First Energy commits to economic development initiatives.

Weekly Update Courtesy of Utility Regulatory News #3987: Citing FirstEnergy Corp.’s agreement to hold ratepayers harmless from costs incurred in switching from one regional transmission organization (RTO) to another, and pointing to the company’s pledges to devote more funding to local economic development programs, the Ohio Public Utilities Commission has signed off on a modified bidding structure by which FirstEnergy’s operating subsidiaries procure supply for their standard service offer (SSO) customers. FirstEnergy’s Ohio operating companies are Ohio Edison Co., Cleveland Electric Illuminating Co., and Detroit Edison Co.

The new SSO procurement process will be based on a twice-yearly competitive bid protocol that will utilize an independent bid manager and rely on a descending clock format. Pursuant to settlement, FirstEnergy agreed not to reflect in resulting rates $42 million in exit fees and integration costs it is incurring as it moves from the Midwest Independent System Operator RTO to the PJM Interconnection RTO. The utility also assented to forgoing recovery of certain “legacy” regional transmission expansion planning charges. In addition, FirstEnergy said that during the three-year period the new SSO bidding arrangement is in place, the utility will provide at least $25 million for economic development and job retention programs.

As part of that commitment, FirstEnergy said it would target automakers, offering those consuming more than 45 million kilowatt-hours at a single site in 2009 a monthly discount for increases in production. For the full story, subscribe to URN.

Posted: September 29th, 2010 under Uncategorized, energy policy, regulation, retail competition, transmission regulation.
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Maryland accepts revised certificate application

Weekly Update courtesy of Utility Regulatory News #3980: After rejecting as procedurally defective the first certificate application submitted for the Maryland segment of the Potomac Appalachian Transmission Highline (PATH) last year, the Maryland Public Service Commission has now declared a new application to be structurally correct and has accepted it for filing. However, although finding that a proper applicant was now seeking the certificate, the commission was careful to state that it was not yet ready to address any actual grant of a certificate for the line.

Last year, Potomac Edison Co. d/b/a Allegheny Power had requested a certificate of public convenience and necessity (CPCN) for that part of the 765-kilovolt PATH project that will cross Maryland. However, Potomac Edison’s application was explicitly titled as being on behalf of another party, a nonutility affiliate, PATH Allegheny Transmission Company. Upon review of CPCN statutory requirements, the commission determined that only a true “electric company” may file for a CPCN for the construction of high-voltage transmission lines. Because the statutory scheme made no provision for “on behalf of” applications, the commission interpreted the law as disallowing such submissions. In the new application, Potomac Edison asked for the CPCN in its own right, averring that it will be the party responsible for overseeing all facets of construction in Maryland, despite the fact that it will be only a 5% owner of the finished project. Although some opponents objected that the CPCN regulations imply that only a full owner could be a proper applicant for a high-voltage transmission line certificate, the commission saw nothing in the law that indicated a need for ownership status. The commission stated that Potomac Edison clearly qualifies as an “electric company,” and therefore is a proper applicant for the CPCN, whereas its PATH affiliate just as clearly had not met the threshold test of being an electric company.

The commission added that Potomac Edison still must meet its burden of proof that the CPCN will be in the public interest. Subscribe to URN for the full story.

Posted: August 13th, 2010 under energy policy, transmission regulation.
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PSC says state’s consumers bear unfair burden

Weekly Update Courtesy of Utility Regulatory News #3969: Pointing to long-standing problems with cost allocations among the various operating companies of the Entergy Corp., the Arkansas Public Service Commission has again exhorted Entergy Arkansas, Inc. (EAI) to spin itself off from its parent company and become a stand-alone entity.

The commission had first raised the prospect of such a move in February 2010, when it initiated an investigation into EAI’s possible withdrawal from the Entergy operating system. The commission indicated that it would like to see EAI serve as an individual utility and join either the Midwest ISO or the Southwest Power Pool. Although EAI’s president had offered assurances at a recent PSC hearing that EAI was seriously examining the option of restructuring as a stand-alone company, the commission noted that reports in the press and public statements from EAI appeared to show otherwise.

The commission expressed concern that maintaining the status quo places Arkansas ratepayers at a disadvantage because a disproportionate amount of common costs from Entergy’s systemwide operations are assigned to EAI. Citing figures showing that Arkansas ratepayers have subsidized Entergy customers in other states by more than $4.5 billion in the last 20 years, the commission asserted that a spin-off of EAI as a stand-alone entity would be the best way to assure that such improper cost allocations do not continue. For the full story, Subscribe to URN.

Posted: June 9th, 2010 under M&A, Uncategorized, finance, regulation, transmission regulation.
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Weekly update courtesy of Utility Regulatory News #3868 …

The U.S. Court of Appeals for the District of Columbia Circuit has sustained two decisions from the Federal Energy Regulatory Commission (FERC) that had examined rate base and rate credit matters associated with a municipally owned electric transmission line that was interconnected with an investor-owned electric utility’s transmission network.

The line, owned by the Florida Municipal Power Agency (FMPA) and running a relatively short distance between Ft. Pierce and Vero Beach, interconnects with the far more expansive transmission facilities of Florida Power & Light Co. (FP&L). The municipal agency claimed that it was due certain rate credits from FP&L because the Ft. Pierce to Vero Beach line not only was critical to the agency’s provision of service to its own customers, but also benefitted FP&L  in its provision of service to the utility’s ratepayers. The agency pointed out that it was itself a customer of FP&L. The utility, however, refuted the notion that the municipal line was somehow necessary for the provision of service to FP&L customers, including FMPA.

FP&L argued that while the FMPA line was indeed interconnected with FP&L’s transmission lines, it was not fully integrated into its system, a conclusion with which the FERC had agreed. The FERC determined that two different tests of comparability, one conducted in 1994 and another in 2005, had yielded the same result, namely that the interconnection notwithstanding, the FMPA line was simply not needed by the utility for purposes of serving either FP&L’s local or remote loads.

Upon appeal by the FMPA, the court acknowledged that the two tests had not been run in an identical manner, but the court denied that the use of different approaches in any way negated or adversely impacted the test results. The court ruled that both reviews had upheld the FERC’s comparability standard for investor-owned versus customer-owned transmission facilities. Additionally, the court said that both tests had been targeted specifically at ascertaining what transmission facilities are required for serving FP&L’s own load, with the two tests producing consistent findings that the FMPA line doesn’t fit the description. Subscribe to URN for the full story.

Posted: May 26th, 2010 under transmission regulation.
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