FERC upholds order requiring Duke, ATSI to remove RTO adder and pay refunds

WASHINGTON, Oct 30 — The Federal Energy Regulatory Commission (FERC) on Oct 30 sustained its order directing Duke Energy Ohio and American Transmission Systems, Inc. (ATSI) to remove a 50-basis-point return-on-equity adder from their formula rates and to pay refunds back to Feb. 24, 2022.

The adder is a bonus to the utilities' authorized return on equity for their membership in PJM Interconnection, L.L.C. FERC's June 25, 2026, order on remand set the removal effective Dec. 15, 2022. That order also required refunds with interest from Feb. 24, 2022, through the date the utilities make them, according to the order in Docket No. EL22-34-003.

The commission said it was modifying the discussion in the order on remand while reaching the same result. It wrote that the remedy is necessary to correct a legal error identified by the U.S. Court of Appeals for the Sixth Circuit.

In their rehearing requests filed July 27, 2026, Duke and ATSI argued that the Federal Power Act limits refunds to a 15-month period; Duke said that period ended May 24, 2023. Duke also argued that the commission could not set the new rate effective before June 2026.

FERC rejected those arguments. It cited a D.C. Circuit decision, MISO Transmission Owners, which found "a clear exception" to the 15-month limit when the commission is remedying its own errors after being reversed in court.

The commission said the parties were on notice from the date of its initial order on the complaint that the decision could be invalidated and that rates could change retroactively.

The Office of the Ohio Consumers' Counsel filed the complaint on Feb. 24, 2022, against Duke, ATSI and two AEP subsidiaries, alleging that they are ineligible for the adder because their membership in a transmission organization is not voluntary under Ohio law. FERC revoked the adder for the two AEP subsidiaries but declined to do so for Duke and ATSI.

The Sixth Circuit vacated that part of the decision and directed that, if all three utilities' rates were based on settlements and can be separated into a base return on equity and a 50-basis-point adder, the commission "must also remove the RTO adder for Duke and [ATSI]."