• FERC Directs MISO and MISO Transmission Owners to Revise Formula Rate Protocols
  • May 21, 2013 | Authors: Peter S. Glaser; Kevin C. Greene; Daniel L. Larcamp; Clifford S. Sikora; Lara L. Skidmore
  • Law Firms: Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Portland Office
  • On May 16, 2013, FERC issued an order on an investigation (“Investigation Order”) that will require revisions to the formula rate protocols of the Midcontinent (previously Midwest) Independent System Operator, Inc. (“MISO”) and its Transmission Owners (“TOs”).  The formula rate protocols are used by the TOs when calculating annual charges pursuant to their formula transmission rates.  As a result of FERC’s Investigation Order, MISO and the TOs must revise their formula rate protocols to: (1) allow for increased participation in the annual update of the TOs formula rates; (2) provide interested parties with additional and more specific information regarding the annual update process; and (3) allow interested the opportunity to challenge those updates.

    FERC’s inquiry into MISO’s formula rate protocols began after several entities argued against the recovery of transmission rate incentives through formula rates during various proceedings at FERC (see May 21, 2012 edition of the WER).  FERC instituted an investigation and set the matter for paper hearing, stating that it was concerned about: (1) the scope of participation regarding who can participate in MISO’s information sharing process; (2) the transparency of the information exchange and what information is exchanged; and (3) the ability to challenge the TOs’ implementation of their formula rates.

    In the Investigation Order, FERC noted that MISO’s formula rate protocols were among the first filed at FERC in 1998.  FERC stated that since that time, numerous other protocols have developed and evolved that offer various benefits to stakeholders.  FERC explained that these newer procedures generally offer a broad scope of stakeholder participation, increased access to additional information, and expanded procedures in which stakeholders can challenge the formula rate updates.

    FERC directed MISO and the TOs to expand the formula rate protocols to allow for information exchange and review by all interested parties - including state utility regulatory commissions, consumer advocacy agencies, and state attorneys general - rather than just customers.  FERC also directed MISO and TOs to expand the amount of information and the level of detail within the information that they share with interested parties so that those parties can properly review and analyze the TOs’ formula rate calculations.  Lastly, FERC directed MISO and the TOs to revise both their pro-forma and company-specific formula rate protocols to outline structured procedures for formal and informal challenges to the TOs’ annual rate updates and true-ups, as appropriate.

    MISO and the TOs must file revised formula rate protocols within 60 days of the date of FERC’s Investigation Order.