By Suzanne Herel and Rich Heidorn Jr.

FERC last week ordered Section 206 proceedings in MISO and SPP, questioning the RTOs’ failure to require nonpublic transmission owners to provide refunds in the manner it requires of public utility owners.

The commission expressed “concern that the refund commitments provided by the nonpublic utility transmission owners thus far do not apply to the full range of situations in which they may receive revenues associated with service provided due to their status as transmission-owning RTO members based on RTO rates, terms or conditions that are found to be unjust and unreasonable,” it said in the MISO order, which resulted from a complaint brought against the RTO by a group of transmission owners (EL15-45, EL16-99).

The commission raised similar concerns in opening the 206 proceeding for SPP, saying the lack of full refund provisions for non-public utilities could result in cost shifts, meaning “SPP’s resulting jurisdictional rates may not be just and reasonable” (EL16-91).

Although the commission cannot directly order refunds from nonpublic utility transmission owners that have joined RTOs, FERC said SPP and MISO could compel such refunds indirectly. It suggested the RTOs revise their Tariffs to require non-jurisdictional TOs to promise to honor refunds ordered in FPA Section 205 and 206 proceedings. Such refunds would include those correcting errors in the application of their formula rates and costs later found to be unjust and unreasonable.

“If a nonpublic utility transmission owner chooses not to make such a refund commitment, then SPP would remove its transmission revenue requirement(s) from the SPP Tariff as of a prospective date to be determined by the commission,” FERC said.

In the MISO ruling, FERC also denied the MISO Transmission Owners’ request for rehearing regarding whether a public utility’s ROE may be found unjust and unreasonable even if it falls within the “zone of reasonableness.” FERC set that zone at 7.03 to 11.74% in a June 2014 ruling involving New England TOs.

The commission cited precedents showing that an ROE may be both within the zone and unjust and unreasonable. (See Rural Utilities Allowed to Continue ROE Fight.)

The commission also granted in part and denied in part rehearing requests in a separate docket involving a dispute over base ROEs. (See MISO TOs Seek Base ROE of 11.39%.) The commission denied a request for rehearing from the MISO TOs and Xcel Energy regarding the effective refund date FERC had set. It did grant in part Xcel’s request for rehearing with respect to refunds for nonpublic utility transmission owners.

In EL14-12-001, FERC agreed to clarify its Oct. 16, 2014, order that set hearing and settlement judge procedures along with a refund effective date related to the base ROE for MISO transmission owners. (See ROE Talks Between MISO Industrials and TOs Collapse.)