On March 16, 2023, FERC found that Commonwealth Edison Company’s (“ComEd”) formula rate protocols under the PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariff (“OATT”) appear to be unjust and unreasonable and therefore directed ComEd to show cause as to why its formula rate protocols are just and reasonable or explain what changes to its formula rate protocols would remedy FERC’s concerns relating to the scope of participation, transparency, and challenge procedures.
FERC’s policy governing transmission formula rate protocols were established in a series of orders that started with FERC investigating whether the formula rate protocols in Midcontinent Independent System Operator, Inc.’s (“MISO”) Open Access Transmission, Energy and Operating Reserve Markets Tariff (“MISO Tariff”) were just and reasonable (“MISO Protocol Orders”). In the MISO Protocol Orders, FERC directed MISO to revise the following areas of its formula rate protocols: (1) the scope of participation; (2) the transparency of the information exchange; and (3) the ability of customers to challenge transmission owners’ implementation of the formula rate because of the information exchange. Since the MISO Protocol Orders, FERC has initiated proceedings investigating the justness and reasonableness of formula rate protocols using the standards established in the MISO Protocol Orders.
In reviewing ComEd’s formula rate protocols using the standards outlined in the MISO Protocol Orders, FERC determined that ComEd’s formula rate protocols appear to be unjust, unreasonable, unduly discriminatory, or preferential, or otherwise unlawful because they were deficient in the three areas identified in the MISO Protocol Orders. Specifically, concerning participation, FERC found that by not including a definition of “interested parties,” ComEd’s formula rate protocols may inappropriately limit the ability of certain parties to obtain information about ComEd’s annual updates. Additionally, concerning transparency, FERC found, among other things, that ComEd’s formula rate protocols may not provide sufficient information to interested parties to understand and evaluate the implementation of the formula rate; do not appear to provide sufficient time to review updates and respond to them before they are filed with FERC; inappropriately limit information requests; do not require ComEd to disclose all necessary accounting changes; and do not address affiliate transactions and associated cost allocation or reorganizations or mergers. Finally, FERC determined that ComEd’s challenge procedures were inadequate because they did not include the filing requirements for formal challenges and because they included a finality provision relating to annual updates that likely impeded the statutory rights of FERC or other interested parties to initiate complaint proceedings.
Accordingly, FERC instituted an investigation into ComEd’s formula rate protocols under section 206 of the Federal Power Act. ComEd has until May 15, 2023, to either show cause as to why its formula rate protocols are just and reasonable or explain what changes to its formula rate protocols would remedy FERC’s concerns if FERC were to determine that the formula rate protocols have, in fact, become unjust and unreasonable or unduly discriminatory or preferential and, therefore, proceed to establish replacement formula rate protocols.
FERC’s investigation is under Docket No. EL23-31-000 and its show cause order can be found here.