Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to...
Vintage, Voltage or Votes
AEP rekindles debate over grid pricing, but should the outcome hinge on majority rule?
allocation only) for all grid facilities, whether new or legacy.
In opposing the MSAT proposal to expand postage-stamp pricing in MISO, advanced by a group of three stand-alone grid companies, IPL explained:
“The commission also must be cognizant of the specialized business model that is reflected in the petition … based on the construction [of] facilities without corresponding responsibility for generation, distribution or retail customer service. Thus, to the extent capital costs can be passed to customers beyond the footprint in which a local facility is being constructed, the business model is facilitated.”
These comments would suggest there is something wrong with the idea of a transmission-only utility, or that transmission can serve as a profit-making sector. And yet FERC’s policy direction so far has sided clearly with the majority. Call it rate-making by head count. By any measure, FERC so far has left scant room for a viable business model keyed only to the building of transmission lines.