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ARTICLE · 03 JANUARY 2013

FERC Issues A Policy Statement Regarding Promoting Transmission Investment Through Pricing Reform

Mayer Brown
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On November 15, 2012, the US Federal Energy Regulatory Commission (FERC) issued a Policy Statement to provide additional and revised guidance regarding its evaluation of applications for electric transmission incentives under section 219 of the Federal Power Act.

United StatesEnergy and Natural Resources
J. Paul Forrester
J. Paul Forrester
David Bloom
David Bloom
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Keywords: FERC, policy statement, transmission investment, pricing reform

On November 15, 2012, the US Federal Energy Regulatory Commission (FERC) issued a Policy Statement to provide additional and revised guidance regarding its evaluation of applications for electric transmission incentives under section 219 of the Federal Power Act. These incentives include increases to the authorized rate of return (ROE), construction work in progress (CWIP) rate treatment and recovery of the costs of abandoned projects under specified circumstances.

As we discussed in our prior Legal Update, FERC has been challenged to provide clear and non-controversial guidance regarding its transmission incentive policy since the adoption of Order No. 6791 in 2006. Some parties argued that FERC was too liberal in providing incentives, while others argued that FERC's tests were applied inconsistently. Accordingly, in May of 2011, FERC issued a related Notice of Inquiry (NOI) soliciting

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