Association of Businesses Advocating Tariff Equity v. Midcontinent Independent System Operator, Inc., 112119 FERC, EL15-45-000

Docket Nº:EL15-45-000, EL14-12-003, Opinion 569
Party Name:Association of Businesses Advocating Tariff Equity Coalition of MISO Transmission Customers, Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Inc. Minnesota Large Industrial Group, Wisconsin Industrial Energy Group v. Midcontinent Independent System Operator, Inc. ALLETE, Inc. Ameren Illinois Company Ameren Missouri ...
Judge Panel:Before Commissioners: Neil Chatterjee, Chairman; Richard Glick and Bernard L. McNamee. Nathaniel J. Davis, Sr., Deputy Secretary. GLICK, Commissioner, dissenting in part. Richard Glick Commissioner.
Case Date:November 21, 2019
Court:Federal Energy Regulatory Commission
 
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169 FERC ¶ 61, 129

Association of Businesses Advocating Tariff Equity Coalition of MISO Transmission Customers, Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Inc. Minnesota Large Industrial Group, Wisconsin Industrial Energy Group

v.

Midcontinent Independent System Operator, Inc. ALLETE, Inc. Ameren Illinois Company Ameren Missouri Ameren Transmission Company of Illinois American Transmission Company LLC Cleco Power LLC Duke Energy Business Services, LLC Entergy Arkansas, Inc. Entergy Gulf States Louisiana, LLC Entergy Louisiana, LLC Entergy Mississippi, Inc. Entergy New Orleans, Inc. Entergy Texas, Inc. Indianapolis Power & Light Company International Transmission Company ITC Midwest LLC Michigan Electric Transmission Company, LLC MidAmerican Energy Company Montana-Dakota Utilities Co. Northern Indiana Public Service Company Northern States Power Company-Minnesota Northern States Power Company-Wisconsin Otter Tail Power Company Southern Indiana Gas & Electric Company Arkansas Electric Cooperative Corporation Mississippi Delta Energy Agency Clarksdale Public Utilities Commission Public Service Commission of Yazoo City Hoosier Energy Rural Electric Cooperative, Inc.

v.

ALLETE, Inc. Ameren Illinois Company Ameren Missouri Ameren Transmission Company of Illinois American Transmission Company LLC Cleco Power LLC Duke Energy Business Services, LLC Entergy Arkansas, Inc. Entergy Gulf States Louisiana, LLC Entergy Louisiana, LLC Entergy Mississippi, Inc. Entergy New Orleans, Inc. Entergy Texas, Inc. Indianapolis Power & Light Company International Transmission Company ITC Midwest LLC Michigan Electric Transmission Company, LLC MidAmerican Energy Company Montana-Dakota Utilities Co. Northern Indiana Public Service Company Northern States Power Company-Minnesota Northern States Power Company-Wisconsin Otter Tail Power Company Southern Indiana Gas & Electric Company

Nos. EL15-45-000, EL14-12-003

Opinion No. 569

United States of America, Federal Energy Regulatory Commission

November 21, 2019

Before Commissioners: Neil Chatterjee, Chairman; Richard Glick and Bernard L. McNamee.

ORDER ON BRIEFS, REHEARING, AND INITIAL DECISION

TABLE OF CONTENTS

Paragraph Numbers

I. Background ..................................................................................................................... 2.

A. Opinion No. 531 et seq .............................................................................................. 2.

B. Opinion No. 551 et seq. . ............................................................................................ 3.

C. Second Complaint Against MISO TOs' ROE ........................................................... 5.

D. Emera Maine ............................................................................................................. 7.

E. Briefing Orders ........................................................................................................ 11.

II. Overview ...................................................................................................................... 18.

III. Use of Multiple Models Generally ............................................................................. 22.

A. Background ............................................................................................................. 22.

B. CAPs ........................................................................................................................ 24.

C. MISO TOs ............................................................................................................... 26.

D. Trial Staff ................................................................................................................ 27.

E. LPSC ........................................................................................................................ 28.

F. RPGI ........................................................................................................................ 29.

G. Alliant ...................................................................................................................... 30.

H. Commission Determination .................................................................................... 31.

IV. Presumptively Just and Reasonable ROE Ranges for Determining if an Existing ROE is Unjust and Unreasonable under Prong One of Section 206 ......................................... 40.

A. Background ............................................................................................................. 40.

B. Commission Determination ..................................................................................... 57.

V. DCF .............................................................................................................................. 87.

A. Background ............................................................................................................. 87.

B. Dividend Yield ........................................................................................................ 90.

C. Short-Term Growth Rate ....................................................................................... 101.

D. Long-Term Growth Projection .............................................................................. 134.

E. Has DCF Performed Inconsistently with Underlying Theory ............................... 160.

VI. Expected Earnings Model ........................................................................................ 172.

A. Background ........................................................................................................... 172.

B. Parties Opposing the Use of Expected Earnings ................................................... 178.

C. Parties Supporting the use of Expected Earnings .................................................. 186.

D. Commission Determination .................................................................................. 200.

VII. CAPM ..................................................................................................................... 229.

A. Background ........................................................................................................... 229.

B. Use of CAPM Generally ....................................................................................... 236.

C. Calculation of Market Risk Premium .................................................................... 237.

D. Betas and Size Premium ........................................................................................ 277.

VIII. Risk Premium Model ............................................................................................. 304.

A. Background ........................................................................................................... 304.

B. CAPs ...................................................................................................................... 309.

C. RPGI ...................................................................................................................... 319.

D. LPSC ..................................................................................................................... 327.

E. OMS ....................................................................................................................... 330.

F. Trial Staff ............................................................................................................... 332.

G. MISO TOs ............................................................................................................. 336.

H. Commission Determination .................................................................................. 340.

IX. Potential Consideration of State ROEs .................................................................... 353.

A. Briefing Order Proposal ........................................................................................ 353.

B. CAPs ...................................................................................................................... 354.

C. Alliant .................................................................................................................... 358.

D. MISO TOs ............................................................................................................. 359.

E. Commission Determination ................................................................................... 363.

X. Proxy Group Construction...

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