By Chris O’Malley

MISO industrial customers will get a full hearing on their bid to reduce transmission rates by $327 million a year.

The Federal Energy Regulatory Commission Thursday ordered an evidentiary hearing on the industrials’ complaint that the 24 MISO transmission owners’ base return on equity (ROE) — 12.38% except for ATC, which has a base ROE of 12.2% — is unjust and unreasonable.

The complaint “raises issues of material fact that cannot be resolved based upon the record before us and that are more appropriately addressed in the hearing and settlement judge procedures,” the commission ruled (EL14-12).

The commission rejected an attempt by the transmission owners — including Ameren, Duke Energy and Entergy — to dismiss the complaint on procedural grounds.

FERC opened the door to fights over the maximum allowable ROE in June, when it changed the way it sets return on equity rates for electric utilities that’s now more akin to the process it uses for natural gas and oil pipelines. Ruling in a case involving New England transmission owners, FERC tentatively set the “zone of reasonableness” at 7.03-11.74%. (See related story, New England TOs to Pay Refunds in ROE Case.)

MISO’s industrial customers say the base ROE for MISO TOs should not exceed 9.15%, citing “significantly changed economic circumstances since the base ROEs were first established.”

The commission rejected the industrials’ challenge to the use of capital structures that include more than 50% common equity.

“Complainants have not demonstrated that MISO TOs, individually or collectively, do not meet the requirement of the commission[’s] three-part test, failure of which would call into question the justness and reasonableness of using their actual capital structures for ratemaking purposes.”

The plaintiffs are six groups of industrial customers, including Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Minnesota Large Industrial Group and Wisconsin Industrial Energy Group.