Teleseminar Audio CD: “Postage Stamp” Pricing Meets Judge Posner

Whether you missed the original broadcast of this teleseminar or you attended and just want to listen to the presentation again, order the CD of this event. Use it for yourself, or better yet, set up a training session for other members of your staff at a time that’s most convenient for you. State utility commissions and NASUCA members pay only a shipping and handling fee of $15. You can expect your CD about 10 days after you place your order.

“Postage Stamp” Pricing Meets Judge Posner—and Loses:
Will We Ever Agree on Transmission Cost Allocation?

Recorded Thursday, October 1, 2009

If you pay for, build, invest in, rely on, or regulate transmission facilities, find out how you can influence FERC’s cost allocation decisions in light of the current sea change in legal principles when you purchase a recording of the teleseminar that was originally presented October 1, 2009.

“Rolled-in rates,” “postage stamp,” and “peanut butter spread”: With these metaphors, FERC allocates the costs of long-distance, high-voltage transmission lines to all customers in a region. FERC’s theory: Everyone connected to a network benefits from upgrades to that network. For decades, the postage-stamp approach has substituted for specificity in allocating costs to beneficiaries.

No longer. With stakes exceeding $400 million, FERC approved PJM’s region-wide allocation of 500 kV-and-above transmission costs, even though most of the lines would reside in eastern PJM. Illinois and Ohio protested.

On August 6, 2009, FERC met its match: Judge Richard Posner, leader of the “law and economics” movement, one of the nation’s top regulatory thinkers. Rejecting FERC’s traditional rationale, the U.S. Court of Appeals for the Seventh Circuit declared that FERC cannot “avoid the duty of comparing the costs assessed against a party to the burdens imposed or benefits drawn by that party.” See Illinois Commerce Commission, et al. v. FERC, Nos. 08-1306 et al. (7th Cir. Aug. 6, 2009).

Now what? Are we to litigate—customer against customer, state against state—every long-distance power line? Must FERC quantify benefits before allocating costs? And if so, how?

NRRI staff, transmission and regulatory experts, and decisionmakers addressed these questions and more in our October 1 teleseminar.

During this in-depth, 90-minute teleseminar, find out how to:

• apply the 75-year-old phrases “just and reasonable” and “undue discrimination” to today’s transmission disputes.

• place “cost allocation” problems in the larger context of multi-region power supply planning.

• understand the complex relationship between a state’s market structure and its preferences on cost allocation policy.

• decide whether your best future is (a) more zero-sum litigation, (b) log-rolling, or (c) a consensus regional plan.

Seminar panel of experts:

Scott Hempling , Executive Director, NRRI
Garry Brown, Chairman, New York Public Service Commission
Mike Proctor, Consultant, SPP Regional State Committee and Organization of MISO States
Whitfield A. Russell, President, Whitfield A. Russell and Associates, P.C.
Adam Pollock (Moderator), Research Analyst, NRRI

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