The FERC affirms transmission access pricing polices
The Federal Energy Regulatory Commission (FERC) has affirmed its transmission pricing policies by denying a rehearing of its January 13 order involving Public Service Electric Gas Co. The action evolved from the FERC's landmark March 1992 Pennsylvania Electric Co. (Penelec) decision that dealt with transmission plant expansion cost recovery. The FERC's January 13 order (see 2/15/93 Fortnightly) dealt with transmission rates and interconnection charges. In addressing transmission rates, the FERC said that Public Service E G may charge a third-party transmission rate that is the higher of its embedded cost rate or its incremental cost of accelerated expansion. (The incremental rate proved higher.) As for interconnection charges, the FERC said that in light of Penelec (which allows for separate cost recovery when an interconnection will not provide system benefits to all customers) the utility may recover the full cost of the interconnection facilities from the plant owner. In arguing for a rehearing, Public Service E G claimed that new transmission customers will use existing grid facilities for free if the transmission service charge is capped at the incremental cost of expanding the grid. The utility also had argued that the FERC's transmission pricing policy sends the wrong price signals. The FERC said there is no free ride, because Public Service E G has been permitted under longstanding practice to charge new transmission customers a rate that reflects a contribution to the fixed costs of its system (including the fixed costs of the existing grid plus the costs associated with any upgrades). Under the policy outlined in its January 13 order, Public Service E G may charge a rate that permits recovery of, at a minimum, the same amount of fixed costs. The FERC declared Public Service E G no worse off under the revised policy that it had been.
- OSTI ID:
- 6261868
- Journal Information:
- Public Utilities Fortnightly; (United States), Vol. 131:12; ISSN 0033-3808
- Country of Publication:
- United States
- Language:
- English
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