FERC on Thursday conditionally accepted a compliance filing by Southern Company revising its formula rate protocols, which FERC said are unjust and unreasonable, and directed the utility to provide a further compliance filing in 60 days on remedying the commission’s concerns (ER22-2642).

Southern had submitted its compliance filing in July 2022 on behalf of its subsidiaries Alabama Power, Georgia Power and Mississippi Power in response to a FERC show-cause order, issued last March, that raised concerns about the formula rate protocols filed in Southern’s tariff.  (See FERC Issues Southern Show-cause Order on Rate Protocols.)

The commission ordered the utility to address deficiencies with the protocols in three areas: scope of participation; transparency of information exchange; and ability of customers to challenge transmission owners’ implementation of the formula rate.

Utility Proposed Multiple Changes

In its filing, Southern updated the protocols to clear up each issue.

Regarding the scope of participation, FERC had directed Southern to “provide a definition of the ‘interested parties’ that can participate in customer meetings, information exchange, and challenge procedures.” Southern proposed a definition that would include “customers under the tariff, state utility regulatory commissions, consumer advocacy agencies, and state attorneys general.” It said the wording fit with established commission precedent.

For the information transparency issue, FERC said that interested parties might not be able to access information that would help them evaluate the correctness of the formula rate. In response, Southern suggested adding language that would require its annual informational filings and true-up filings to:

• provide formula rate calculations and their inputs, along with supporting documentation;
• specify the information that enables interested parties to replicate the calculation of the formula results;
• identify all material adjustments made to relevant data in determining formula inputs; and
• provide underlying data for formula rate inputs that require greater granularity.

Southern also proposed revisions that would allow interested parties to request information and documents necessary to determine the effect of an accounting change, to see if the annual filing includes appropriate data, and to assess the prudence of costs and expenditures. Additional new language would provide for annual meetings regarding the informational filings and joint meetings with other transmission owners. It would also address reorganizations and mergers that affect the inputs to the formula rate.

Addressing other FERC concerns, Southern added language detailing the issues that can be challenged during the review period, procedures for formal and informal challenges, protocols for appointing representatives to work with parties that submit a challenge, and processes for elevating an informal challenge to a formal one.

Clarification Still Needed

FERC accepted most of Southern’s revisions but identified remaining deficiencies that still must be addressed.

The commission noted that the language related to posting of the annual update filings does not include a provision for notification of the filing via email and ordered Southern to add language to that effect.

FERC also said Southern’s proposed true-up filing timeline seemed to require the filings be published by May 1 of the year following the relevant rate year. The proposed protocols, however, require interested parties to file informational requests by Aug. 1 of the rate year. That would be impossible if the filing was not available until the following year, FERC said. The commission required Southern to correct the error.

Regarding the challenge procedures, FERC said that “the lack of provisions in Southern’s protocols to post all information requests, responses to information requests, informal challenges, and informal challenge resolutions [online] could limit” the ability of interested parties to “fully participate in the formula rate process.” It ordered the utility to add a requirement that all relevant information be made available online.

Finally, the commission said that Southern’s proposed timelines for making formal challenges “may not allow interested parties adequate time” to respond. It directed Southern to “propose a date for any interested party to submit an informal challenge … as well as … a formal challenge … after being given a reasonable period of time to review Southern’s responses to the informal challenges.”

The commission set 15 days as the minimum acceptable time between responses to information requests and informal challenge submission deadlines, and 31 days between responses to informal challenges and formal challenge submission deadlines.

Southern is required to submit its compliance filing within 60 days of the date of the order. The original compliance filing is conditionally accepted, effective July 23, 2022, pending its receipt.