Commission Watch

Irregular seams affect ratemaking policies.

In a case that marks the first time the Federal Energy Regulatory Commission eliminated inter-RTO rate pancaking, the commission in late July issued an order terminating regional through-and-out rates (RTORs) charged by two regional transmission owners (RTOs)-Midwest Independent System Operator (MISO) and PJM Interconnection. The decision removes an estimated $250 million in yearly fees collected by those two entities.

But the lost revenue has parties to the proceeding squabbling over many aspects of the case, such as how to make up for the lost money, and whether new revenue recovery mechanisms should be litigated as compliance filings or in new, separate proceedings. Also up for debate: how to make calculations within the new cost-recovery mechanisms that eventually will be adopted.

The flurry of filings resulted from FERC's finding that the RTORs in the MISO and PJM regions perpetuate seams and rate pancaking, preventing realization of more efficient and competitive electric markets when applied to transactions sinking within the proposed MISO ISO/PJM footprint. FERC eliminated them Nov. 1, 2003.