Commissioner James Danly Statement
February 18, 2021
Docket No. EL20-57-000
Order: E-20
I concur in the Commission’s order issued today because I think a hearing is necessary to update the record, and because I think it important to give the parties the opportunity to settle. The data and analyses submitted by Cloverland Electric Cooperative and Wisconsin Electric Power Company cover only the time periods ending on April 2020 and July 2020, respectively. Further, some of the submitted data may not reflect market conditions, particularly in light of the COVID-19 pandemic and the policies adopted in response to the pandemic. Hearing procedures will afford an opportunity for the parties to update the record to reflect more recent data. For instance, Value Line data for proxy group companies is updated on a rolling quarterly basis. Hearing procedures also will afford an opportunity to submit amended CAPM analysis and the use of the 30-year U.S. Treasury average historical bond yield over a six-month period.
I do not think, however, that an evidentiary hearing is necessary here, either to update the record or to facilitate settlement.[1] Evidentiary hearings are expensive, time-consuming, and add additional layers of process by requiring the issuance of an Initial Decision followed by two rounds of briefs. Further, the Commission has a record of issuing untimely decisions in ROE proceedings. For example, the complaint that ultimately led to Opinion Nos. 569 and 569-A was filed in 2013 and was not finally resolved until 2020. The complaint in this proceeding was filed almost eight months ago and we are only now setting it for hearing. If there is no settlement, the complaint most likely will not be resolved for three or more years from the date it was filed.
Although some cases need to be resolved through an evidentiary hearing, this is not one of them. Rather, the goals of updating the record and facilitating settlement could be achieved through a paper hearing in which updated evidence and arguments are filed and then settlement proceedings can begin. Such a process would be considerably less expensive and time consuming than an evidentiary hearing and would leave the Commission in position to rule in a year or less. This seems to me to be a much preferable result.
For these reasons, I respectfully concur.
[1] While I agree the record should be updated, I do not think there are any significant issues that must be resolved through an evidentiary hearing to determine the appropriate return on equity (ROE) once we have the updated data. Opinion Nos. 569 and 569-A spell out in detail how ROE determinations are to be made. See Ass’n of Bus. Advocating Tariff Equity v. Midcontinent Indep. Sys. Operator, Inc., Opinion No. 569, 169 FERC ¶ 61,129 (2019), order on reh’g, Opinion No. 569-A, 171 FERC ¶ 61,154, order on reh’g, Opinion No. 569-B, 173 FERC ¶ 61,159 (2020). Although there are a few disputes in this proceeding not addressed in those opinions, those disputes are discrete, relatively less important, and can be resolved by the Commission without an evidentiary hearing.