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Commissioner Richard Glick Statement
December 29, 2017
Docket Nos. ER18-169-000, EL18-44-000
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Statement on Order Accepting and Suspending Proposed Formula Rate Filing

“I support the Commission’s decision to accept Southern California Edison Company’s (SoCal Edison) filing, subject to refund, and establish hearing and settlement judge procedures as well as a proceeding under section 206 of the FPA. However, I dissent from the Commission’s decision to summarily award SoCal Edison an ROE “incentive adder” on the basis of SoCal Edison’s membership in CAISO. For the reasons that follow, I do not believe that this summary approval is the product of reasoned decision-making.

“I do not intend to call into question the Commission’s general policies supporting the efficient development and operation of the nation’s transmission infrastructure. These policies play an essential role in encouraging the development of transmission infrastructure, which benefits consumers in many ways, including by reducing congestion, increasing reliability, and providing access to remotely located renewable energy resources. I also support the Commission’s policies intended to promote decisions by public utilities to participate as members of RTOs, which can provide consumers with many of these same benefits.

“Nevertheless, I do not believe that the Commission has adequately justified its decision to grant SoCal Edison an incentive for RTO participation. In the Energy Policy Act of 2005, Congress amended the FPA to require the Commission to “provide for incentives” to encourage RTO participation.1 In Order No. 679, which implemented this requirement, the Commission explained that it would consider requests for an RTO participation adder as an “incentive” for public utilities to join and remain members of an RTO in “recognition of the benefits that flow from membership in such organizations and the fact [that] continuing membership is generally voluntary.” 2 As the Commission subsequently explained, the purpose of this incentive is to “ensure the[] benefits” of RTO participation “are spread to as many consumers as possible” by creating a financial inducement for public utilities to become and remain a member of an RTO.3 Importantly, however, the Commission explained that it would award the incentives identified in Order No. 679 only “when justified” by the public utility seeking those incentives.4

“In this proceeding, however, it is not clear that there is anything for the RTO participation adder to incentivize or induce because the California Public Utilities Commission has taken the position that that California law requires California’s three largest investor-owned utilities to be members of CAISO. Thus, assuming the California Public Utilities Commission’s interpretation of its own requirements is correct,5 this proceeding is unlike the “general[]” situation that the Commission considered in Order No. 679 because SoCal Edison’s membership in CAISO is not voluntary and, therefore, awarding a 50 basis point RTO participation adder does nothing to harness for consumers the benefits of RTO membership. Accordingly, I believe that SoCal Edison has failed to justify its request for an RTO participation adder.

“In addition, I am troubled by the tension between (1) the Commission’s repeated statements that the RTO participation adder is not a “generic” adder awarded to all public utility members of an RTO6 and (2) the Commission’s decisions, including today’s order, that “presume” that a public utility that is a member of an RTO is eligible for the RTO participation adder and should receive that adder because of the benefits of RTO membership, irrespective of whether this adder actually incentivizes RTO membership.7 Although I do not question the benefits of membership in an RTO—and I support using an RTO participation adder where it incentivizes RTO membership—I believe that the Commission’s approach in this proceeding essentially transforms the “case-by-case” evaluation of a request for an RTO participation adder that the Commission described in Order No. 679 into exactly the type of generic determination that the Commission forswore in Order No. 679 and subsequent orders.

“For these reasons, I respectfully dissent from the Commission’s summary grant of the 50 basis point RTO participation adder.”





                                               

    1 16 U.S.C. § 824s(c) (2012); Pub. L. No. 109-58, Title XII, §?1241, 119 Stat. 961 (2005).
    2 Promoting Transmission Investment through Pricing Reform, Order No. 679, FERC Stats. & Regs. ¶ 31,222, at P 331 (Order No. 679), order on reh’g, Order No. 679-A, FERC Stats. & Regs. ¶ 31,236 (2006) (Order No. 679-A), order on reh’g, 119 FERC ¶ 61,062 (2007); see also Order No. 679-A, FERC Stats. & Regs. ¶ 31,236 at P 86.
    3 Order No. 679-A, FERC Stats. & Regs. ¶ 31,236 at P 86.
    4 Order No. 679, FERC Stats. & Regs. ¶ 31,222 at PP 1, 326.
    5 The Commission notes that CAISO’s tariff permits a member “to petition to withdraw from CAISO at any time.” S. California Edison Co., 161 FERC ¶ 61,309, at P 25 n.49 (2017). However, this language would be without effect if California law nevertheless requires SoCal Edison’s continued participation in CAISO.
    6 Order No. 679, FERC Stats. & Regs. ¶ 31,222 at PP 318, 326; see Am. Elec. Power Serv. Corp., 121 FERC ¶ 61245, at P 10 (2007) (explaining that in Order No. 679, “the Commission called for case-by-case evaluation of whether a proposed incentive is justified (as opposed to adopting a generic incentive for all utilities that join an RTO)”).
    7 S. California Edison Co., 161 FERC ¶ 61,309 at P 25; Pacific Gas and Elec. Co., 154 FERC ¶ 61,118, at P 11 (2016); Pacific Gas and Elec. Co., 152 FERC ¶ 61,252, at PP 23, 25 (2015) (“PG&E is a member of CAISO, an independent system operator, and its membership is ongoing; therefore, PG&E is presumed to be eligible for this incentive adder in accordance with Order No. 679.”).
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