FERC on Monday again upheld the RTO incentives it previously approved for Southern California Edison and Pacific Gas and Electric, rejecting rehearing requests by California regulators.
Commissioner Richard Glick, who had dissented on the 50-basis-point adder to SCE’s return on equity in December 2017, joined with the majority this time around. (See FERC Sets Hearing on SCE Tx Rates; Glick Dissents.)
The commission has repeatedly approved the adder for the two utilities’ participation in CAISO since creating the incentives in Order 659 in 2007.
The California Public Utilities Commission challenged the adders, arguing that the state’s three big investor-owned utilities — PG&E, SCE and San Diego Gas & Electric — were required by state law to participate in CAISO.
In 2018, the 9th U.S. Circuit Court of Appeals remanded the issue and directed FERC to conduct fact finding on whether PG&E could unilaterally leave CAISO. The commission responded with an order in July, saying that the utilities could leave CAISO without CPUC approval and thus were entitled to the incentive. (See PG&E Deserves $30M ISO Adder, FERC Says.)
In Monday’s orders (ER17-2154-001, ER18-169-001, EL18-44-001), FERC reiterated its conclusion, citing a section of the California Code that states that the IOUs “should commit control of their transmission facilities to the independent system operator.”
“The language of these statutory provisions does not mandate participation in CAISO,” FERC said. “Rather … these provisions speak in terms of encouragement and facilitation of participation.”
Glick said that although he dissented from the 2017 SCE order, “I believe that the commission has now adequately addressed the arguments against” the RTO adder.
– Rich Heidorn Jr.
