Commissioner Chang’s Partial Dissent in Order on Transmission Rate Treatments and Accepting Formula Rate Template and Protocols under ER26-859

Docket No. ER26-859-001 

I dissent in part from today’s order addressing a suite of rate and incentive proposals by Invenergy Grid Midwest LLC (Invenergy), a subsidiary of Invenergy Grid LLC, formed to develop projects in the Midcontinent Independent System Operator, Inc. region.  While I support most of the Commission’s holdings, I disagree with the approval of Invenergy’s requested hypothetical capital structure of 60% equity and 40% debt and would instead set Invenergy’s capital structure for paper hearing, consistent with the Commission’s recent decision in Valley Link and my partial dissent in MGS Iowa.[1] 

In support of its proposed hypothetical capital structure, Invenergy did not provide any company-specific analysis to support its proposal and did not demonstrate that comparable transmission companies, in fact, are capitalized by 60% equity and 40% debt.  For the same reasons explained in my partial dissent in MGS Iowa, the Commission should expect more justification before approving this incentive.  Although the Commission has approved the use of a 60% equity and 40% debt hypothetical capital structure with minimal support in the past, the Commission also has applied greater scrutiny in some cases.[2]  Given such conflicting precedent and the significant rate impact associated with the proposed hypothetical capital structure, I would clarify that the Commission’s expectation going forward is that applicants should provide robust support for their proposed company-specific hypothetical capital structure to be used in setting transmission rates.  Accordingly, instead of accepting Invenergy’s capital structure proposal, I would set it for paper hearing. 

For these reasons, I respectfully dissent in part.