On May 29, FERC approved a request from Baltimore Gas and Electric Company (“BG&E”) to implement Order No. 679 transmission rate incentives for its portion of the 230-mile, 500 kV Mid-Atlantic Power Pathway (“MAPP”) Project.
Order No. 679 implemented section 1241 of the Energy Policy Act of 2005, which directed FERC to establish incentive-based rates to encourage the construction of new transmission. To receive incentives, an applicant must demonstrate among other things that the facilities either ensure reliability or reduce the cost of delivered power by reducing transmission congestion. On October 31, 2008, FERC unanimously approved rate incentives for Pepco Holdings Inc.’s (“Pepco”) portion of the MAPP Project (see November 7, 2008 edition of the WER). The line is to run from Northern Virginia, through Maryland and Delaware, into southern New Jersey and is scheduled to be in service by 2013.
The Commission found that the MAPP Project meets the requirements of Order No. 679 because it was included in PJM Interconnection, Inc.’s (“PJM”) 2007 Regional Transmission Expansion Plan (“RTEP”) as a baseline project. PJM determined that the project is regional in nature and will mitigate congestion or ensure PJM’s ability to continue to serve load reliably. Because each portion of the MAPP Project is dependent on the other portions to achieve the reliability and congestion relief benefits, the Commission evaluated the MAPP Project in its entirety, not just the BG&E portion.
The Commission authorized a 150 basis-points return on equity (“ROE”) adder to BG&E’s existing 11.3 percent ROE for the construction of 10.4 miles of new transmission facilities. FERC also granted full recovery of prudently incurred abandonment costs.
Commissioner Suedeen Kelly filed a separate dissent stating that BG&E had not demonstrated that its portion of the MAPP Project produces broad public interest benefits. She said that BG&E should be required to show that there is a nexus between the incentive it seeks and the specific investment it proposes to make.
The Order is available at: http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12031937.