On October 16, 2018, FERC proposed a new method to determine whether a utility’s return on equity (“ROE”) remains just and reasonable under section 206 of the Federal Power Act (“FPA”).  Specifically, FERC discussed three additional methods, along with the well-known and traditionally used Discounted Cash Flow (“DCF”) analysis, and proposed to average the results to come to an equitable ROE.  This new method will apply to successive complaints filed against the New England Transmission Owners (“NETOs”), regarding the justness and reasonableness of their existing ROE.  Briefs related to this proposal are due on December 17, 2018. 

On October 12, 2018, FERC rejected without prejudice a proposal submitted by Midcontinent Independent System Operator, Inc. (“MISO”) and a group of MISO Transmission Owners (“MISO TOs”) (together, “Filing Parties”) to add a new Schedule 50 to MISO’s Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) that would enable MISO TOs to recover reasonable expenses, including overhead costs, associated with operation, maintenance, and repair of a transmission owner’s interconnection facilities (“TOIF”).  FERC rejected the proposal without prejudice because it relied on estimated construction costs of the TOIF without the requirement to support the reasonableness of such estimated costs.

On September 20, 2018, FERC denied rehearing and partially granted clarification of its order regarding Multi-Value Project (“MVP”) rate pancaking charges between PJM Interconnection, L.L.C. (“PJM”) and the Midwest Independent Transmission System Operator, Inc. (“MISO”).  In the underlying order, FERC determined that because MISO’s transmission projects benefited the existing MISO-PJM system, the limitation on rate pancaking imposed by FERC in 2003 and 2010 was no longer reasonable. 

On September 20, 2018, FERC dismissed Nevada Hydro Company, Inc.’s (“Nevada Hydro”) request that (1) the Lake Elsinore Advanced Pumped Storage (“LEAPS”) facility is a transmission facility and (2) LEAPS is entitled to cost-based rate recovery under the California Independent System Operator Corporation’s (“CAISO”) Transmission Access Charge.  FERC found that Nevada Hydro’s request is premature because LEAPS has not been studied in the CAISO Transmission Planning Process (“TPP”) to determine whether it addresses a transmission need identified through that process, and, if such a need were met, how the facility would be operated.

On September 6, 2018, FERC denied the PJM Interconnection, L.L.C.’s (“PJM”) rehearing request of FERC’s prior order rejecting proposed revisions to PJM’s Amended and Restated Operating Agreement (“Operating Agreement”) and Open Access Transmission Tariff (“OATT”) that would allocate uplift charges to Up-to-Congest transactions (“UTCs”) similarly to other virtual transactions.  However, FERC granted rehearing in part to accept PJM’s proposal to exclude internal bilateral transactions from the calculation of supply and demand deviations for the purpose of uplift allocation.

On August 31, 2018, the Federal Energy Regulatory Commission (“Commission”) issued an order (“August 31 Order”) in which it denied a complaint  (“Complaint”) by the California Public Utilities Commission, Northern California Power Agency, City and County of San Francisco, the State Water Contractors, and the Transmission Agency of Northern California (collectively, “Complainants”) against Pacific Gas and Electric Company (“PG&E”).  Complainants alleged that PG&E was in violation of its obligation under Order No. 890 to conduct an open, coordinated, and transparent transmission planning process because, according to Complainants, more than 80 percent of PG&E’s transmission planning is done on an internal basis without opportunity for stakeholder input or review.  In Order No. 890, the Commission found, among other things, that in order for a Regional Transmission Organization or Independent System Operator’s transmission planning processes to be open and transparent, transmission customers and stakeholders must be able to participate in each underlying transmission owner’s transmission planning process. 

On July 26, 2018, FERC approved AEP Energy Partners, Inc.’s (“AEP Energy”) request that Sharyland Utilities, L.P., AEP Texas, Inc., and Electric Transmission Texas, LLC (collectively, “Tie Owners”) provide AEP Energy with transmission service across interconnections between the Electric Reliability Council of Texas (“ERCOT”) and the Mexican Comisión Federal de Electricidad (“CFE”) transmission system.  In issuing that ruling, FERC seemingly went out of its way to suggest that if two proposed transmission projects – unrelated to AEP Energy’s request – are completed, the interconnections between ERCOT and the CFE system could result in interstate power flows in ERCOT.  While the Commission did not go any further other than to point out this fact, if FERC finds that such interstate power flows exist, FERC could potentially subject utilities in ERCOT to FERC’s plenary Federal Power Act (“FPA”) jurisdiction.