MCR

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What We Do

Formula Rate and Cost Analysis

MCR has reviewed or developed over 85 formula rate templates in MISO, SPP and PJM.

Review of existing formula rates

MCR conducts a transmission formula rate diagnostic for the Attachment O in MISO and the Attachment H in SPP and PJM, for existing transmission owners to optimize revenue, withstand cost scrutiny from outside stakeholders and ensure adherence to RTO transmission rate protocols. The diagnostic identifies immediate and near-term opportunities for improvement. Additionally, MCR provides intervention support for challenges to costs included in a formula rate.

Development of new formula rates & revenue impact analysis

We develop the formula rate ATRR for the MISO Attachment O, GG and MM, and the SPP or PJM Attachment H formula rate templates for new prospective electric transmission owners to optimize cost recovery. We assist in developing Section 205 FERC filings to implement new transmission rates, including tailored formula rates and testimony. MCR also provides revenue potential analysis and ATRR forecasts for our clients who are considering RTO membership and/or making a transmission investment. This includes determining the proper type of formula rate template to optimize revenue.

Staff education/workshops

MCR ensures financial data typically used by G&Ts and public power entities within MISO, SPP and PJM (e.g., the RUS Form 12, and GASB accounts) properly maps to FERC accounts. We provide an education workshop to review the completed client formula rate template and underlying work papers, which helps our client’s staff gain an enhanced understanding of the important implications and returns associated with adding new transmission and debt, optimizing revenue and appropriately accounting for transmission vs. distribution activities. Moreover, this training enables client staff to better field inquiries from third parties during potential challenge processes defined in the update protocols.

Challenge to incumbent IOU formula rate costs

At the request of our public power and cooperative clients, MCR reviews transmission and/or generation formula rates of incumbent utilities (often IOUs) in a joint pricing zone to ensure that the incumbent’s costs adhere to the approved formula rate template and protocols, and are in line with the tariff. We also review the RTO/ISO’s allocation of shared project charges to ensure the cost allocation methodology has been properly applied.

FERC Filings

MCR has supported and testified in over 25 FERC filings.

Section 205 filing testimony and support

MCR provides expert testimony, analysis and formula rate cost templates for new TO annual ATRR filings, FERC filings for projected test years, variances to the standard formula rate templates and requests for regulatory asset recovery.

Transmission incentive rate filings at FERC

MCR is the market leader for public power and cooperative transmission incentive rate filings. We develop expert testimony and analytics for transmission incentives rate applications to FERC, including requests for hypothetical capital structure, recovery of construction work in progress (CWIP) in rate base, abandoned plant recovery and regulatory asset account. Our approach for justifying a hypothetical capital structure has been accepted by FERC Commission Staff.

Cost of capital expert testimony

MCR provides expert testimony justifying a public power entity’s cost of capital, including the margin or return on equity. MCR’s extensive knowledge of industry financial metrics and their link to our clients’ debt credit rating enables MCR to justify the optimal return while also considering intervention risks.

Intervention and mediation support

MCR provides analytical and intervention support related to client FERC filings during intervention, settlement and mediation. Our extensive knowledge of FERC case precedents involving public and cooperative power enables us to help obtain the best outcome for our clients.

Strategic Analysis

MCR has completed over 30 client strategic analysis assignments.

Economic evaluation of new transmission projects

MCR analyzes the costs and expected revenues for proposed transmission projects. MCR’s modeling tools, including the Transmission Project Evaluation Tool™, highlight how value is created under various return, financing, cost allocation and recovery scenarios and how to mitigate large anticipated transmission rate increases in the future.

RTO membership economic evaluation

We conduct economic and risk analysis using MCR’s RTO Membership Evaluation Model™ to determine whether it makes financial sense to become a transmission owner in an RTO, such as MISO or SPP. This involves understanding the incremental costs and benefits in light of key issues, such as existing grandfathered agreements.

Development of business plan and evaluation of transmission investment strategies

Against a backdrop of rapidly rising transmission rates, we help public power and cooperative entities begin to run “transmission as a business.” We understand the required processes and disciplines required to be successful. We conduct economic and risk analysis of the various strategic options public power can use to mitigate future transmission rate increases, including expanding the existing local system, investing in new transmission through a joint action agency, taking a minority interest in a Transco or its projects, or partnering with another entity to invest in projects.

Analysis and development of negotiating strategies

MCR provides its clients analytical support during negotiations with incumbent and nearby transmission owners. These topics include substantiating current and forecasted tariff costs, determining potential cost shifting of rates, calculating and making the case for fair or neutral levels of transmission investment, developing lists of anticipated questions and answers in defense of a formula rate template, and where needed, providing expert testimony.

Purchase and sale of existing transmission assets

MCR assists public power and cooperative clients in evaluating the economics, risks and strategic impacts of purchasing or selling electric transmission assets, including substation and transmission lines.