By Tom Kleckner and Rich Heidorn Jr.

Three new transmission developers affiliated with established utilities have entered the race for competitive transmission projects in the Midwest.

FERC this month conditionally accepted formula rate templates and related protocols for two new developers in SPP and one in MISO.

The commission acted on filings by ATX Southwest (ER15-1809), an affiliate of Ameren; Kanstar Transmission (ER15-2237), an affiliate of Westar Energy; and Midwest Power Transmission Arkansas (ER15-2236), whose parent is a joint venture of Westar and Berkshire Hathaway Energy.

Midwest Power set its sights on MISO, which expects to issue its first competitive solicitation under FERC Order 1000 as part of its 2015 Transmission Expansion Plan.

ATX and Kanstar intend to compete in SPP, which issued a request for proposals May 5 for its first competitive upgrade, the 21-mile North Liberal-Walkemeyer 115-kV project in Kansas. (See Walkemeyer Transmission Project Wins SPP OK.)

The commission approved the companies’ proposed base returns on equity (ROE) for filing, setting them for hearings and settlement procedures.

Midwest Power was granted use of MISO’s base ROE, currently 12.38%, subject to the outcome of complaints challenging the rate (EL14-12 and EL15-45).

ATX’s request for a base ROE of 10.9% and Kanstar’s requested 10.5% base were accepted for filing and set for hearing and settlement judge procedures.

All three companies also were awarded 50-basis-point adders for participation in an RTO, subject to the total ROE being within the “zone of reasonableness” established in the hearing and settlement procedures.

Also approved were the companies’ hypothetical capital structures, 60% equity and 40% debt for Kanstar and Midwest, and 56-44 for ATX.

FERC denied ATX’s request to recover costs related to transmission facilities abandoned for reasons beyond the entity’s control and its request to include 100% of construction work in progress (CWIP) in its rate base during development and construction. It also denied ATX’s request to include 50% of CWIP in its rate base for all transmission projects it is awarded through SPP’s Order 1000 solicitation process.

FERC also denied Kanstar’s request to recover 100% of costs associated with its proposed Walkemeyer project, should the company be selected to develop the project and it is later discontinued.

The commission announced its orders on Kanstar and Midwest Power at Thursday’s open meeting.

Unfinished Business

In a related order, the commission on Wednesday dismissed as moot a 2013 petition by the trade group WIRES seeking a generic “statement of policy” on regulated rates of return for transmission investments (RM13-18).

WIRES, which represents transmission owners, made the petition in an attempt to counter a dozen complaints challenging as unjust and unreasonable the FERC-approved ROEs for transmission owners around the country.

The commission said it had addressed the issue in Opinion 531, its June 2014 ruling adopting a two-step discounted cash flow method for setting ROEs (EL11-66-001). (See FERC Splits over ROE.)

The group issued a press release expressing disappointment in the commission’s rejection of the petition.

“The downward pressure on ROEs has increased since Opinion No. 531, as have the uncertainties of ongoing litigation,” said WIRES Counsel Jim Hoecker, a former FERC chair. “If other investments become more attractive to investors than transmission, the long-term impacts on the [Environmental Protection Agency’s Clean Power Plan], renewable energy development and the commission’s pro-market objectives could be significant.”

With the number of would-be transmission developers continuing to grow, however, there’s little evidence that the sector is having trouble attracting investment.

Among WIRES members: Berkshire Hathaway Energy.