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Developing a Section 205 rate filing to change the formula rate template


“Their knowledge helped improve our collection of transmission costs through an adjustment to the tariff template, a strategy they developed and we were able to get implemented. It was a very helpful, innovative and unique solution to put us on a more even playing field with peer transmission owners.”

—Chief Financial Officer, joint action agency


Background

A joint action agency was faced with an under recovery of its transmission-related costs because the standard transmission formula rate was not appropriate for its particular business situation. The joint action agency requested MCR’s assistance to help increase recovery of these costs.

Solution

MCR identified a potential change to the standard template that would more fairly allocate common costs to the agency’s annual transmission revenue requirement (ATRR). The joint action agency decided to make a Section 205 rate filing at FERC to change their formula rate template and asked MCR to support them. MCR identified key filing issues to be addressed, researched supporting precedents and provided an initial draft of the testimony sponsored by the client and supporting exhibits. MCR worked with the testimony sponsor, the rest of the client team and their outside counsel to enhance the testimony.

Results

The filing encountered no protests and it was accepted by FERC through a letter order. As a result, the client was allowed to change its template, which resulted in recovery of hundreds of thousands of dollars of additional transmission costs each year.