UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Belmont Municipal Light Department
Braintree Electric Light Department;
Concord Municipal Light Plant;
Georgetown Municipal Light Department;
Groveland Electric Light Department;
Hingham Municipal Lighting Plant;
Littleton Electric Light & Water Department;
Middleborough Gas & Electric Department;
Middleton Electric Light Department;
Reading Municipal Light Department;
Rowley Municipal Lighting Plant;
Taunton Municipal Lighting Plant;
Wellesley Municipal Light Plant,
Complainants,
v.
Central Maine Power Company;
Emera Maine (formerly known as Bangor HydroElectric Company); Eversource Energy
Service Company and its operating
company affiliates: The Connecticut Light
and Power Company, Western
Massachusetts Electric Company, Public
Service Company of New Hampshire, and
NSTAR Electric Company; New England
Power Company d/b/a National Grid; New
Hampshire Transmission LLC d/b/a
NextEra; The United Illuminating
Company; Fitchburg Gas and Electric Light
Company; and Vermont Transco, LLC,
Respondents.
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Docket No. EL16-64-000
MOTION TO INTERVENE AND PROTEST OF EDISON ELECTRIC INSTITUTE
Pursuant to Rules 212, 214 and 711 of the Federal Energy Regulatory Commission’s
(“FERC” or the “Commission”) Rules of Practice and Procedure, 18 C.F.R. §§ 385.212, 385.214
and 385.711 (2016), the Edison Electric Institute (“EEI”), on behalf of its member companies,
1
hereby submits this Motion to Intervene and Protest to the April 29, 2016 Complaint in the
above-captioned docket.
EEI submits this motion to intervene out-of-time and protest for the limited purpose of
addressing the broad industry-wide ramifications of a threshold legal and policy issue presented
by this Complaint, which is the fourth successive return on equity (“ROE”) complaint to be filed
in a five-year period against a group of New England Transmission Owners (“NETOs”). The
Commission has responded to the prior complaints challenging the NETOs base ROE by setting
each complaint for trial-type hearing. The Commission has concluded that any complaint
presenting a new Discounted Cash Flow (“DCF”) analysis, and thus offering a numerically
different rate from the rate sought in the prior complaint (and the base ROE in effect), has ipso
facto presented a “different issue” from the prior complaint—even when the prior complaint (or
two) remains pending, and without regard to the claimed differential in rates. The instant
Complaint threatens to prolong for years a wasteful cycle of pancaked ROE complaints and
endless litigation and create substantial uncertainty for transmission investment at a time when
significant transmission investment is sorely needed. If not reassessed now, the perpetual rate
uncertainty and litigation created by this approach will have sweeping ramifications across the
country that go well beyond the litigants in this proceeding.
The Commission’s recent approach to successive ROE complaints like those filed against
the NETOs contravenes two firmly established principles with respect to Federal Power Act
(“FPA”) ratemaking in general, and section 206 complaints challenging rates, in particular. First,
with respect to ratemaking, the Supreme Court and other federal courts have for decades
affirmed the bedrock principle that there is no one single just and reasonable rate, but rather a
range of just and reasonable rates. Second, when it comes to section 206 complaints, Congress
2
has directed the Commission to limit rate uncertainty due to refund exposure to a period of 15
months.
To date, the Commission has granted and set for full trial-type hearings successive ROE
complaints based on the false premise that they each necessarily present a “different issue”
simply because they include an “updated” DCF analysis showing the ROE for a given proxy
group has changed from the previous year and would, if adopted, produce a lower ROE than the
existing rate—no matter how small the difference, and without regard to the veracity and
defensibility of the complaint’s analysis. While section 206 allows the filing of complaints, there
is no inherent right to a trial-type hearing every time a complaint is filed; rather, the Commission
must determine that the complaint makes a prima facie case that the existing rate may not be just
and reasonable. Through its recent approach to successive complaints, the Commission has
effectively disregarded a complainant’s burden to make a prima facie case and plainly
contravened decades of law holding that there is a range of just and reasonable rates. Under the
Commission’s rationale, one could even file a new complaint—and have a right to a whole new
trial-type hearing—based on a change to a single DCF input, many of which are subject to nearconstant fluctuation.
The Commission’s approach has also allowed complainants to circumvent the 15-month
limit on rate uncertainty adopted by Congress by acting to pancake section 206 complaints. The
complainants, knowing that the Commission now regards literally any change in a DCF model
used to determine ROEs as a basis to set a complaint for trial-type hearing and establish a “new”
refund period, have persisted in filing follow-on complaints at or shortly following the expiration
of each 15-month period. This pattern of behavior circumvents the plain language of section 206
3
and clear congressional intent to limit the uncertainty of refund exposure to a single 15-month
period.
In addition to contravening established law and congressional intent, the pancaking of
complaints and endless litigation that now threatens to continue for years longer has upset any
sense of regulatory certainty. For the past five years, transmission customers, utilities, and
investors have not known the ROE in New England.
Such prolonged uncertainty will
undoubtedly make it more difficult to develop cost-effectively the needed transmission
infrastructure in New England and elsewhere. The parade of ROE complaints has also imposed
significant burdens and consequences on all parties (including the Commission itself), not the
least of which is the time and expense of what has become an endless cycle of litigation at the
Commission-level and in the courts as well.
The Commission’s procedural approach to
addressing these successive complaints has also resulted in a situation where it has been unable
to resolve the proceedings in a reasonable time period, consistent with Congress’s expectations.
This fourth successive Complaint—filed while two prior complaints remain pending—
clearly demonstrates that the Commission’s recent policy with respect to successive ROE
complaints is now producing extreme outcomes that are not only costly, burdensome, and
administratively wasteful, but also create uncertainty, add risk, and threaten future transmission
investment. The Commission is now at a critical juncture. Following its recent approach here
with this fourth complaint will perpetuate this litigation cycle, prolong uncertainty to at least a
decade in New England alone, and create additional nationwide uncertainty with regard to the
stability of transmission returns for investors. For this reason, EEI, on behalf of its member
companies, files this motion to intervene and protest to provide the Commission with an
4
industry-wide perspective on the consequences of continuing the current approach to allowing
pancaking ROE complaints in transmission ratemaking.
