Ninth Circuit Considers FERC Transmission Rate Structure

To accurately allocate the cost of transmission, the California Department of Water Resources argued, the Ninth Circuit Court should make federal regulators reconsider their rolled-in rate policy for generators. The Federal Energy Regulatory Commission maintains that its policy allows more new generators access to transmission lines, including encouraging alternative energy sources, by spreading the costs more evenly among users. "FERC abdicated its duty to 'just and reasonable' rates" with the rolled-in rate policy, declared DWR attorney Deborah Barnes in oral arguments before the appellate court January 8. She called it a change in accounting that benefits Pacific Gas & Electric's existing and former subsidiaries, while federal regulators' old accounting system "more accurately allocated" costs. She called rolled-in rate accounting "socialized." Judge Proctor Hug queried back - playing devil's advocate - why FERC should go back to its old system when much of the country uses rolled-in rates. Digging into the other side of the argument, he asked that if rolled-in rates were less accurate than the old system, how could they be "just and reasonable"? FERC attorney Carol Banta said the federal policy aims at the "health of the overall grid." She said it allows less financially onerous access to alternative energy sources by "removing barriers to entry." PG&E supported the rolled-in federal accounting for transmission costs. The court took the matter under consideration. - J.A. Savage

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Ninth Circuit Considers FERC Transmission Rate Structure

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