Commissioner Cheryl A. LaFleur
October 18, 2018
Docket Nos. EL18-140-000
Item No. E-3
Today’s order grants a complaint to reduce the incentive return on equity adders for stand-alone transmission companies (Transco Adders) to 25 basis points for International Transmission Company, ITC Midwest, LLC, and Michigan Electric Transmission Company, three subsidiaries of ITC Holdings Corporation. While I support today’s order, I write separately to further explain my reasoning.
As today’s order explains, Order No. 679 explicitly contemplated that an entity with active ownership by a market participant could nonetheless be sufficiently independent to justify receipt of a Transco Adder under our incentive policies. Order No. 679 identifies a set of criteria that should be considered in determining whether an entity should receive a Transco Adder in such circumstances. While I have concerns regarding the level of independence demonstrated by the ITC entities, I believe that Commission precedent adequately justifies today’s determination that reduced Transco Adders for the three ITC Holdings Corporation subsidiaries are just and reasonable.1
Most importantly, I believe that today’s order reflects a reasonable compromise that provides immediate rate relief to customers.
I believe as we move forward it would be appropriate for the Commission to generically consider our incentive policies to ensure that they are aligned with the goals of promoting investment in transmission infrastructure under Section 219 of the Federal Power Act, while also ensuring just and reasonable rates. In particular, I believe it would be appropriate to explore the value of the Transco business model in promoting transmission development to date, and consider whether, and how, such a Transco Adder should be applied in the future.
For these reasons, I respectfully concur.
- 11 See NextEra Energy Transmission New York, Inc., 162 FERC ¶ 61,196 (2018).