MOTION TO INTERVENE OUT-OF-TIME
Pursuant to Rule 214, 18 C.F.R. § 385.214 (2016), EEI submits the following in support
of its Motion to Intervene Out-of-Time. EEI is the association that represents all U.S. investorowned electric companies, international affiliates and industry associates worldwide.
Our
members provide electricity for 220 million Americans, operate in all 50 states and the District
of Columbia, and directly employ more than 500,000 workers. With more than $100 billion in
annual capital expenditures, the electric power industry is responsible for millions of additional
jobs. Safe, reliable, affordable and clean energy drives our economy and powers America.
EEI’s members make considered investments in needed and beneficial transmission
infrastructure—investments the Commission and Congress have recognized are critical to ensure
a reliable, cost-effective, and modern bulk power system. To that end, EEI is uniquely situated to
address matters concerning the Commission’s policies with respect to transmission rates and how
such policies impact the development of transmission infrastructure.
Granting EEI late intervention is appropriate in this case.1 As noted above and discussed
further herein, the Complaint in this case—and the circumstances in which it has been filed—
implicates fundamental issues of great importance concerning the Commission’s approach to
ROEs in general, and complaints under section 206 of the FPA challenging ROEs. How the
Commission proceeds in this case, therefore, will have ramifications that go well beyond the
1
In deciding whether to grant late intervention, the Commission may consider whether: (i) the movant had
good cause for failing to file a motion to intervene within the time prescribed; (ii) any disruption of the proceeding
might result from permitting intervention; (iii) the movant’s interest is not adequately represented by other parties in
the proceeding; and (iv) any prejudice to, or additional burdens upon, the existing parties might result from
permitting intervention. 18 C.F.R. § 385.214(d)(1).
5
litigants in this case, affecting the entire industry, transmission investors, and a wide range of
consumers and other stakeholders. As the association representing the interests of investorowned utilities and transmission owners, EEI is uniquely situated to provide the Commission
with an important perspective on the impact of its current approach to addressing successive
ROE complaints, and the need to reconsider that approach here to ensure that utilities can
continue to make cost-effective investments in needed transmission infrastructure. To that end,
EEI’s interests are not adequately represented in this proceeding.
Importantly, no party will be prejudiced, harmed, or burdened by EEI’s intervention at this stage.
EEI accepts the record in this proceeding as it stands and does not intend to litigate the merits of
the DCF analysis or any other case-specific data. Rather, EEI seeks to participate in this
proceeding only for the limited purpose of addressing important threshold legal and policy issues
concerning the Commission’s approach to section 206 complaints challenging ROEs. In light of
the importance of these issues, EEI’s unique perspective, and the fact that no party will be
harmed by EEI’s participation, there is good cause for the Commission to grant EEI intervention
and accept this filing.
PROTEST2
I.
The Endless Cycle of ROE Litigation in New England, and the Commission’s
Sanctioning of Continued Successive ROE Complaints, Creates Uncertainty
That Now Threatens Needed Infrastructure Investments
Before addressing the legal and policy infirmities of the Commission’s recent approach to
successive ROE complaints—and in particular, how it contravenes the intent of Congress to limit
the period of rate uncertainty created by section 206 complaints—a brief review of the
2
EEI is submitting this Protest to address the pancaking complaint issues raised by the instant Complaint
that will have broad ramifications across the industry if not addressed by the Commission, but takes no position on
the merits of the Complaint.
6
chronology of events in these proceedings demonstrates the extreme level of instability and
uncertainty, and endless litigation, that has resulted from this approach to date. In Opinion No.
531-B, the Commission confronted claims that its current approach to ROE complaints would
lead to an “increase in uncertainty, controversy, and litigation.”3 In its response, the Commission
summarily rejected any assertion that its approach to ROE complaints would “lead to increased
uncertainty and litigation” on the basis that the Commission was following “long-standing
practice.”4 Not only has the Commission contravened established principles regarding both FPA
ratemaking in general and section 206 complaints, but, as demonstrated below, the ROE
complaint process has become riddled with uncertainty, controversy, and litigation.
Since September 30, 2011, four separate complaints have been filed against the NETOs
alleging that the NETOs’ ROE is not just and reasonable, with this docket reflecting the fourth
and most recent such complaint. The first complaint (Complaint I) was filed on September 30,
2011, and alleged that the NETOs’ 11.14 percent base ROE was unjust and unreasonable because
capital market conditions had significantly changed since the existing base ROE was established
in 2006. The complaint sought to reduce the ROE from 11.14 percent to 9.2 percent.5 The
existing base ROE had been established by the Commission more than five years earlier and
relied largely on market data that was seven years old.6 The Commission allowed Complaint I to
move forward and established hearing and settlement judge procedures.
In December 2012, just days prior to expiration of the 15-month refund period
established by Complaint I—and while the parties were still litigating Complaint I—a second
3
NETOs, Request for Rehearing and Motion for Clarification, Docket No. EL11-66-003, at 46 (filed Nov.
17, 2014).
4
Coakley v. Bangor Hydro-Elec. Co., 150 FERC ¶ 61,165, at P 32 n.67 (2015) (“Opinion No. 531-B”).
NETOs, Complaint Challenging Base Return on Equity, Docket No. EL11-66-000, at 3 (filed Sept. 30,
2011) (“Complaint I”).
6
Id. ¶ 28.
5
7
complaint (Complaint II) was filed against the NETOs concerning the same ROE set in 2006.
The Commission likewise allowed Complaint II to move forward and established hearing and
settlement judge procedures. In July 2014, approximately four months after the maximum 15month refund period established in Complaint II expired, in the midst of ongoing litigation
concerning Complaint II, and while the Commission had yet to decide Complaint I, a third
complaint (Complaint III) was filed alleging that the very same existing base ROE was not just
and reasonable. Again, the Commission established hearing and settlement judge procedures
rather than dismissing the complaint as the NETOs requested.
And in April of this year, the fourth and most recent complaint (Complaint IV) was filed
challenging the NETOs’ ROE.
