FERC Grants Edison Higher Rate Returns for Transmission Projects

By Published On: November 16, 2007

In action November 15, federal regulators approved a new policy that would offer three proposed Southern California Edison transmission projects incentive rate treatment. The Federal Energy Regulatory Commission noted that the transmission lines have been vetted through regional planning, which makes them eligible for a higher base for the utility’s equity investments. Edison’s applicable projects include the proposed Palo Verde-Devers 2 line. That line–proposed to run from Arizona to Edison territory–is currently in limbo. California regulators have approved it, but Arizona regulators have turned it down. Another project is the Tehachapi line, planned to bring in wind energy from the mountains to urban areas. A third project is Rancho Vista, with a new 500 kV substation. The commission allowed a 1.25 percent return on equity incentive for the first two lines, and a .75 percent increase in return on equity investment for the substation. A utility spokesperson said the company is reviewing the decision and could not yet estimate the amount of extra money this move would allow Edison. Federal regulators also reaffirmed Pacific Gas & Electric’s revenue sharing process for its secondary products and services. Allowing revenue sharing between ratepayers and shareholders “continues to provide an appropriate incentive that will ensure that the revenues from such products and services will be maximized.” In another California decision, the commission denied San Diego Gas & Electric’s request to rehear the methodology used to grant the state refunds from the 2000-01 energy crisis market manipulation. Regulators noted they want to bring a closure to the refund proceedings.

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