By Suzanne Herel
FERC on Thursday greenlighted FirstEnergy’s plan to spin off the transmission assets of Jersey Central Power & Light, Metropolitan Edison and Pennsylvania Electric into a new subsidiary, rejecting motions for a stay by New Jersey and Pennsylvania regulators, who also must approve the deal.
New Jersey regulators could vote on the transaction as early as this week.
The proposal would form a new public utility, Mid-Atlantic Interstate Transmission (MAIT), which would manage all 24,000 miles of FirstEnergy’s transmission system. (See FirstEnergy to Spin off its Last Utility-Managed Tx Assets.)
FirstEnergy said the stand-alone transmission company will have a better credit rating, enabling it to save money on grid-strengthening projects under its Energizing the Future program (EC15-157).
The company told the New Jersey Board of Public Utilities and the Pennsylvania Public Utility Commission it expects to save $135 million over the 30-year life of $1.5 billion in projects. It said total transmission spending over the next 10 years could reach $3 billion in the two states.
State regulators had asked FERC not to rule on the deal until after they had rendered their decisions, saying that doing so would impair the states’ proceedings. Both state boards took issue with the classification of the new transmission company as a public utility, raising “jurisdictional issues regarding the safety and reliability oversight of the transmission systems,” according to the FERC order.
FERC determined that the transaction would not adversely affect state or federal regulation, and said that it is not the commission’s policy to delay a decision because of parallel proceedings.
The commission also rejected LSP Transmission’s request that FERC prohibit the new company from claiming a right of first refusal in a broader area than the FirstEnergy operating companies could individually. FERC Order 1000, which opens up new projects to non-incumbent bidders, reserves to incumbents upgrades to existing facilities as well as “local” projects.
In Order No. 1000-A, LSP noted, the commission clarified that “a local transmission facility is one that is located within the geographical boundaries of a public utility transmission provider’s retail distribution service territory, if it has one, otherwise the area is defined by the public utility transmission provider’s footprint.”
In rejecting the request, FERC cited as precedent a 2014 order in which it ruled that “the combined retail distribution service territories of the Entergy operating companies together constitute a single footprint for purposes of defining local transmission facilities.”
In its comments, the Public Power Association of New Jersey recommended FERC accept FirstEnergy’s offer to maintain a hypothetical capital structure of 50% debt and 50% equity for at least two years in order to not adversely affect rates.
FERC agreed and noted that the transaction includes a hold-harmless component preventing MAIT from passing on transaction-related costs to customers.