Part of Grid Network »

The Transmission Professionals special interest group covers the distribution of power from generation to final destination. 

14,059 Members

WARNING: SIGN-IN

You need to be a member of Energy Central to access some features and content. Please or register to continue.

Post

FERC Grants 50% Recovery of Abandoned Plant Costs

On May 31, 2019, in ER19-2023, Tucson Electric filed, pursuant to sections 205 and 219 of the Federal Power Act (FPA) and part 35 of the Commission’s regulations, a request to recover in rates 100 percent of the prudently-incurred costs that it incurred associated with the development of a 345 kV transmission line between Sahuarita and Nogales, Arizona (Nogales Project), which was ultimately abandoned.  Tucson Electric states that, at a minimum, it is eligible to recover 50 percent of the prudently incurred costs associated with the Nogales Project.  In its Order dated September 19, 2019, FERC denied Tucson Electric’s request for 100 percent recovery of prudently incurred costs associated with the Nogales Project and granted Tucson Electric’s request for 50 percent recovery, consistent with Opinion 295.  FERC accepted and suspended the filing for a nominal period, effective August 1, 2019, subject to refund, and set for hearing and settlement judge procedures the types and level of prudently incurred costs and the appropriate amortization period.  FERC denied Tucson Electric request for 100 percent abandoned plant cost recovery on a retroactive basis and many years after it incurred the costs (mostly prior to 2005) and abandoned the project (2014).  Tucson Electric developed the Nogales Project (and incurred the associated costs) not only prior to its submittal of the Abandonment Incentive application, but also largely prior to the enactment of section 219 of the FPA and the issuance of Order No. 679. 

Paul Dumais's picture

Thank Paul for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Discussions

Matt Chester's picture
Matt Chester on Oct 3, 2019 3:11 pm GMT

In its Order dated September 19, 2019, FERC denied Tucson Electric’s request for 100 percent recovery of prudently incurred costs associated with the Nogales Project and granted Tucson Electric’s request for 50 percent recovery, consistent with Opinion 295.

Curious if you think this was the most likely expected outcome, and also was this likely Tuscon Electric shooting high knowing they'd likely be able to achieve at least the 50% recovery?

I'm not nearly as educated and informed on these FERC cases as you are, Paul, so I really appreciate your continued contributions and explanations. 

Paul Dumais's picture
Paul Dumais on Oct 3, 2019 8:24 pm GMT

Your welcome, Matt.  FERC grants 50% recovery unless a transmission owner applies to FERC and is granted an abandonment incneitve, which Tucson had just done even though the incurred the project costs many years ago.  Since FERC's abandonment incentive applies to costs incurred on and after receipt of the incentive, it did not work for Tucson.  It turned out as I expected.  

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »