The trickle has turned into a steady drip. Pretty soon it's going to be a gusher.
What started with a successful complaint against New England transmission owners' ROE has been spreading like a virus of sanity.
A group of large industrial MISO consumers filed a complaint at FERC the other day asking to have the 12.38% base ROE lowered to 9.15% to reflect current market conditions, which would save MISO ratepayers $327M anually in unnecessary return paid to transmission owners.
But these complainants took their ROE complaint two steps further.
They also asked to have the debt/equity ratio capped at 50/50. For example, the equity return would be the above-mentioned 9.15%, but the debt return would be a much lower actual cost of debt percentage. These two percentages are combined to come up with the actual return. When the ratio is predominantly equity earning at a higher percentage, this creates a larger return for the transmission owner. By capping it at 50%, this would reduce transmission owner return and save consumers money.
However, the big thing you should be paying attention to is the request that the Commission eliminate previously granted ROE adders for RTO participation (50 basis points) and independent transco formation (100 points). The complainants argue that these adders have long since served their useful purpose and continuation only serves to unnecessarily drive up transmission owner profits.
It's about time this ridiculous transmission profits gravy train slows down. Viva sanity!
What started with a successful complaint against New England transmission owners' ROE has been spreading like a virus of sanity.
A group of large industrial MISO consumers filed a complaint at FERC the other day asking to have the 12.38% base ROE lowered to 9.15% to reflect current market conditions, which would save MISO ratepayers $327M anually in unnecessary return paid to transmission owners.
But these complainants took their ROE complaint two steps further.
They also asked to have the debt/equity ratio capped at 50/50. For example, the equity return would be the above-mentioned 9.15%, but the debt return would be a much lower actual cost of debt percentage. These two percentages are combined to come up with the actual return. When the ratio is predominantly equity earning at a higher percentage, this creates a larger return for the transmission owner. By capping it at 50%, this would reduce transmission owner return and save consumers money.
However, the big thing you should be paying attention to is the request that the Commission eliminate previously granted ROE adders for RTO participation (50 basis points) and independent transco formation (100 points). The complainants argue that these adders have long since served their useful purpose and continuation only serves to unnecessarily drive up transmission owner profits.
It's about time this ridiculous transmission profits gravy train slows down. Viva sanity!
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