NOVI, Mich., July 28, 2015 /PRNewswire/ -- ITC Holdings Corp.
(NYSE: ITC), the nation's largest independent electricity
transmission company, today filed a Petition for Declaratory Order
with the Federal Energy Regulatory Commission (FERC) asking for
needed guidance on issues critical to the regional competitive
transmission bidding processes established under Order 1000. ITC's
Petition seeks guidance from FERC as to how winning bids will be
treated for ratemaking purposes: whether bids selected through
FERC-approved competitive transmission solicitation processes are
deemed to be just and reasonable. In addition, the Petition asks
FERC to award winning binding, full revenue requirement bids
protection from future rate challenges unless required by the
public interest.
ITC's Petition comes at a time when Regional Transmission
Organizations (RTOs) are initiating their recently approved
competitive solicitation processes. Southwest Power Pool (SPP)
currently has an open bidding window for its first competitive
project. The Midcontinent Independent System Operator (MISO)
is expected to launch its competitive process prior to year
end. Both SPP and MISO require 40-year, annual revenue
requirement (project costs plus return) estimates. Based on
experience in other regions, it is likely developers will seek to
submit binding bids for these revenue requirements as well.
Full revenue requirement bids raise questions as to how a regulated
cost-of-service methodology works in a competitive
environment. This question has not been addressed to date,
because CAISO and PJM, the only other regions that have conducted
competitive processes to award new transmission projects, only
require that developers bid on project costs, not full revenue
requirements.
"As Order 1000 is being implemented, cost containment measures,
including binding bids, are becoming commonplace, which shifts more
risk to transmission developers," said Daniel Oginsky, executive vice president of U.S.
Regulated Grid Development for ITC. "To have veracity in the
competitive process, cost containment mechanisms make sense, but it
is also necessary for FERC to address this untenable 'head's I win;
tails you lose' situation for developers," said Oginsky.
Any costs incurred by the winning bidder in excess of a binding
bid, regardless of prudence or benefit to ratepayers, will not be
recoverable. To be fair then, cost savings achieved below the
binding bid level should benefit the developer who achieved those
savings. However, developers would be exposed to Federal
Power Act Section 206 complaints seeking to lower rates.
Thus, a developer is faced with receiving the lower of cost or bid,
a situation that is unfair and will not for long support genuine
competition in transmission development.
The Petition proposes the Commission grant Mobile-Sierra
protection for a winning binding bid, at FERC's discretion, upon
approval of an implementing FPA Section 205 rate filing. Such a
result would be consistent with the United States Supreme Court's
Mobile-Sierra cases, which protect agreements freely entered
into and has been extended to rates and rate elements developed
through competitive market processes, including rates established
through capacity auctions.
"It is illogical to require developers to offer 40-year bids
with rate components that could be changed through future
regulatory proceedings. We do not need a lengthy, costly and
complex new competitive process to regulate transmission rates. The
goal should be that competition will result in disciplined rates
and drive innovation," Oginsky said.
A member of three RTOs, ITC has invested $5.2 billion in transmission infrastructure since
its inception in 2003 through March 31,
2015, completing four large-scale regional transmission
projects in the past four years alone across the Midwest and Great
Plains. "To make competitive transmission work, we need to know
when we make our bid whether that bid will be acceptable to federal
regulators and how durable it is. If a developer takes on
greater risk by binding its bid, and that bid is found to be
superior to all others and selected through a FERC-approved
process, customers should not be able to undo that agreement,
unless there is a higher public interest reason for doing so,"
Oginsky explained.
ITC's Petition does not seek to require any developer to offer a
binding bid, nor does it suggest FERC must determine that all Order
1000 solicitation processes are functionally competitive.
About ITC Holdings Corp.
ITC Holdings Corp. (NYSE: ITC) is the largest independent
electric transmission company in the
United States. Based in Novi,
Michigan, ITC invests in the electric transmission grid to
improve reliability, expand access to markets, lower the overall
cost of delivered energy and allow new generating resources to
interconnect to its transmission systems. Through its regulated
operating subsidiaries ITCTransmission, Michigan Electric
Transmission Company, ITC Midwest and ITC Great Plains, ITC owns
and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, serving a combined peak load
exceeding 26,000 megawatts along approximately 15,600 circuit miles
of transmission line. ITC's grid development focus includes growth
through regulated infrastructure investment as well as domestic and
international expansion through merchant and other commercial
development opportunities. For more information, please visit ITC's
website at www.itc-holdings.com. (ITC-itc-F).
Safe Harbor Statement
This press release contains certain statements that describe our
management's beliefs concerning future business conditions, plans
and prospects, growth opportunities and the outlook for our
business and the electricity transmission industry based upon
information currently available. Such statements are
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Wherever possible, we
have identified these forward-looking statements by words such as
"will," "may," "anticipates," "believes," "intends," "estimates,"
"expects," "projects" and similar phrases. These forward-looking
statements are based upon assumptions our management believes are
reasonable. Such forward looking statements are subject to risks
and uncertainties which could cause our actual results, performance
and achievements to differ materially from those expressed in, or
implied by, these statements, including, among others, the risks
and uncertainties disclosed in our annual reports on Form 10-K,
quarterly reports on Form 10-Q and other filings made with the
Securities and Exchange Commission.
Because our forward-looking statements are based on estimates
and assumptions that are subject to significant business, economic
and competitive uncertainties, many of which are beyond our control
or are subject to change, actual results could be materially
different and any or all of our forward-looking statements may turn
out to be wrong. Forward-looking statements speak only as of the
date made and can be affected by assumptions we might make or by
known or unknown risks and uncertainties. Many factors mentioned in
our discussion in this release and in our annual and quarterly
reports will be important in determining future results.
Consequently, we cannot assure you that our expectations or
forecasts expressed in such forward-looking statements will be
achieved. Except as required by law, we undertake no obligation to
publicly update any of our forward-looking or other statements,
whether as a result of new information, future events, or
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SOURCE ITC Holdings Corp.