By Chris O’Malley

The Federal Energy Regulatory Commission has accepted a request by MISO transmission owners to implement a 50-basis-point adder as an incentive for RTO membership.

But the commission suspended the adder (ER15-358) from being applied until TOs demonstrate that their base return on equity is reasonable based on an updated discount cash flow analysis. The resulting ROE, including the adder, must be within the 7.03% to 11.74% “zone of reasonableness” the commission set in June in a case involving New England TOs.

Last fall, MISO industrial customers filed a complaint contending that the TOs’ current base return on equity — 12.38% except for American Transmission Co. — is too high (EL14-12).

The industrials argued the base ROE for TOs should not exceed 9.15%, citing changes in financial markets. The lower rate would reduce transmission rates by $327 million, industrials say.

The base ROE case is now bound for a pre-hearing conference, after settlement talks broke down in December. (See ROE Talks Between MISO Industrials and TOs Collapse.)

TOs filed for the adder request on Nov. 6, in what industrials countered was an attempt to claw back some of the revenue TOs might lose if unsuccessful in the base ROE challenge.

Industrials have argued that TOs don’t need an incentive to remain in MISO and that granting the adder would not benefit the reliability, coordination or operation of transmission facilities.

In its ruling, FERC said industrials and other opponents of the adder failed to provide evidence for that argument.

“We reiterate that the basis for the incentive adder is a recognition of the benefits that flow from membership in an RTO, ISO or other commission-approved transmission organization, and that continuing membership is generally voluntary,” FERC said.

The MISO industrial customers include the Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Minnesota Large Industrial Group and Wisconsin Industrial Energy Group.

The TOs consist of 24 companies, including Ameren, ATC, Entergy, Indianapolis Power & Light and Northern States Power.