Although the Commission has decided Complaint I and
established a new base ROE of 10.57 percent,7 Complaints II and III remain undecided. If the
Commission were to follow the pattern established to date and set Complaint IV for hearing and
settlement judge procedures, the end result will likely be the prolonged litigation of the NETOs’
ROE for nearly a decade.
As noted above, the Commission has set each successive complaint for trial-type hearing
procedures, summarily concluding that complainants have made a prima facie showing that the
existing ROE—already subject to litigation—may not be just and reasonable. By setting each
successive complaint for hearing, the Commission has allowed complainants to extend the
NETOs’ period of rate uncertainty beyond the 15-month statutory maximum by claiming that
each complaint has presented a “different issue” solely because it offered a new DCF analysis
reflecting a rate lower from the existing rate, irrespective of the validity of the modeling or the
extent to which the proffered rate differs from the existing rate or what ROE has been proposed
7
Coakley v. Bangor Hydro-Elec. Co., Opinion No. 531-A, 149 FERC ¶ 61,032 (2014).
8
in prior complaints. The practical consequences of this approach have been to usher in an era of
endless, unprecedented ROE litigation, in which at least one ROE complaint—and often multiple
complaints—are the subject of active litigation or otherwise pending before the Commission at
all times, resulting in uncertainty and added risk for investors in transmission.
The end result of this sequence of complaints has been little more than costly and
burdensome litigation that has caused perpetual rate uncertainty for utilities, consumers, and
investors alike, and hampered the Commission’s ability to resolve section 206 complaints in a
timely manner, as Congress envisioned when it adopted the Regulatory Fairness Act (“RFA”).
Indeed, there is no evidence that the successive complaints in New England will ultimately yield
major differences in the effective ROEs that render the existing ROE outside of the range of just
and reasonable rates.8

The Perpetual Litigation Cycle Has Caused Prolonged Uncertainty
Since Complaint I was filed on September 30, 2011, transmission rates in New England
have been continuously subject to refund with only limited exceptions, foreclosing any notion of
rate or revenue certainty. Transmission rates have now been unresolved for 45 months since
Complaint I was filed—nearly three times the 15-month statutory limit under section 206 of the
FPA (discussed in detail below). The most recent ROE complaint threatens to further extend this
rate uncertainty as complainants have sought yet a new refund period.
Such perpetual rate and revenue uncertainty comes with a cost, as it ultimately increases
the cost of capital, which threatens the ability of utilities in New England and elsewhere to make
needed transmission infrastructure investments in a timely and economically-efficient manner. It
8
Complaint I sought to reduce the base ROE from 11.14 percent to 9.2 percent. In October 2014, after
nearly three years of litigation, the Commission reset the NETOs’ base ROE from 11.14 percent to 10.57 percent.
See id.
9
also has tangible consequences for the ability of utilities to report to shareholders and investors
regarding their financial outcomes, causing additional uncertainty. Investment analysts, in fact,
have begun to take note of, and report on, the risks associated with rate uncertainty caused by the
perpetual litigation cycle.9
The endless rate and revenue uncertainty also contravenes the
Commission’s stated objective of “provid[ing] regulatory certainty through consistent
approaches and actions,” and the Commission’s recognition that rate certainty itself is a core
component of just and reasonable rates.10 Ultimately, the added risks caused by perpetual rate
uncertainty could negatively impact the level of transmission infrastructure that is needed to be
developed, causing the inability to connect new generation resources (including locationconstrained renewable resources needed to meet evolving federal and state policy goals) and
leaving unresolved significant market inefficiencies caused by transmission congestion, all to the
ultimate detriment of consumers.

The Perpetual Litigation Cycle Delays the Resolution of ROE Disputes, Contrary to
Congressional Intent, and Wastes Resources
The practice of setting successive complaints for full trial-type hearings, even before the
previous complaint, or two, has been resolved, has created an endless cycle of ROE litigation at
the Commission that has delayed resolution of ROE disputes and consumed valuable resources
of the parties and Commission staff. Since Complaint I was filed in September 2011, at least one
ROE complaint has been the subject of pending administrative proceedings every day for the
past five years. The additional pancaked complaints—and the Commission’s decision to send
them all to trial-type hearing procedures—has also undoubtedly diverted resources and
9
See, e.g., Wolfe Research, Don’t you FERCedabout ROE, Don’t Don’t Don’t Don’t!, Utilities & Power
(Apr. 6, 2015).
10
See FED. ENERGY REGULATORY COMM’N, About FERC, http://www.ferc.gov/about/about.asp (last
visited Aug. 4, 2016).
10
contributed to delays in issuing final decisions on earlier complaints. More than three years
passed before a decision on the merits on Complaint I was issued, and it will take more than four
years to do the same on Complaint II. As discussed below, this timetable for resolving section
206 complaints is not what Congress envisioned when it reformed section 206 through the RFA.
Moreover, the pendency of multiple complaints subject to ongoing agency proceedings,
including active litigation before the Commission and in the appellate courts, wastes the
resources of all involved. The full cost to the parties of this perpetual litigation cycle is likely
incalculable, but at a minimum includes extensive costs for the attorneys and consultants
necessary to litigate these complex cases. The Commission itself is not immune from the
burdens and costs of litigation, since valuable staff resources must also be devoted to managing
and resolving these duplicative proceedings. And again, the burdens and costs must be viewed in
the context of what is actually being accomplished; to date, there is no evidence that successive
complaints will ultimately yield major changes to the base ROE established in the initial
complaint.

There Is No Evidence Successive Complaints Will Produce Major Changes to the
Base ROE
In the nearly four years during which successive ROE complaints against the NETOs
have been pending, there has been little correlation between the base ROEs sought by
complainants in the successive complaints and what the Administrative Law Judge (“ALJ”) has
recommended following trial-type hearing. Such a lack of correlation is unsurprising given that
the Commission’s current approach to ROE complaints allows complainants to show that the
ROE may not be just and reasonable and obtain a new trial-type hearing simply by offering a
DCF analysis that produces a different ROE, without regard to the veracity and defensibility of
the analysis or the magnitude of potential difference from the existing ROE. Moreover, the
11
ALJ’s recommended base ROEs for Complaints II and III, if adopted by the Commission, would
ultimately produce only modest changes to the effective ROE established in the initial complaint
proceeding. If the Commission were to adopt the ALJ’s recommended base ROEs for the first
two successive complaints against the NETOs (Complaints II and III)—which EEI is not here
advocating the Commission do—the weighted average base ROE for all three complaints that
have been litigated (approximately 10.4 percent) is very close to the base ROE the Commission
set in response to the initial complaint (10.57 percent).11
II.
