On March 22, 2016, FERC issued an order affirming its jurisdiction over Vermont Electric Cooperative, Inc. (“VEC”) in the context of a Federal Power Act (“FPA”) Section 206 investigation into the formula rates of ISO-New England (“ISO-NE”) Participating Transmission Owners, including their Regional Network Service (“RNS”) and Local Network Service (“LNS”) formula rates.
Originally, on December 28, 2015, FERC issued an order (“December 28 Order”) finding that ISO-NE’s formula rates were unjust and unreasonable. In doing so, FERC set the justness and reasonableness of the formula rates for a trial-type evidentiary hearing, held the hearing in abeyance, and established settlement judge procedures. VEC requested rehearing of the December 28 Order on the grounds that it is an electric cooperative generally exempt from the provisions of Part II of the FPA (including Section 206) and, therefore, should not be made a part of the proceeding established by FERC. VEC added that FERC lacked authority to examine VEC’s LNS rates in particular because they are not “passed through” the jurisdictional RNS rate administered or charged by ISO-NE.
FERC denied VEC’s request for rehearing and held that it had the authority, under Section 206 of the FPA, to examine “any rule, regulation, practice, or contract affecting” the rates or charges of a public utility, including ISO-NE’s RNS rate. FERC noted that it specifically requested information on how the RNS and LNS rate interact in its December 28 Order to determine whether ISO-NE Participating Transmission Owners are recovering the same costs through both the RNS and LNS rates. Thus, the Commission concluded, it had the authority to review VEC’s LNS rates to the extent they affect ISO-NE’s Commission-jurisdictional RNS rate. FERC also rejected arguments raised by VEC that ISO-NE has no FPA Section 205 rights with respect to VEC’s LNS rates and, absent such rights, Section 206 of the FPA cannot be invoked against ISO-NE to review, and potentially change, a non-jurisdictional rate that it does not administer. In doing so, FERC stated that the scope of ISO-NE’s rights under Section 205 have no bearing upon the Commission’s authority under Section 206.
A copy of FERC’s order can be found here.