FERC Clarifies ROE Policy for Electric Transmission Projects

On November 18, the Federal Energy Regulatory Commission (FERC) issued orders clarifying aspects of its policy on Return on Equity (ROE) determinations for electric transmission projects. FERC clarified its policy through orders on rehearing requests in four separate proceedings that concerned upfront rate incentives for new transmission facilities: Potomac-Appalachian Transmission Highline, L.L.C., 133 FERC ¶ 61,152 (2010); Atlantic Path 15, LLC, 133 FERC ¶ 61,153 (2010); Startrans IO, L.L.C., 133 FERC ¶ 61,154 (2010); and Nevada Hydro Co., Inc., 133 FERC ¶ 61,155 (2010).

In the rehearing requests, the parties had contested recent orders in which FERC appeared to mandate that the proxy group used in the development of an applicant's ROE must be composed of companies in geographic proximity to the applicant.