The Endless Cycle of Litigation is the Compounded Product of Two Legal
Errors in the Commission’s Analysis of the ROE Complaints
EEI respectfully submits that the endless cycle of litigation that has occurred in New
England—and the resulting consequences described above—is the product of two fundamental
errors with respect to the Commission’s recent approach to setting the ROE and granting
successive ROE complaints:
1. In recent years, the Commission has taken the position that there is but one single just
and reasonable base ROE, and that all other ROEs are necessarily not just and
reasonable; and
2. The Commission has allowed complainants to perpetuate an endless cycle of
litigation by setting each successive ROE complaint for trial-type hearings—resulting
in circumvention of the statutory 15-month refund period limitation under section 206
of the FPA rather than resolution of complaints within 15 months.
As explained below, this approach to setting ROE rates and handling related complaints
contravenes judicial precedent and the plain language of section 206 of the FPA. The Supreme
Court has held for sixty-five years that there is a range of just and reasonable rates, such that a
showing of an alternative just and reasonable rate cannot on its own establish that the existing
11
In Opinion No. 531-A, the Commission set a base ROE of 10.57 percent for Complaint I. That ROE was
in effect during the approximately 15-month Complaint I refund period and for approximately four months in 2014
after the Complaint II refund period lapsed but before Complaint III was filed. When averaged with the 15-month
refund periods applicable to Complaints II and III, the weighted average base ROE is approximately 10.4 percent.
12
rate is not just and reasonable. By setting for trial-type hearing any ROE complaint alleging an
alternative just and reasonable rate, no matter how small the difference from the original ROE,
the Commission is contravening this binding precedent. Moreover, by entertaining successive
complaints that are filed, at least in part, because the Commission has not yet decided the
previous complaint and complainants wish to extend the refund period, the Commission has
contravened clear legislative language limiting refund liability, and has upset Congress’s
carefully crafted incentives intended to facilitate speedy resolution of section 206 complaints.
Even apart from the legal infirmities of the Commission’s recent approach to ROE
complaints, EEI urges the Commission to rethink the policy ramifications of continuing down
this path. The ROE litigation in New England over the past several years has not been an
efficient or effective means of ratemaking. Additionally, the Commission has repeatedly found
that reasonable rate certainty is itself a core component of setting just and reasonable rates.12 Yet
the past five years have seen the Commission set transmission rates retroactively through an
endless cycle of ROE complaints and lengthy litigated proceedings. This approach has not only
deprived utilities, consumers, and investors of any sense of rate or revenue certainty, but it has
needlessly consumed valuable resources of the Commission and litigants alike. The perpetual
litigation cycle has thus far produced recommended ROEs that are generally substantially closer
to the existing rate than the rate sought in the complaint. In sum, even if the Commission’s
approach were legally tenable, it would nevertheless reflect a profoundly inefficient, if not
wasteful, means of ratemaking.
12
See, e.g., Alliance Cos., 94 FERC ¶ 61,070, at 61,312 (2001) (finding a rate proposal just and reasonable
because it provided “greater rate certainty for suppliers and customers”).
13
A. The Commission’s Assertion That There Can Be Only One Just and
Reasonable ROE—Which Has Set the Foundation for an Endless Cycle of
Litigation—Is Inconsistent With the Law and Is Not Sound Policy
Setting aside the question of whether successive ROE complaints are legally proper—a
question discussed below—a principal cause of the perpetual litigation that has ensued the past
several years is the legal standard the Commission has applied in reviewing such complaints and
determining whether they meet the section 206 threshold of showing that the existing base ROE
may not be just and reasonable and should be set for hearing. In the context of ROE complaints,
the Commission has recently determined:
[O]nly the single point approved by the Commission within the DCF zone of
reasonableness is the just and reasonable base ROE. It follows that showing the
existing base ROE established in the prior case is unjust and unreasonable merely
requires showing that the Commission’s ROE methodology now produces a
numerical value below the existing numerical value.13
In other words, the Commission now posits that there is but one single base ROE that is just and
reasonable, and that a complaint offering any analysis showing that a potential just and
reasonable ROE could be something other than the existing ROE necessarily shows that the
existing ROE may no longer be just and reasonable.
This rationale ignores the previously uncontroversial principle that there is more than one
just and reasonable rate. Extensive precedent—including Supreme Court precedent dating back
sixty-five years—holds that there is not merely one “just and reasonable” rate, but rather a
“zone” of just and reasonable rates. The Supreme Court has recognized that ratemaking is not an
“exact science” and, therefore, “there is no single cost-recovery rate, but a zone of
13
Opinion No. 531-B at P 32; see also Arkansas Elec. Coop. Corp. v. ALLETE, Inc., 156 FERC ¶ 61,061,
at P 19 (2016); Ass’n of Bus. Advocating Tariff Equity v. Midcontinent Indep. Sys. Operator, Inc., 156 FERC
¶ 61,060, at P 23 (2016).
14
reasonableness.”14 Indeed, “[s]tatutory reasonableness is an abstract quality represented by an
area rather than a pinpoint” and “allows a substantial spread between what is unreasonable
because too low and what is unreasonable because too high.”15 Not only is there a range of just
and reasonable rates, but the Supreme Court and others have described that range as necessarily
“broad.”16
An additional consequence of the Commission’s assertion that there is only a single just
and reasonable ROE is the collapsing of the two distinct burdens under section 206 (to show that
the existing rate is not just and reasonable and to determine a rate that is just and reasonable) into
a single analysis—something that the Commission admits has occurred: “the fact that both of the
burdens of proof under FPA section 206 can be satisfied using a single ROE analysis—one that
generates an ROE that is both below the existing ROE (thus demonstrating that the existing ROE
is excessive) and that also is a just and reasonable ROE (thus demonstrating what numerical
point the new ROE should be)—does not alter those two burdens.”17 The Commission’s recent
approach to ROE complaints, therefore, contorts the statutorily-mandated process for changing
rates under section 206 and does away with the longstanding, judicially recognized distinction
between the one-part burden under section 205 and the two-part burden under section 206.
