Industry Regulation | Note 4. Industry Regulation Electricity and Natural Gas Distribution – Maine, New York, Connecticut and Massachusetts The Maine distribution rate stipulation, the Federal Energy Regulatory Commission (FERC) Transmission Return on Equity (ROE) case, the New York and Connecticut rate plans, Reforming Energy Vision (REV), the New York Transmission Company (New York TransCo) filings, the Storm proceedings in NY and ME and the Tax Act are some of the most important specific regulatory processes that currently affect Networks. The revenues of Networks companies are essentially regulated, being based on tariffs established in accordance with administrative procedures set by the various regulatory bodies. The tariffs applied to regulated activities in the U.S. are approved by the regulatory commissions of the different states and are based on the cost of providing service. The revenues of each regulated utility are set to be sufficient to cover all its operating costs, including energy costs, finance costs, and the costs of equity, the last of which reflect our capital ratio and a reasonable ROE. Energy costs that are set on the New York and New England wholesale markets are passed on to consumers. The difference between energy costs that are budgeted and those that are actually incurred by the utilities is offset by applying compensation procedures that result in either immediate or deferred tariff adjustments. These procedures apply to other costs, which are in most cases exceptional, such as the effects of extreme weather conditions, environmental factors, regulatory and accounting changes, and treatment of vulnerable customers, that are offset in the tariff process. Any New York revenues that allow a utility to exceed target returns, usually the result of better than expected cost efficiency, are generally shared between the utility and its customers, resulting in future tariff reductions. Each of the four Networks’ New York and Maine supply companies must comply with regulatory procedures that differ in form but in all cases conform to the basic framework outlined above. Generally, tariff reviews cover various years and provide for a reasonable ROE, protection, and automatic adjustments for exceptional costs incurred and efficiency incentives. The distribution rates and allowed ROEs for Networks’ regulated utilities in Connecticut and Massachusetts are subject to regulation by the Connecticut Public Utilities Regulatory Authority (PURA) and the Massachusetts Department of Public Utilities (DPU), respectively. CMP Distribution Rate Stipulation and New Renewable Source Generation On May 1, 2013, CMP submitted its required distribution rate request with the Maine Public Utilities Commission (MPUC). On July 3, 2014, after a fourteen month review process, CMP filed a rate stipulation agreement on the majority of the financial matters with the MPUC. The stipulation agreement was approved by the MPUC on August 25, 2014. The stipulation agreement also noted that certain rate design matters would be litigated, which the MPUC ruled on October 14, 2014. The rate stipulation agreement provided for an annual CMP distribution tariff increase of 10.7% or $24.3 million. The rate increase was based on a 9.45% ROE and 50% equity capital. CMP was authorized to implement a Rate Decoupling Mechanism (RDM) which protects CMP from variations in sales due to energy efficiency and weather. CMP also adjusted its storm costs recovery mechanism whereby it is allowed to collect in rates a storm allowance and to defer actual storm costs when such storm event costs exceed $3.5 million. CMP and customers share storm costs that exceed a certain balance on a fifty-fifty basis, with CMP’s exposure limited to $3.0 million annually. CMP has made a separate regulatory filing for a new customer billing system replacement. In accordance with the stipulation agreement, a new billing system is needed and CMP made its filing on February 27, 2015 to request a separate rate recovery mechanism. On October 20, 2015, the MPUC issued an order approving a stipulation agreement authorizing CMP to proceed with the customer billing system investment. The approved stipulation allows CMP to recover the system costs effective July 1, 2017. The rate stipulation does not have a predetermined rate term. CMP has the option to file for new distribution rates at its own discretion. The rate stipulation does not contain service quality targets or penalties. The rate stipulation also does not contain any earning sharing requirements. Under Maine law 35-A M.R.S.A §§ 3210-C, 3210-D, the MPUC is authorized to conduct periodic requests for proposals seeking long-term supplies of energy, capacity or Renewable Energy Certificates, or RECs, from qualifying resources. The MPUC is further authorized to order Maine Transmission and Distribution