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FERC ROE Policy in a Flux: What’s Happening & Why it Matters
For supposedly a slow-moving industry, there is a lot going on in the electrical industry. One area that may not grab the headlines but is no less important, is the Federal Energy Regulatory Commission’s (“FERC” or the “Commission”) policy on Return on Equity (“ROE”). This rate sets the regulated profit for investor-owned utilities in respect of their FERC regulated transmission assets and plays a significant role in how much wholesale transmission customers and many retail ratepayers pay for transmission service . With no slow down expected in transmission construction across the country, the importance of return on equity will only increase. For the last few years, FERC’s policy on this front has been mired in somewhat of a vacuum following a DC Circuit court remand of a 2014 FERC decision in an ISO New England case, but more recently the Commission has reignited the debate by proposing a drastic change in how it determines a just and reasonable ROE as part of its response to the court’s remand. In this article we look at what exactly the Commission is proposing and how coops and municipalities can continue to protect their members and retail customers in this time of FERC ROE Policy flux. Read Full Article