The Commission has sought to justify its recent approach to ROE complaints—which
disregards longstanding precedent and has opened the door to seemingly endless rate litigation—
based on a hyper-technical (and legally inconsequential) explanation that, when it “finds a
utility’s base ROE to be just and reasonable in a particular case, it finds only that single point to
14
FPC v. Conway Corp., 426 U.S. 271, 278 (1976).
Montana-Dakota Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 251 (1951).
16
In re Permian Basin Area Rate Cases, 390 U.S. 747, 797 (1968); Panhandle E. Pipe Line Co. v. FERC,
777 F.2d 739, 746 (D.C. Cir. 1985).
17
Arkansas Elec. Coop. Corp., 156 FERC ¶ 61,061, at P 19 (2016).
15
15
be just and reasonable” and “not . . . any other base ROE within the DCF zone of
reasonableness.”18
EEI agrees with the Commission that, generally speaking, when the
Commission approves a rate under section 205 or establishes a rate under section 206, it is
finding only that rate—and not any other rates—to be just and reasonable. This is necessarily the
case, as the FPA requires the Commission to determine that the rates it approves and establishes
are just and reasonable.
But it does not follow logically that the Commission approving only that single rate as
just and reasonable at the conclusion of a proceeding means that there is in fact only a single just
and reasonable rate. The Commission has indeed acknowledged this in approving tariff and rate
filings submitted under section 205, noting that its job is not to insist on the “most” just and
reasonable rate, but instead to ensure that the rate ultimately approved and in place is just and
reasonable.
Yet in applying the same just and reasonable standard to successive ROE
complaints, the Commission repeatedly has made, and continues to make, a presumption that a
DCF analysis suggesting a lower ROE—however small the difference from the existing ROE—
is sufficient grounds to conclude that the existing ROE may be unjust and unreasonable and to
establish an entirely new trial-type hearing and refund effective date. This presumption conflates
the Commission’s approval of a single rate with there being only one possible just and
reasonable rate. Put another way, the Commission’s approach has equated approving a rate as
just and reasonable with an affirmative finding that every other rate is necessarily not just and
reasonable. Such a view simply cannot be reconciled with the extensive precedent holding that
there can be more than one just and reasonable rate. This approach taken by the Commission is
18
Id.; Opinion No. 531-B at P 32.
16
plainly inconsistent with the notion of a range of just and reasonable rates that the Supreme
Court, other federal appeals courts, and the Commission itself has recognized for decades.19
EEI urges the Commission to also think through the legal and policy implications of this
approach. If the Commission truly believes that there is but one ROE that can be just and
reasonable, and that “showing the existing base ROE established in the prior case is unjust and
unreasonable merely requires showing that the Commission’s ROE methodology now produces a
numerical value below the existing numerical value,” no matter how far below, then ROEs will
inevitably be subject to endless litigation and relitigation. The DCF methodology used by the
Commission to set ROEs relies on various data inputs, many of which are subject to short-term
fluctuations. If, as the Commission has said, an ROE is only just and reasonable when it is the
exact rate produced by a DCF model, then the ROE necessarily becomes unjust and
unreasonable the moment a single input into the DCF model changes. This approach would
allow a section 206 complainant to demonstrate that an ROE is no longer just and reasonable by
showing only the slightest of changes to a single DCF data input.
EEI respectfully submits that this is not the law and should not be the Commission’s
policy. Rather, there must be some meaningful limiting principle governing the threshold for
demonstrating that an ROE may no longer be just and reasonable and requires examination in a
trial-type hearing. Absent such a threshold, the Commission not only contravenes longstanding
judicial and Commission precedent holding that there is a range of just and reasonable rates, but
places ROEs on a hair trigger—ensuring that the slightest change in any data input to a DCF
19
The Commission has rejected claims that the range of just and reasonable rates is coextensive with the
“zone of reasonableness” produced in a DCF analysis. See, e.g., Opinion No. 531-B at P 24 (asserting that the DCF
“zone of reasonableness” has a “technical meaning that differs from its meaning when used in general descriptions
of what constitutes a just and reasonable rate . . . .”). That issue is currently pending appeal before the D.C. Circuit.
But even if the DCF “zone of reasonableness” does not reflect a zone of legally just and reasonable rates, that does
not mean that there is not some zone of just and reasonable rates.
17
model is sufficient to show that the existing rate may no longer be just and reasonable and to
send the parties back to litigation. Once back in litigation, the parties and Commission staff will
spend years devising a new ROE which will itself only remain just and reasonable in the
Commission’s eyes for the most fleeting of moments until a single input to the DCF
methodology changes again. That is, under the current approach, by the time the Commission
ultimately approves the base ROE produced through the litigation process, the base ROE will
inevitably no longer be just and reasonable as it was based on a snapshot of DCF data that has
changed in at least some respects since the DCF snapshot was taken.
B. The Commission Has Inadvertently Incented the Endless Litigation Cycle
by Improperly Allowing Pancaking of Complainants to Extend Potential
Refunds Beyond the 15-Month Statutory Limitation Through Successive
Complaints
Section 206 of the FPA explicitly and deliberately limits a utility’s refund exposure in a
complaint case challenging its rates to a maximum of 15 months.20 However, the Commission’s
position that a successive ROE complaint is justiciable and should be set for hearing whenever a
proffered DCF analysis produces any rate that is lower than the existing rate effectively sets no
bar for making a prima facie case that the existing ROE may be unjust and unreasonable given
that DCF inputs constantly fluctuate, and contravenes the 15-month limitation on refunds. This
position, which is illogical in the context of setting ROEs, has encouraged complainants to file a
new complaint at the end of the 15-month refund period established in the previous complaint
proceeding, to extend potential refunds over a longer time period. Each of the four successive
ROE complaints at issue here were filed at or closely following the expiration of the maximum
