Developing a transmission formula rate and protocols for a transmission developer (Transmission Formula Rate Analysis)

Background

A transmission developer participated in a public policy-based solicitation process and was awarded a segment of a very large transmission line project. The project represented the developer’s entrance into the RTO, which required a new formula rate and protocols. The transmission developer engaged MCR to develop and support the formula rate and protocols at FERC.

Solution

MCR reviewed documents from the project approval process and participated in discussions with the client team to understand the cost elements and terms for the recovery of the project’s costs. The formula rate was then designed and developed to ensure recovery of all allowed costs and the proper calculation of each rate component, including the inclusion of return on equity incentives granted to the client. MCR worked with the client and outside counsel to develop and finalize the associated transmission owner protocols.

Results

MCR’s expertise and management of the formula rate’s development ensured that the cross-functional client team members were in alignment with the calculation of costs included in the formula rate. The formula rate was tested to successfully recover all approved costs and the protocols were approved by outside counsel. MCR’s testimony in support of the formula rate and protocols went unchallenged throughout the FERC Section 205 filing; and the client gained approval for the formula rate.