FERC order addresses Colorado co-ops’ complaint over fairness of ROE

FERC on Oct. 5 issued an order on a return on equity (ROE) rate complaint filed by four Colorado member-owned electric cooperatives against Public Service Company of Colorado (PSCo) that consolidates the docket with a previously filed PSCo rate case.

The order answered a June 21 complaint by Grand Valley Rural Power Lines, Yampa Valley Electric Association, Intermountain Rural Electric Association, and Tri-State Generation and Transmission Association challenging the rate of ROE under PSCo’s open access transmission tariff (OATT).

The complainants had submitted a similar protest to an April 20 filing in which PSCo sought to revise its transmission and ancillary service rates under its OATT. The revisions included the modification of certain cost elements, including a 10.25% ROE. The protest called the rate “excessive” and offered independent analyses supporting a rate of 9.15%.

FERC’s Oct. 5 order consolidates the complaint by the cooperatives (Docket No. EL12-77-000) with PSCo’s rate revision request (Docket No. ER12-1589-000).

FERC conditionally accepted the revised tariff sheets in PSCo’s rate case, and suspended them for five months, subject to refund and to be effective Nov. 17.

In the June 21 complaint, the co-ops requested “an investigation of PSCo’s proposed ROE of 10.25% for the period between July 1 and Nov. 17, arguing that the ROE is … not calculated pursuant to FERC precedent, and is unjust and unreasonable.”

The co-ops also requested a refund effective date of July 1, which FERC granted.

FERC’s order requires that a public hearing be set on the combined dockets and that the presiding judge for PSCo’s rate case determine procedures for the consolidation.

A similar complaint challenging the ROE rate of New England transmission owners (NETO) was filed with FERC in September 2011 by Massachusetts Attorney General Martha Coakley (FERC Docket No. EL11-66).

The AG submitted Oct. 1 the testimony of Randall Woolridge, professor of finance at Pennsylvania State University and president of Nittany Lion Fund, in support of a base ROE reduction in NETO’s OATT from 11.14% to 9.2%.

Eastern Massachusetts Consumer-owned Systems submitted Oct. 1 the additional testimony of John Wilson, president of J.W. Wilson & Associates, in conjunction with a request to intervene in the proceedings.

Wilson described his independent analysis in his testimony and suggested FERC adopt an ROE allowance of 8.2% for the NETO case.