20
16 U.S.C. § 824e(b).
18
15-month refund period for the prior complaint. As complainants have admitted, this is no
coincidence.21
EEI urges the Commission to revisit its position with respect to successive complaints in
the ROE context for three reasons. First, by automatically granting successive ROE complaints
and instituting lengthy trial-type hearings, the Commission has contravened clear statutory
language and legislative intent limiting utilities’ rate and revenue uncertainty to a maximum of
15 months. The Commission’s basis for automatically granting successive ROE complaints and
instituting lengthy trial-type hearings—specifically, its presumption that an updated DCF
analysis is “new, more current data” that presents a “different issue” than the previous
complaint—fails to reconcile the unique context of ROE challenges, where changes to the DCF
inputs happen monthly. Second, by automatically granting successive ROE complaints and
instituting new trial-type hearings, the Commission has also facilitated complainants’ continual
evasion of the statutory limit on refunds. Finally, the Commission’s approach to successive ROE
complaints has created circumstances that both frustrate Congress’s goal of facilitating speedy
resolution of section 206 complaints and upset Congress’s carefully crafted structural incentives
in section 206—outcomes that are antithetical to core objectives of the RFA.
1. The Commission’s Treatment of Successive Complaints in the
ROE Context Contravenes Clear Statutory Language and
Legislative Intent Limiting Refund Exposure to 15 Months
In allowing successive ROE complainants to perpetually extend the 15-month maximum
refund period by filing successive complaints, the Commission has contravened the statutory
language and legislative intent limiting refunds in a section 206 case to 15 months. In amending
the FPA through the RFA to provide the Commission with refund authority under section 206,
21
See ENE, et al., Complaint Challenging Base Return on Equity and Motion for Consolidation, Docket
No. EL13-33-000, at 5-6 (filed Dec. 27, 2012) (“Complaint II”).
19
Congress considered—and explicitly rejected—the idea that a refund liability should be
indeterminate. While the original legislation proposed potentially unlimited refund exposure,22
after receiving testimony regarding the consequences of such rate uncertainty, Congress
amended the legislation to “limit[] the time period during which refund liability can accrue” by
providing that, “[i]n general, refunds may only be ordered for amounts paid in excess of lawful
rates during the period within 15 months of the refund effective date.”23 In allowing successive
ROE complaints to be used to extend the 15-month limitation on refunds, the Commission has
contravened not only the plain statutory language of section 206, but Congress’s intent in
limiting refund exposure to a maximum of 15 months.
EEI submits that the Commission’s reasoning for refusing to consider any range of
justness and reasonableness and instead automatically establishing trial-type hearings in
successive ROE complaints does not withstand reasonable scrutiny, particularly in the context of
the legislative history of the RFA. The Commission has repeatedly entertained successive
complaints in the ROE context—setting them for hearing and establishing a new refund period—
on the basis that each successive complaint is based on “new, more current data” and presents a
“different issue” than the previous complaint.24 Even if this policy may make sense in other
22
133 CONG. REG. 18,693 (July 1, 1987) (statements of Rep. Terry L. Bruce and Rep. Edward J. Markey)
(discussing refunds without reference to a time period limitation) (“Our bill makes a one paragraph addition to
section 206 of the FPA. That paragraph directs FERC to set a refund effective date for section 206 rate decrease
complaints. If, after completing its investigation and proceedings, FERC decides that a wholesale electric rate is too
high, the decrease can go into effect from the time the purchasing utility sought relief: the refund effective date.”).
23
Regulatory Fairness Act: Hearing on S. 1567 and H.R. 2858 Before the S. Comm. on Energy & Nat.
Res., 100th Cong. 74-76, 85-87, 91-92, 99-100, 107-08, 115-17, 138, 295-97 (1987) (witness statements urging
modification of the legislation to avoid the uncertainty of an indeterminate refund period); S. REP. NO. 100-491,
1988 U.S.C.C.A.N. 2684, 2688 (1988) (2d Sess. 1988) (“While giving FERC the discretionary authority to grant
refunds, the Committee amendment in several respects limits the time period during which refund liability can
accrue. In general, refunds may only be ordered for amounts paid in excess of lawful rates during the period within
15 months of the refund effective date.”).
24
Arkansas Electric Coop. Corp., 156 FERC ¶ 61,061, at P 33 (2016); ENE v. Bangor Hydro-Elec. Co.,
151 FERC ¶ 61,125, at P 28 (2015); ENE v. Bangor Hydro-Elec. Co., 147 FERC ¶ 61,235, at P 27 (2014).
20
contexts (although virtually any jurisdictional rate could be reassessed based on “new, more
current data” at any point in time), it makes no sense in the case of establishing an ROE under
current DCF analysis standards. Daily changes in market conditions impact the DCF analysis
and, under a hyper-technical application of the Commission’s policy on successive complaints,
can be said to be “new, more current data” presenting a “different issue.” As a practical matter,
this rationale provides no limiting principle whatsoever.
Nor is there any basis for believing that Congress intended the 15-month refund
limitation to apply only to rates that were not susceptible to changes due to “new, more current
data”—the logical corollary of the Commission’s position. In instituting a 15-month refund
period limitation, Congress expressly recognized that inputs to determining just and reasonable
rates are susceptible to frequent, if not constant, change. In introducing the RFA, Senator
Bumpers noted that “[e]lectric rates go up and down in response to a number of factors, such as
interest rates, construction costs, wages, fuel costs, and tax rates.”25 With the possible exception
of tax rates, all of these examples of rate inputs are subject to near-constant change. Under the
Commission’s recent approach to ROE complaints, showing even the slightest fluctuation in any
DCF input would provide a basis for granting a “new” section 206 complaint and establishing a
new refund period that effectively extends the 15-month refund period beyond its statutory limit.
This simply cannot be a proper application of the RFA when Congress itself—in instituting a 15month refund period limitation—recognized that inputs to just and reasonable electric rates (like
the inputs to the DCF analysis) were subject to near-constant fluctuations.
25
Statements on Introduced Bills and Joint Resolutions, 133 CONG. REC. S10925-01 (1987) (statement of
Sen. Bumpers).