Utilities to enter into contracts with sellers selected from the MPUC’s competitive solicitation process. Pursuant to a MPUC Order dated October 8, 2009, CMP entered into a 20-year agreement with Evergreen Wind Power III, LLC, on March 31, 2010, to purchase capacity and energy from Evergreen’s 60 MW Rollins wind farm in Penobscot County, Maine. CMP’s purchase obligations under the Rollins contract are approximately $7 million per year. In accordance with subsequent MPUC orders, CMP periodically auctions the purchased Rollins energy to wholesale buyers in the New England regional market. Under applicable law, CMP is assured recovery of any differences between power purchase costs and achieved market revenues through a reconcilable component of its retail distribution rates. Although the MPUC has conducted multiple requests for proposals under M.R.S.A §3210-C and has tentatively accepted long-term proposals from other sellers, these selections have not yet resulted in additional currently effective contracts with CMP. NYSEG and RG&E Rate Plans On September 16, 2010, the New York Public Service Commission (NYPSC) approved a new rate plan for electric and natural gas service provided by NYSEG and RG&E effective from August 26, 2010 through December 31, 2013. The rate plans contain continuation provisions beyond 2013 if NYSEG and RG&E do not request new rates to go into effect and the current base rates will stay in place. The rates stayed effective until May 1, 2016, at which time a newly approved rate plan became effective. The 2010 revenue requirements were based on a 10% allowed ROE applied to an equity ratio of 48%. If annual earnings exceed the allowed return, a tiered Earnings Sharing Mechanism (ESM) will capture a portion of the excess for the ratepayers’ benefit. The ESM is subject to specified downward adjustments if NYSEG and RG&E fail to meet certain reliability and customer service measures. Key components of the rate plan include electric reliability performance mechanisms, natural gas safety performance measures, customer service quality metrics and targets, and electric distribution vegetation management programs that establish threshold performance targets. There will be downward revenue adjustments if NYSEG and RG&E fail to meet the targets. The 2010 rate plans established revenue decoupling mechanism (RDM), intended to remove company disincentives to promote increased energy efficiency. Under RDM, electric revenues are based on revenue per customer class rather than billed revenue, while natural gas revenues are based on revenue per customer. Any shortfalls or excesses between billed revenues and allowed revenues will be accrued for future recovery or refund. In August 2010, NYSEG began amortizing $15.2 million per year of its $303.9 million theoretical excess depreciation reserve. On September 1, 2012, RG&E began amortizing $5.3 million per year of its $105 million theoretical excess depreciation reserve. Both amortization amounts reflect a twenty year amortization period. Theoretical excess depreciation is the difference between actual accumulated depreciation taken to date and a theoretical reserve. The actual accumulated depreciation is the result of depreciation rates allowed in prior rate orders based on estimates of useful lives and net salvage values as determined in those cases. The theoretical reserve is the amount that would have accumulated if the depreciation rates in the new rate plan had been in place for the entire useful lives of the affected assets. Differences between the actual reserve and the theoretical reserve are normal aspects of utility ratemaking. The usual treatment is to flow any excess or deficiency back as an adjustment to depreciation expense over the remaining life of the property. However, in accordance with the new rate plan, NYSEG and RG&E moderate electric rates by recording the theoretical reserve amortization as a debit to accumulated depreciation and a credit to other revenues, and normalize a portion of the amortization from a tax perspective. On May 20, 2015, NYSEG and RG&E filed electric and gas rate cases with the NYPSC. The companies requested rate increases for NYSEG electric, NYSEG gas and RG&E gas. RG&E electric proposed a rate decrease. On February 19, 2016, NYSEG, RG&E and other signatory parties filed a Joint Proposal with the NYPSC for a three-year rate plan for electric and gas service at NYSEG and RG&E commencing May 1, 2016. The Joint Proposal, which was approved by the NYPSC on June 15, 2016, balanced the varied interests of the signatory parties including but not limited to maintaining the companies’ credit quality and mitigating the rate impacts to customers. The Joint Proposal reflects many customer benefits including: acceleration of the companies’ natural gas leak prone main replacement programs and increased