Conducting a transmission formula rate review and education of client staff for a joint action agency (Transmission Formula Rate Analysis)
“Everyone I know would do well to have MCR come in at least once to do a review. It’s good to have an independent resource that isn’t attached to (the RTO) … for our agency and three of our members, MCR was able to point out some significant areas where we weren’t recovering all we could; and, for one of those organizations, those numbers were substantial.”
—CFO
Background
A joint action agency had been a transmission owner in an RTO for many years. Faced with changing RTO formula rate protocols, the client wanted to ensure that its transmission costs were properly recorded and documented, and its transmission revenue was being optimized within the framework of the RTO tariff.
Solution
MCR conducted a review of the client’s transmission-related cost information to ensure they were recorded in accordance with FERC’s Uniform System of Accounts. MCR also pointed out opportunities to increase transmission revenue within the confines of the formula rate.
During a day-long staff workshop session, MCR educated key company and member personnel on the components and allocators in the formula rate and the new RTO protocols, including the required work papers.
Results
As a result of the review, the client made some adjustments to its recording of costs and work papers, and capitalized on ways to increase transmission revenue. Overall, the client staff developed a deeper understanding of the formula rate details and is now better equipped to answer formula rate questions from stakeholders and the RTO.