Dive Brief:

• If federal regulators approve a proposed decision, transmission owners in the Midwest could see their base return on common equity slashed roughly 2% points, to 10.3%, resulting in millions in savings for large industrial consumers in Illinois, Indiana, Minnesota, Wisconsin and other states, the Minneapolis Star Tribune reports. 
• All transmission owners in the Midcontinent ISO are authorized to collect a return of 12.38%, except American Transmission Co., which collects 12.2%.
• While transmission customers will likely see significant savings should the ruling stand, they had asked for even more, requesting that the Federal Energy Regulatory Commission (FERC) cut the ROE to just 9.15%. 

Dive Insight:

A FERC administrative law judge last month issued a proposed decision that, if regulators approve it, could save consumers $200 million annually, according to the Minneapolis Star Tribune. Minnesota Commerce Commissioner Mike Rothman called the proposed decision an "important victory," and told the news outlet it "is a huge step in the right direction."

Major industrial customers challenged Midwest transmission rates, describing them as excessive, the news outlet reported. Other consumer advocates joined the challenge from six other states, focusing on whether or not transmission companies' regulated profits are not in sync with the current economic atmosphere and low interest rates. 

Federal regulators could still alter the proposed decision, changing the adjusted return on equity.

"What it demonstrates is that the 12.38% rate was too high," Rothman said. "It was a rate that was exploiting consumers.” And Tyson Slocum, energy program director for Public Citizen, called the 12% rates "insanely high."

Transmission operators were less pleased with the ruling. 

Michigan-based ITC Holdings Corp. called the decision a "constructive step," but told the Minneapolis Star Tribune that return levels needed to be sufficient to attract investment. Wisconsin-based American Transmission Co. defended the current rates as necessary to continue improving the region's infrastructure. Both companies would likely need to issue refunds if the proposed decision is approved.

All MISO transmission owners were named in the complaint, brought by a coalition of transmission customers that included: Illinois Industrial Energy Consumers; Indiana Industrial Energy Consumers; Minnesota Large Industrial Group; and the Wisconsin Industrial Energy Group.