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FERC: Retail Customers Can Challenge Rates

December 2, 2015 By Cheryl Kaften

The Federal Energy Regulatory Commission (FERC) ruled (Docket No. ER07-1069-006) on November 12 that retail customers “have a right to intervene and protest against [transmission rates and wholesale power rates] when some portion of those rates will be flowed through to their … bill[s].”

In doing so, the settlement judge responded to two certified questions posed by American Electric Power Service Corporation (AEPSC) –a subsidiary of the major utility AEP that provides management services for the company’s utilities:

  • Shouldn’t Section 306 of the Federal Power Act (FPA) [allowing retail ratepayers or end users to file complaints against interstate wholesale rates] be interpreted in the same way as Section 201 of the FPA? AEP opined that FPA Section 201 gives the commission jurisdiction over wholesale interstate rates and interstate transmission; therefore, retail ratepayers would not have the right to file complaints against wholesale rates.
  • Wouldn’t an expansive interpretation of Section 306 of the FPA violate the delicate balance of federalism? In other words, by giving complaint authority to retail rate customers, is the commission interfering with states’ rights by asserting jurisdiction over retail rates?

The questions surfaced after AEPSC submitted its annual update to FERC on behalf of Southwestern Electric Power Company (SWEPCO), detailing the calculation of charges under the SWEPCO/AEP transmission formula rate in the Southwest Power Pool. open access transmission tariff (OATT).

At that time, a consumer, Martha Peine formally challenged the retail rates she pays, which she asserted included a pass -through of the SWEPCO/AEP transmission rates.

Noting that Peine’s formal challenges address the inputs to AEP’s transmission rate formula, FERC staff argued that these challenges are within the commission’s exclusive jurisdiction. They found that their analysis was consistent with federalism, because Peine’s claims relate to transmission, over which FERC has exclusive jurisdiction – and not to local distribution, which falls within the purview of the state.

In support of its position, commission staff cited FERC’s 2012 ruling in PATH [Potomac-Appalachian Transmission Highline], in which the commission concluded that “[a] complaint regarding a transmission rate can, under commission rules, be filed by any person, including an end-use customer [who] will pay . . . some portion of that rate when flowed into its retail bill.”

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