News 2006
Statement: December 21, 2006 | View Printable PDF Version |
Docket No: RM06-4-001 |
Commissioner Moeller's statement on promoting transmission investment through pricing reform
"Even though I was not here when this final rule promoting transmission investment
through pricing reform was issued, I support the decisions, as modified today, made
in this proceeding. As I have repeatedly stated, this nation is in desperate need of
transmission infrastructure. The decline in transmission investment is threatening
reliability and imposing billions of dollars in congestion costs on consumers.
Congress' recognition of this fact led to its enactment of statutory provisions that
promote investment in transmission infrastructure. Per Congress' mandate, FERC
has worked hard to get Order No. 679 in place to establish incentive-based
(including performance-based) rate treatments for the transmission of electric
energy in interstate commerce by public utilities for the purpose of benefiting
consumers by ensuring reliability and reducing the cost of delivered power by
reducing transmission congestion.
On rehearing, we attempted to balance the concerns expressed by the various
entities--including state commissions, consumer groups, investor-owned utilities,
consumer-owned utilities and investors--with the need to develop transmission
infrastructure and have consequently modified our final rule in key respects.
As discussed by staff, these modifications include our decision to not grant a
rebuttable presumption for projects that are located in national interest electric
transmission corridors because we find that such location does not necessarily
ensure reliability or reduce congestion. Another change in the rule requires
applicants to demonstrate that the total package of incentives is tailored to address
demonstrable risks or challenges faced by the applicant in undertaking the project.
For example, if some incentives reduce the risks of the project, that fact will be
taken into account in establishing a Return on Equity (ROE). Finally, the order
clarifies that each applicant will be required to justify a higher ROE under the revised
nexus test and justify where in the zone of reasonableness that return should be set.
This, we believe, will address the concern that the Commission "will routinely grant
ROEs at the top end of the zone of reasonableness."
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