No Reverting to Pancaked Transmission Charges, FERC Warns MISO Ex Pats

When FERC actively urged utilities to join RTOs and ISOs, it emphasized the need to end rate "pancaking" "• subjecting transmission customers to multiple transmission charges for long-distance power deliveries.  Pancaking has resurfaced in connection with Louisville Gas and Electric's and Kentucky Utilities' withdrawal from the Midwest ISO.   In its latest order authorizing the withdrawal, FERC emphasized the utilities needed to do more to ensure their municipal customers not become subject to rate "re-pancaking" when the two utilities resume operations outside of MISO.

In a previous order, FERC had conditioned the withdrawal on the utilities taking various steps required by MISO agreements, the utilities' merger order, open access transmission obligations, and the standards of the Federal Power Act.  FERC did approve allowing the Southwest Power Pool to serve as the utilities' Independent Transmission Organization, and the Tennessee Valley Authority as their Reliability Coordinator.  In the latest order, however, FERC directed the utilities to amend their open access transmission tariffs to state explicitly that existing customers will receive service subject to the same prices, terms and conditions that they would have received if the utilities had not withdrawn from MISO.  This includes providing transmission and ancillary services at "de-pancaked" rates to a group of Kentucky municipals that rely on the utilities' transmission service.

While the case is complicated by the merger order that imposed other obligations on the utilities, it suggests that even though RTO membership remains voluntary, FERC intends to ensure the availability of RTO-type benefits, including independent operation of the transmission system and de-pancaked of rates.