BOSTON, February 16, 2023 – London Economics International LLC (“LEI”) has released a primer on transmission formula rates (“TFRs”) on behalf of WIRES.
TFRs are an alternative to the stated rates approach to setting transmission rates, and have become widely used among electric utilities because of their ability to advance multiple ratemaking objectives for customers, FERC, transmission owners, and other industry stakeholders, including:
- transparency, oversight, and stakeholder engagement through TFR protocols, which enable interested parties to submit information requests, as well as raise informal and formal challenges;
- timeliness of cost recovery through an annual update process; and
- reduced regulatory burden and enhanced administrative efficiency from the avoidance of frequent and lengthy rate cases.
LEI observed that stakeholder engagement through TFR protocols is thorough and extensive, as evidenced by the volume of information requests reported by several transmission owners in response to an LEI survey. “TFRs are a very good complement to the extensive stakeholder process for transmission planning in RTO regions,” Julia Frayer, Managing Director at LEI, noted. “Especially in this day and age when we need a variety of infrastructure investment to support the energy transition, the TFR process is much needed.”
For more information, visit WIRES website at: https://wiresgroup.com/primer-on-transmission-formula-rates/