Item E-2: Commissioner James Danly Concurrence in Part and Dissent in Part Regarding Office of the Ohio Consumers’ Counsel v. American Electric Power Service Corp., et al.

Commissioner James Danly Statement
December 15, 2022
EL22-34-000

I dissent from this order eliminating transmission organization membership incentives from the rates of American Electric Power Service Corporation affiliates Ohio Power Company (Ohio Power) and AEP Ohio Transmission Company Inc. (AEP Ohio Transmission).[1]  The Federal Power Act does not limit incentives to only those utilities that “voluntarily” join a transmission organization.[2]  The Commission improperly added this non-statutory requirement in Order No. 679.[3]  We had no authority to do so then or now.

Section 219(c) of the Federal Power Act provides that “the Commission shall . . . provide for incentives to each transmitting utility or electric utility that joins a Transmission Organization.”[4]  This plain statutory text does not limit the provision of incentives to only those utilities “that ‘voluntarily’ join[]” a transmission organization.  Congress could have established this limitation, but Congress did not.

The Commission itself added the “voluntary” limitation in Order No. 679 and subsequent orders implementing the statutory text.  I do not see this addition as an example of the Commission filling in unforeseen interstices in a statutory regime or acting in the face of statutory ambiguity.  Order No. 679 works an amendment of unambiguous law and only Congress—not FERC—has the authority to pass and amend statutes.  Congress said the Commission shall provide incentives to a utility “that joins” a transmission organization.  Ohio could thus mandate that Ohio Power and AEP Ohio Transmission join a transmission organization and Ohio Power and AEP Ohio Transmission would still qualify for the incentive under the plain terms of the statute for as long as it remains in a transmission organization.

The ruling of the 9th Circuit Court of Appeals that under Order No. 679 “the voluntariness of a utility’s membership in a transmission organization is logically relevant to whether it is eligible for an adder” does not change the meaning of the statute.[5]  The Court in CPUC did not interpret section 219(c) of the Federal Power Act; it only interpreted and ruled on Order No. 679.  CPUC does not address whether FERC improperly exceeded the statutory text by limiting the incentive to a utility “that ‘voluntarily’ joins” a transmission organization.

I therefore would uphold the 50-basis point adder for Ohio Power and AEP Ohio Transmission because they have “joined” PJM, which is a transmission organization.  I also would reverse our “voluntariness” limitation in Order No. 679 because it runs afoul of the statute.

I concur with the majority’s determination that the American Transmission Systems, Inc., and Duke Energy Ohio, LLC, should continue to collect the transmission organization incentive in rates because these incentives were included in comprehensive settlements.[6]  I would add the further rationale that section 219(c) of the Federal Power Act requires it, and the subsequent addition of the “voluntariness” requirement was a Commission invention not authorized by the statute, as discussed above.[7]

For these reasons, I respectfully concur in part and dissent in part.