FERC Approves Settlement with ROE of 10.6%
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- Jul 1, 2019 7:00 pm GMT
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In ER-19-1427, on March 25, 2019, Southern Company Services, for itself and on behalf of both its respondent affiliates, Alabama Power Company, Georgia Power Company, Gulf Power Company, and Mississippi Power Company (Southern Companies), and the complainants Alabama Municipal Electric Authority (AMEA) and Cooperative Energy (collectively, the Settling Parties), jointly submitted a Settlement Agreement (Settlement) that resolves all issues set for hearing in this proceeding. FERC approved the settlement agreement on June 28, 2019. The Settlement reduces the base return on equity (ROE) in the Southern Company Open Access Transmission Tariff (OATT) formula rate from 11.25 percent to 10.60 percent, effective May 10, 2018, the refund effective date set by the Commission. The Settlement imposes a five-year moratorium on Southern Companies, or any affiliate, making a filing under section 205 of the Federal Power Act (FPA) to amend its OATT rate, except for ministerial or compliance changes necessary to conform with any Commission requirement or mandate, including but not limited to, revisions to address Accumulated Deferred Income Tax (ADIT). It also bars, for five years, filings under section 206 of the FPA by Southern Companies, AMEA, Cooperative Energy, or any affiliate, to reduce the ROE in Southern Companies’ OATT formula rate. However, nothing in the Settlement precludes the Commission from initiating a section 206 investigation of the formula rate or its 10.6 percent ROE, either on its own motion or in response to a section 206 complaint. It likewise provides that the Settlement moratorium does not affect Southern Companies’ obligation to comply with existing or future regulations, including 18 C.F.R. § 35.24 (Tax Normalization for Public Utilities), and that Southern Companies agree that they will need to make a section 205 filing to address the impact of the federal tax rate reductions that became effective January 1, 2018, including the flow-back of excess ADIT to customers.