By Amanda Durish Cook

ITC Midwest is overcharging its customers for network upgrades because it isn’t applying for tax breaks to which it is entitled, customers and Iowa officials told FERC last week.

Among the projects affected is Wisconsin Power and Light’s 201-MW Bent Tree Wind Farm in southern Minnesota.

In an unexecuted facilities services agreement filed with FERC, ITC said it needs $38.8 million in network upgrades to support Bent Tree’s generation. It sought to bill WPL $418,020 monthly over 25 years.

WPL asked FERC last week to reject the rates, claiming the charges are excessive because they fail to reflect the “bonus” depreciation that ITC could claim on its federal taxes (ER16-206).

WPL’s sister company, Interstate Power and Light in Iowa, filed a motion to intervene on Nov. 24, saying it could face an identical situation over its Marshalltown Generating Station, which is interconnecting into ITC’s transmission system in Iowa.

“IPL has estimated that ITC Midwest’s annual revenue requirement is roughly $18 million higher in 2015 than it would have been had ITC Midwest taken available bonus depreciation in prior years in which it was eligible to do so. This results in an ITC Midwest transmission rate which is approximately 5% higher, unnecessarily increasing charges to ITC Midwest’s customers — including IPL and its customers,” IPL stated in its motion.

The Iowa Office of Consumer Advocate, Iowa Consumers Coalition, Iowa Utilities Board and Resale Power Group of Iowa have all filed to intervene in the matter.

“The IUB also understands that when bonus depreciation is utilized, it is done so on all capital investments within a given class of assets in a given year, not just selected projects. Thus, ITC Midwest’s choice to not utilize bonus depreciation will affect not only the Bent Tree or Marshall Generating Station network upgrades, but could affect all capital investments in the asset class, including investments elsewhere in the ITC Midwest transmission system, which could directly affect Interstate Power and Light’s customer costs of transmission service,” the Iowa Utilities Board said.

Likewise, the Iowa Consumers Coalition said ITC should “articulate a sound rationale for not electing to take bonus depreciation.”

ITC did not respond to a request for comment.