By Chris O’Malley

The Federal Energy Regulatory Commission on Thursday approved requests by two Michigan electric utilities to reclassify a number of distribution facilities as transmission assets within MISO.

FERC granted requests by Consumers Energy (ER15-910) and Wolverine Power Supply Cooperative (ER15-976). Consumers initially filed its reclassification request with the Michigan Public Service Commission, which last October approved a settlement (U-17598) between the utilities and Michigan Electric Transmission Co. (METC). The PSC approved a settlement over Wolverine’s reclassification of the assets from “excluded transmission” to “included transmission” in January (U-17742).

Consumers transferred its transmission assets in 2001 to then-subsidiary METC. A year later, it sold METC to another company, which sold it to current owner ITC Holdings.

In 2012, however, ReliabilityFirst Corp. informed Consumers that its audit had determined that a small set of the company’s distribution facilities were actually transmission facilities.

Consumers said its own analysis confirmed RFC’s findings and identified other assets that it said were similarly misclassified.

In total, Consumers said, the facilities to be reclassified have a net value of $34 million, representing 1.32% of Consumers’ distribution plant. They include equipment in 69 substations on 138-kV transmission lines, 65 138-kV line segments and six substations connecting those lines to Consumers’ bulk power substations.

Consumers noted that FERC previously stated that the 100-kV threshold has been among the factors in determining whether an asset is part of the bulk electric system.

Consumers plans to sign the MISO Transmission Owners Agreement and will join the Michigan Joint Zone, under MISO Rate Schedule 11. FERC also ordered Wolverine to include its reclassified facilities in the Michigan Joint Zone.

Ratepayer Implications Minimal

Consumers said the reclassification will benefit consumers by placing the transmission assets under “the functional control” of MISO. Becoming a transmission owner will allow it to more fully participate in the RTO, Consumers said.

Consumers said the increased costs of the reclassification are negligible, with an incremental revenue requirement of about $50,000, or .001% of Consumers’ $3.9 billion base rate revenue.

The utility noted that some of the assets are used to provide wholesale distribution service. “To avoid a potential double recovery, Consumers will remove the applicable assets from the wholesale distribution service rate and include them instead under its forthcoming transmission rates under the MISO Tariff.”

Wolverine also said a portion of its reclassified assets are also used to provide wholesale distribution service. To avoid a double recovery, Wolverine said it will coordinate with MISO to separately submit a filing to terminate its wholesale distribution service rate with the Zeeland Board of Public Works.

Wolverine said the net plant value of its updated list of included transmission facilities is $249.91 million, or an increase of nearly $16 million.

Tom King, Wolverine’s director of regulation and policy, told RTO Insider that the co-op is still calculating the impact of the change but expects the reclassification to be positive for its members.

Consumers officials could not be reached for comment.