Appeals Court Upholds FERC's ROE Approach

On May 10, the U.S. Court of Appeals for the District of Columbia Circuit rejected Southern California Edison's challenge to the Federal Energy Regulatory Commission's (FERC's or Commission's) setting the company's base return on equity (ROE) for three transmission projects using the median, rather than the midpoint, of a zone of reasonableness. The zone was established using the ROEs of a group of companies facing similar risks. At the same time, the court sent the matter back to the Commission for further proceedings because FERC had updated the base ROE using data produced after the record had closed, without providing Edison an opportunity to challenge FERC's updating methodology.