By Chris O’Malley

The transmission rate dispute between MISO’s industrial customers and its transmission owners appears headed for a Federal Energy Regulatory Commission hearing after an administrative law judge recommended last week that FERC terminate settlement proceedings.

Settlement Judge Dawn E.B. Scholz said the parties had reached an impasse (EL14-12).

That clears the way for a pre-hearing conference as early as next month, according to the Organization of MISO States, whose executive committee last week discussed the status of the case.

This fall, MISO industrials filed a complaint contending that the TOs’ current base return on equity — 12.38% except for ATC, at 12.2% — is too high.

MISO industrials contend the base ROE for TOs should not exceed 9.15%, citing changes in financial markets and other factors. Industrials say the lower rate would cut transmission rates by $327 million.

Industrial representatives met with TOs several times to attempt a settlement, to no avail.

At last week’s OMS meeting, Executive Director Bill Smith estimated the case could be resolved by fall 2015.

The dispute follows FERC’s June ruling introducing a new two-step method for calculating electric utility ROEs. Ruling in a case involving New England TOs, FERC tentatively set the “zone of reasonableness” at 7.03% to 11.74%.

Plaintiffs in the MISO case include the Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Minnesota Large Industrial Group and Wisconsin Industrial Energy Group.

A second dispute erupted between the groups on Nov. 6. That’s when industrials, along with consumer advocates and state regulators, asked FERC to reject a request by TOs for a 50-basis point adder as an incentive for their participation in the RTO (ER15-358).

The opponents said that the adder request is an attempt to claw back some of the revenue TOs might lose if unsuccessful in the base ROE challenge. (See Consumers, Regulators Respond as New Front Opens in MISO ROE Battle.)