21
2. By Automatically Sending All Successive ROE Complaints to
Trial-Type Hearing, the Commission Has Permitted Complainants
to Continually Evade the Statutory Limitation on Refunds
It cannot be reasonably disputed that the primary impetus to the successive ROE
complaints in New England has been to circumvent the 15-month refund period limitation. As
noted above, complainants have admitted that this is their primary consideration, and the fact that
complainants have consistently filed successive complaints at or shortly following expiration of
the prior complaint’s maximum refund period is further confirmation. This is an evasion of the
15-month refund limit established by section 206, and there is no principled basis on which the
Commission should encourage or permit such conduct, especially when it prohibits it in other
contexts.
In recent years, the Commission has sought to discourage market participants from
complying with the “letter of the law” while taking advantage of rule “loopholes.”
The
Commission has been concerned with practices that, while perhaps technically compliant with
existing rules, regulations, or statutes, can nevertheless be inconsistent with the purpose behind
the rules, regulations, or statutes, and therefore should not be permitted.
Moreover, the
Commission has long recognized the importance of complying with not only the letter of the law,
but the spirit.26
As discussed above, there is no doubt that the primary purpose underlying successive
ROE complaints is to improperly extend the potential for refunds beyond the statutory 15-month
refund period limitation. That complainants have done so by offering a “new” or “updated”
26
See, e.g., City Power Mktg., LLC, 152 FERC ¶ 61,012, at P 216 (2015) (finding that certain conduct
violated “both the letter and the spirit” of a Commission rule); New England Power Pool, 45 FERC ¶ 61,456, at
62,417 n.4 (1988) (directing entity to “take appropriate steps to ensure that future submittals fully comply with the
letter and the spirit of [the Commission’s] regulations”); Saltville Gas Storage Co., L.L.C., 104 FERC ¶ 61,273, at P
24 (2003) (finding pipeline’s activities “satisfie[d] neither the spirit nor the letter of Section 1(c) of the NGA”).
22
analysis does not absolve the Commission of its statutory obligation to enforce the 15-month
refund period limitation, particularly when Congress itself recognized that inputs to just and
reasonable rates are subject to near-constant fluctuation (and thus always prone to “new”
analysis) but nevertheless imposed a 15-month refund period limitation. EEI submits that the
Commission must apply its principles and expectations with respect to gaming rules and
exploiting loopholes equally to all market participants and in all contexts.
3. The Commission Has Created Circumstances That Both Frustrate
Congress’s Goal of Facilitating Speedy Resolution of Section 206
Complaints and Upset Congress’s Carefully Crafted Structural
Incentives
A core purpose of the RFA was not only to provide the Commission with time-limited
refund authority under section 206, but also to facilitate speedier resolution of section 206
proceedings.
By automatically setting all successive section 206 ROE complaints for re-
litigation in a trial-type hearing , the Commission has failed to recognize that there is a range of
just and reasonable rates and has created circumstances that have and will continue to bog it and
all parties in litigation for years with no end in sight, plainly contrary to Congress’s core
objective.
The legislative history of the RFA reflects a concern that section 206 proceedings were
taking too long to resolve—consuming resources and depriving parties of needed regulatory
certainty.27 The Senate Committee observed that “[o]ne probable reason for the longer period
needed to resolve such proceedings is that public utilities have no incentive to settle meritorious
section 206 complaints since any relief is prospective,” and that the RFA “would correct this
27
See S. REP. NO. 100-491, 1988 U.S.C.C.A.N. at 2685 (2d Sess. 1988) (“Section 205 proceedings on
average require one year for resolution” while “[r]esolution of section 206 proceedings requirements two years on
average.”).
23
problem by giving FERC the authority to order refunds, subject to limitations.”28 Thus, a key
objective of the RFA was creating a framework in which section 206 proceedings could be
resolved more quickly. In fact, as discussed more fully below, by providing for a limited
exception to the 15-month refund period limitation for instances in which a utility’s “dilatory
behavior” caused a section 206 proceeding to take longer than 15 months to resolve, it is
apparent that Congress expected section 206 proceedings to be resolved within the 15-month
refund period.29 In enacting the RFA, therefore, Congress could not have intended that the
Commission would allow parties to circumvent the 15-month refund period limitation by filing
successive complaints, and that the Commission in turn would set such complaints for full trialtype hearings, triggering an increase in not only the number of section 206 proceedings, but the
length of time it would take the Commission to resolve such proceedings. Such an outcome
would be the exact opposite of what Congress intended; but in fact, it is exactly what has
occurred.
Indeed, it took the Commission more than three years to resolve the first of the four
successive ROE complaints in New England. It will take the Commission even longer to resolve
the second ROE complaint, which was filed in December 2012, and for which the Commission is
expected to issue an order in late 2016 or early 2017, more than four years after the complaint
was filed. This is clearly not what Congress intended when it enacted legislation to facilitate
resolution of section 206 complaints within 15 months.
In addition to contravening Congress’s objective of facilitating more efficient resolution
of section 206 complaints, by allowing complainants to circumvent the 15-month refund period
28
29
Id.
16 U.S.C. § 824e(b).
24
limitation, the Commission has also upset the structural incentives established by Congress
through the RFA. Congress crafted the 15-month refund period limitations such that it was not
an absolute limitation. Rather, as noted above, Congress limited utilities’ refund liability to 15
months provided they did not engage in “dilatory behavior” causing resolution of the section 206
proceeding to take longer than 15 months.30 The incentive set by Congress was simple: if the
utility does not intentionally delay resolution of a section 206 proceeding, its refund exposure
will be limited to the 15-month statutory period; if the utility does engage in “dilatory behavior,”
its refund liability will extend beyond 15 months.
The Senate Committee explained this
bargain—and how it should be implemented by the Commission—as follows:
[I]f the Commission determines at the end of a section 206 proceeding that the
proceeding was not resolved within the 15 month proceeding [sic] primarily
because of dilatory behavior by the public utility whose rates are at issue, the
Commission is empowered to order refunds of all amounts paid in excess of just
and reasonable rates for the entire period of time between the refund effective
date and the conclusion of the proceeding.31
This provision of section 206 and its corresponding legislative history dictates that a
utility can only be subject to a refund period of greater than 15 months if the utility is at fault
(i.e., if a delay in resolving a complaint is caused by its “dilatory behavior”). By allowing
complainants to circumvent the 15-month refund period limitation through successive
complaints, the Commission has weakened this congressionally-mandated incentive structure
and rendered both the 15-month refund period limitation and the corresponding “penalty” for
“dilatory behavior” nullities.
