Southwestern Electric Cooperative got a few wins last week in its challenges to Ameren Illinois’ annual formula rate updates.
FERC was not swayed by most of the co-op’s arguments against Ameren’s accounting practices behind its formula rate updates for 2020 and 2019, but it did find a few discrepancies in the 2020 rate filing (ER20-1237).
The commission ruled Thursday that Ameren inflated construction-related materials and supplies by putting them on the wrong line in its 2020 books. It ordered Ameren to recalculate its formula rate within 60 days to correct the oversight.
FERC also said Southwestern had credible concern about nearly $20,000 classified as transmission operations and maintenance under an account meant for regulatory costs. It asked Ameren to elaborate within 60 days as to whether that amount was “incurred in connection with a formal case before a regulatory body.”
Finally, the commission said that Ameren placed company-owned life insurance amounts “for officers and other employees for policies in which Ameren Illinois is the beneficiary” in the wrong accounts, overbilling wholesale transmission customers. The commission again ordered a correction within 60 days.
Southwestern has challenged Ameren’s formula rate filings for three years, often unsuccessfully. (See FERC Orders Ameren Accounting Changes and Challenge to Ameren Illinois Rate Rejected Again.)
This time, Southwestern said Ameren recorded some 2020 costs relating to customer service software and net metering software in the wrong account. FERC pointed out that Southwestern couldn’t name a more appropriate account to place the expenses.
FERC also said Southwestern was mistaken in its argument “that expenses deemed non-deductible by the IRS are automatically not includable for recovery in rates.”
“The commission has no such policy, nor does Ameren Illinois’ formula rate reflect such a policy,” the agency said.
Contrary to Southwestern’s arguments, FERC said public relations costs could be included in Ameren’s general expense account and thereby included in the formula rate.
FERC also rejected an argument that Ameren is understating its excess accumulated deferred income taxes (ADIT).
Finally, the commission disagreed that Ameren was including distribution-related expenses in transmission-related expense accounts.
FERC also defended its prior ruling on Southwestern’s challenge of Ameren’s 2019 formula rate update (ER19-1276-001).
Southwestern claimed that any ADIT associated with retired plants is excess ADIT and should be returned to customers. But FERC said the co-op misunderstands ADIT and said the loan “is not kept by the utility, but instead is reversed and payable” to the IRS.
FERC continued to deny Southwestern’s request that Ameren offer more detail around its $14.8 million amortization of excess ADIT. The commission agreed with Ameren that the utility’s software system isn’t sophisticated enough to verify the total excess ADIT broken down by specific plants.
Southwestern argued that transmission customers “are improperly penalized because they do not have sufficient justification for the calculations by Ameren Illinois.”
FERC also denied Ameren’s rehearing request that its renewable energy credits (RECs) should be classified as inventory rather than a prepaid expense.
“RECs should not be removed from the books of account because they are still available for use by the owner,” the commission said.
