By Suzanne Herel

The Federal Energy Regulatory Commission last week approved an uncontested settlement over the 2010 move by two Duke Energy subsidiaries from MISO into PJM (ER12-91).

FERC had rejected a February 2013 settlement over the move by Duke Energy Ohio and Duke Energy Kentucky, saying it unfairly imposed transition costs on customers that should be borne by the utilities.

The Duke companies agreed in the original settlement to reimburse American Municipal Power for any transition costs and 75% of “legacy” transmission expansion costs resulting from the move. The commission said that discriminated against other Duke customers that had not received exemptions from the transition and legacy costs, which Duke estimated at $518 million. (See FERC Rejects Settlements over ATSI, Duke Moves to PJM.)

FERC then set a hearing over how much Duke would pay to resolve its obligations for transmission expansion projects in MISO.

The new settlement, filed last October, was signed by the Duke companies and the members of AMP, Buckeye Power and East Kentucky Power Cooperative. Also signing on were the Indiana Municipal Power Agency, Dayton Power & Light, and Ohio municipalities Hamilton and Blanchester.

Under the settlement:

• Effective Jan. 1, 2012, the Duke companies’ revenue requirement for wholesale transmission service provided in the DEOK Zone will not include any PJM transition costs or internal integration costs.
• The Duke companies will not recover any MISO “legacy” transmission expansion costs in rates for transmission service provided since Jan. 1, 2012. Going forward, Duke will be permitted to recover 30% of MISO legacy costs.
• The Duke companies’ return on equity for wholesale transmission service shall be reduced to 11.38%, including a 0.5% adder for participation in an RTO. Duke and the other signatories agreed not to seek FERC approval for a change in the ROE that would be effective before June 1, 2017.