30
16 U.S.C. § 824e(b) (“[I]f the proceeding is not concluded within fifteen months after the refund
effective date and if the Commission determines at the conclusion of the proceeding that the proceeding was not
resolved within the fifteen-month period primarily because of dilatory behavior by the public utility, the
Commission may order refunds of any or all amounts paid for the period subsequent to the refund effective date and
prior to the conclusion of the proceeding.”).
31
S. REP. NO. 100-491, 1988 U.S.C.C.A.N. at 2688 (2d Sess. 1988).
25
III.
The Commission Should Adopt a Pragmatic Policy on Successive Complaints
That Is Consistent With Applicable Statutory Limitations, Preserves a Just
and Reasonable Rate, Promotes Efficient Use of Resources by All Parties,
and Does Not Threaten Capital Investment in Transmission Development
As discussed above, if the Commission persists with its recent approach to ROE
complaints, the result will inevitably be a continued cycle of successive complaints that causes
prolonged rate uncertainty, threatens capital investment in transmission infrastructure, and
saddles all parties and the Commission itself with the costs and burdens of endless litigation.
Instead, the Commission should reassess its approach to successive ROE complaints and adopt a
pragmatic policy that is consistent with the statutory limitation on refunds, preserves just and
reasonable rates, promotes efficient use of resources by all parties, and provides the certainty
needed to support capital investment in the development of transmission infrastructure.
The following are two potential approaches the Commission could explore:

Establish a reasonable burden of proof for determining whether an ROE complaint
makes a prima facie case such that it should be set for hearing.
The Commission should establish a reasonable burden of proof for determining whether
an ROE complainant makes a prima facie case that the current rate may not be just and
reasonable such that the complaint should be set for trial-type hearing procedures. As discussed
above, the Commission’s recent assertion that there is only a single just and reasonable rate is
contrary to established law, and has effectively eliminated any burden of proof for making a
prima facie case, resulting in the endless cycle of complaints and litigation that has now
emerged. The Commission should acknowledge the established law and precedent holding that
there is in fact a range of just and reasonable rates, and use that range to establish a more rational
threshold for determining when a complaint—especially a successive complaint—has made a
sufficient showing that updated data and analysis would produce an ROE outside of that range.
26
While some have argued that a sufficient prima facie case must show that the updated data and
analysis would produce an ROE outside of the “zone of reasonableness” generated by the DCF
analysis in the most recently adjudicated ROE proceeding—an issue currently pending before the
D.C. Circuit32—at a minimum, the Commission should implement some more rational burden of
proof for demonstrating that the existing rate may not be just and reasonable. Acknowledging
that there is some range of potential just and reasonable rates, and that not every change in the
inputs to the DCF analysis producing a different ROE necessarily means that the current ROE
may no longer be just and reasonable, would allow the Commission to readily establish a
threshold limiting the administrative burdens and uncertainty of multiple pancaked ROE
complaints.

Defer to the Commission’s own prior order establishing a just and reasonable ROE
for some reasonable period of time, absent extraordinary circumstances.
The Commission could also establish a policy, based on pragmatic and prudential
considerations, of deferring to its own prior order establishing a just and reasonable ROE for
some reasonable period of time, absent extraordinary circumstances. The Commission, with
input from stakeholders as necessary, would determine both the appropriate baseline period of
time in which to defer to the prior order, and the circumstances in which a departure from such a
policy would be warranted. Complainants would not be prohibited from filing a section 206
complaint, but would face a higher burden of proof to show not only that a successive complaint
requires a new trial-type hearing (i.e., to demonstrate that extraordinary circumstances warrant
revisiting the ROE) but to prevail on the merits. Such a policy would discouragethe tide of
endless litigation and uncertainty, while preserving flexibility to address consequential changes
32
Emera Maine v. FERC, No. 15-1118 (D.C. Cir. filed Apr. 30, 2015); Braintree Elec. Light Dep’t. v.
FERC, No. 15-1119 (D.C. Cir. filed May 1, 2015); Massachusetts v. FERC, No. 15-1121 (D.C. Cir. filed May 1,
2015) (consolidated).
27
in circumstances. It would also be fully consistent with the Commission’s legal obligations to
ensure just and reasonable rates, particularly given that rate stability is a critical component of
just and reasonable rates and lowers costs to utilities and consumers alike over the long term.
Of course, these are but two possible solutions to the current situation (and they are not
mutually exclusive). There are undoubtedly others. At a minimum, the Commission must
reassess and reform its procedures and processes for considering the successive ROE complaints
causing this endless litigation, and reconsider whether such complaints truly present a “different
issue” based on “new data or analysis.”
However the Commission elects to proceed, EEI respectfully submits that this fourth
successive ROE complaint in New England—and the potential that it will prolong rate
uncertainty in the region for a decade—demonstrates the now critical need for a new approach
that it is consistent with the statutory limitation on refunds, preserves just and reasonable rates,
promotes efficient use of resources by all parties, and provides the certainty needed to support
capital investment in the development of transmission infrastructure.
Respectfully submitted,
/s/ Suedeen G. Kelly
Edward H. Comer
Emily S. Fisher
Adam L. Benshoff
Edison Electric Institute
701 Pennsylvania Ave., NW
Washington, D.C. 20004-2696
(202) 502-5000
E-mails: ecomer@eei.org
efisher@eei.org
abenshoff@eei.org
Suedeen G. Kelly
Jeffery S. Dennis
Todd L. Brecher
Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036-1564
Tel: (202) 887-4000
Fax: (202) 887-4288
E-mails: skelly@akingump.com
jdennis@akingump.com
tbrecher@akingump.com
Counsel for the Edison Electric Institute
Dated this 4th day of August 2016.
28
CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document upon each person
designated on the official service list compiled by the Secretary of the Commission in this
proceeding.
Dated at Washington, D.C. this 4th day of August, 2016.
/s/ Shawn Whites
Shawn Whites
Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036-1564
29