FERC clarifies credits for upgrades

On May 16, FERC clarified its policy regarding credits for network upgrades
associated with the interconnection of a generating facility -- all network
upgrade costs (the cost of all facilities from the point where the generator
connects to the grid), including those necessary to remedy short-circuit and
stability problems, should be credited back to the customer that funded the
upgrades once the delivery service begins.

Once a customer signs up for transmission, then the transmission provider is
limited to charging the higher of the expansion cost or an embedded cost rate.

Generally, Enron has not procured transmission at the time of interconnection
and therefore, may be required to pay the network upgrades at the time of
interconnection; however, the order clarifies that a credit should be
available to the interconnecting customer or a third party that contracts for
transmission away from the generator.

Kinder Morgan v. Consumers Energy (Docket No. ER01-1587-000)