Incentives for transmission investment could boost postage-stamp pricing over license-plate rates.
Bruce W. Radford is editor-in-chief for Public Utilities Fortnightly.
Last year, when a federal court rebuffed the Federal Energy Regulatory Commission (FERC) on its efforts to reward electric utilities with a higher return on equity (ROE) as a bonus for joining a regional transmission organization (RTO), the judge ruminated on the difficulty of designing incentives for transmission owners: “Calculating this rate [ROE] would be relatively easy,” the judge declared, “if a utility’s interest in its grid—its business as a transmission owner (TO)—were publicly traded.”
However, as the judge then noted, “There are no publicly traded independent pure electric transmission companies.” (See, Kentucky PSC v. FERC, D.C. Cir., Feb. 18, 2005, 397 F.3d 1004.)