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FERC NOI on Incentive Rates

FERC seeks input on transmission incentive regulations and issues with Order No. 679 implementation, covering various key areas and providing options for public comment.

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FERC NOI on Incentive Rates

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  1. FERC NOI on Incentive Rates May 25, 2011 1

  2. Background FERC seeks comment on the scope and implementation of its transmission incentives regulations and policies under Order No. 679 (Docket RM11-26-000) • 75 requests for Transmission Incentives from FERC since 2005 • Application of Order 679 is becoming inconsistent in different regions of the country • RSC concerns with incentive rates with Highway Byway cost allocation • FERC has 74 question related to incentive rates for comment. A Brief Review of the NOI and emphasis on Communications 2

  3. Order 679 – Transmission Investment through Pricing Reform • Section 219(a) – requires FERC develop incentive based rate treatments for transmission development. • Section 219(b) – requires: • Promote reliability and efficient transmission regardless of ownership. • Provide an ROE to attract ownership and new technology. • Allow recovery of prudently incurred costs. • Section 219(c) – requires incentives for RTO membership • Section 219(d) – requires rates cannot be unduly discriminate but just and reasonable. 3

  4. NOI Content 74 Questions relate to the following areas • Overall impact of the incentive policy • Adequacy of thresholds of Section 219(b) • Application of advanced transmission technology • Nexus Test for meeting qualifications to get incentive rates • Effects of incentives • Role of cost estimates • Risks/Challenges for appropriate incentive rates • Development of Transco’s • Right level of ROE • CWIP and Abandonment • Other incentives 4

  5. Options for CAWG Consideration • Everyone file separately. • File jointly with RTO. • File jointly with Utilities. • Not File at this time. Avoid Different RSC and FERC Policies 5

  6. Additional Information • CAWG Incentive Chart.doc • FERC Docket RM11-26-000 6

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