By William Opalka

The Federal Energy Regulatory Commission on Thursday rejected tariff revisions submitted by New England Power, saying they would allow the company to exceed the commission’s limits on transmission returns on equity (ER15-418).

In Opinion 531, FERC last year ordered that the New England Transmission Owners’ total ROE, including base rate and incentives, could not exceed 11.74%, the top of the “zone of reasonableness.” (See FERC Splits over ROE.)

As a result, New England Power was required to revise the tariff governing the transmission facilities of its affiliates, Massachusetts Electric and Narragansett Electric, which it operates as a single integrated system.

But FERC ruled that the revisions the company filed would have improperly allowed it to earn returns of more than 11.74% on some of its assets as long as the average ROE was below the cap.

The commission said the company’s language “relies on the same interpretation of the term ‘total ROE’ that the New England Transmission Owners presented on rehearing in the Opinion No. 531 proceeding. The commission rejected that interpretation in Opinion No. 531-B, and we do so here for the same reasons.”

The commission also ordered the use of data from calendar year 2013, rather than 2012, to calculate the estimated decrease in revenues resulting from New England Power’s tariff revisions. The company had calculated a $2.2 million rate decrease if 2012 was used as the test year, and nearly a $2.3 million decrease based on data for 2013.