A three-judge panel of the D.C. Circuit Court of Appeals on Tuesday upheld FERC’s decision requiring Ameren Illinois to refund inappropriately recovered costs related to transmission construction.
The utility improperly included costs for construction-related supplies and materials in the same filing that was meant to recover the cost of transmission plant materials and supplies, when the construction supplies were not eligible to be recovered under the formula rates Ameren Illinois was using at the time.
“The commission found that Ameren Illinois had misreported materials and supplies costs on Form 1 and ordered Ameren Illinois to pay approximately $11.5 million in refunds to its customers, based on ten years of misreporting,” the court said (20-1277).
Ameren filed for rehearing, which was rejected by FERC (ER20-1237). The company appealed to the D.C. Circuit, which said that FERC has broad statutory authority to grant refunds.
“Upon finding that Ameren Illinois failed to correctly record certain materials and supplies costs in the annual Form 1 report, the commission reasonably determined, based on a balancing of the equities, that refunds were warranted,” the court said.
Ameren argued that FERC issued its customers a “windfall” and failed to perform a required balancing-of-equities test in granting the refund, but the court disagreed.
The utility said reporting construction-related costs in the wrong line was a common industry practice before FERC found Duke Energy Progress doing the same and put the industry on notice that it needed to stop the practice. That means it should not be bound its formula rate, Ameren said.
“No justification is offered for that position,” the court said. “The utility’s view that the misreporting was a mere technicality ignores the fact that such costs, if properly reported at line 5, could not have been passed on to customers under Ameren Illinois’s formula rate.”
Rather than giving customers a windfall, Ameren’s error resulted in a windfall for itself to the tune of $11.5 million. That amounts more than a ministerial error, the court said.
Just because FERC has not issued a refund order for every other utility that listed the construction-related costs under the wrong item does not mean the refund order to Ameren was unjust and unreasonable, the court said.
