, putting Texas customers at the mercy of the federal government's transmission policies and pricing.
Alternatives do exist to this scenario, however, the most notable being the potential for the Entergy Texas transmission and service area to join ERCOT, a move which was under serious consideration previously. While such alternative was shelved due to perceived high costs, we find it strange that this alternative has not attracted renewed interest, especially among so-called competitive market supporters (who appear to be too busy fighting for government intervention in the ERCOT energy market) in light of high, and uncontrollable by Texas regulators, costs associated with Entergy Texas joining MISO and the ITC transaction, which would expose Texas customers to FERC transmission pricing, which is now the subject of a formal complaint from MISO end users.
When judged against the status quo, the ERCOT option may have appeared to be a non-starter due to the price tag, but the status quo is no longer an option, and the future for Entergy Texas customers is the potential exposure to runaway federal transmission policies, including subsidization of transmission to meet other states' policy goals which do not benefit Texas in any manner.
Turning to the specific complaint against the MISO rates, customers alleged that in light of capital market and other changes, "the current Base ROEs are excessive and that a just and reasonable Base ROE for all MISO TOs would not exceed 9.15 percent." Current ROEs exceed 12 percent for many MISO transmission owners.
End users also said that adders granted to various ITC subsidiaries, ranging from 100-150 basis points in aggregate, are no longer justified.
The complaint was filed by the Association of Businesses Advocating Tariff Equity; Coalition of MISO Transmission Customers; Illinois Industrial Energy Consumers; Indiana Industrial Energy Consumers, Inc.; Minnesota Large Industrial Group; and Wisconsin Industrial Energy Group.
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November 13, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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