funding for electric vegetation management to provide continued safe and reliable service. The delivery rate increase in the Joint Proposal can be summarized as follows: May 1, 2016 May 1, 2017 May 1, 2018 Rate Increase Delivery Rate Increase Rate Increase Delivery Rate Increase Rate Increase Delivery Rate Increase Utility (Millions) % (Millions) % (Millions) % NYSEG Electric $ 29.6 4.10 % $ 29.9 4.10 % $ 30.3 4.10 % NYSEG Gas 13.1 7.30 % 13.9 7.30 % 14.8 7.30 % RG&E Electric 3.0 0.70 % 21.6 5.00 % 25.9 5.70 % RG&E Gas 8.8 5.20 % 7.7 4.40 % 9.5 5.20 % The allowed rate of return on common equity for NYSEG Electric, NYSEG Gas, RG&E Electric and RG&E Gas is 9.00%. The equity ratio for each company is 48%; however, the equity ratio is set at the actual up to 50% for earnings sharing calculation purposes. The customer share of any earnings above allowed levels increases as the ROE increases, with customers receiving 50%, 75% and 90% of earnings over 9.5%, 10.0% and 10.5% ROE, respectively, in the first rate year covering the period May 1, 2016 – April 30, 2017. The earnings sharing levels increase in rate year two (May 1, 2017 – April 30, 2018) to 9.65%, 10.15% and 10.65% ROE, respectively. The earnings sharing levels further increase in rate year three (May 1, 2018 – April 30, 2019) to 9.75%, 10.25% and 10.75% ROE, respectively. The rate plans also include the implementation of a rate adjustment mechanism designed to return or collect certain defined reconciled revenues and costs, new depreciation rates, and continuation of the existing RDM for each business. The Joint Proposal reflects the recovery of deferred NYSEG Electric storm costs of approximately $262 million, of which $123 million is being amortized over ten years and the remaining $139 million is being amortized over five years. The proposal also continues reserve accounting for qualifying Major Storms ($21.4 million annually for NYSEG Electric and $2.5 million annually for RG&E Electric). Incremental maintenance costs incurred to restore service in qualifying divisions will be chargeable to the Major Storm Reserve provided they meet certain thresholds. The Joint Proposal maintains NYSEG’s and RG&E’s current electric reliability performance measures (and associated potential negative revenue adjustments for failing to meet established performance levels) which include the system average interruption frequency index (SAIFI) and the customer average interruption duration index (CAIDI). The Joint Proposal also modifies certain gas safety performance measures at the companies, including those relating to the replacement of leak prone main, leak backlog management, emergency response, and damage prevention. The proposal establishes threshold performance levels for designated aspects of customer service quality and continues and expands NYSEG’s and RG&E’s bill reduction and arrears forgiveness Low Income Programs with increased funding levels included in the proposal. The Joint Proposal provides for the implementation of NYSEG’s Energy Smart Community (ESC) Project in the Ithaca region which will serve as a test-bed for implementation and deployment of Reforming the Energy Vision (REV) initiatives. The ESC Project will be supported by NYSEG’s planned Distribution Automation upgrades and Advanced Metering Infrastructure (AMI) implementation for customers on circuits in the Ithaca region. The companies will also pursue Non-Wires Alternative projects as described in the proposal. Other REV-related incremental costs and fees will be included in the Rate Adjustment Mechanism (RAM) to the extent cost recovery is not provided for elsewhere. Under the proposal, each company will implement the RAM, which will be applicable to all customers, to return or collect RAM Eligible Deferrals and Costs, including: (1) property taxes; (2) Major Storm deferral balances; (3) gas leak prone pipe replacement; (4) REV costs and fees which are not covered by other recovery mechanisms; and (5) NYSEG Electric Pole Attachment revenues. The Joint Proposal provides for partial or full reconciliation of certain expenses including, but not limited to: pensions, other postretirement benefits; property taxes; variable rate debt and new fixed rate debt; gas research and development; environmental remediation costs; Major Storms; nuclear electric insurance limited credits; economic development; and Low Income Programs. The Joint Proposal also includes a downward-only Net Plant reconciliation. In addition, the Joint Proposal includes downward-only reconciliations for the costs of: electric distribution and gas vegetation management; pipeline integrity; and incremental maintenance. The Joint Proposal provides that NYSEG and RG&E continue their electric RDMs on a total revenue per class basis and their gas RDMs on a revenue per customer basis. UI, CNG, SCG and BGC Rate Plans Under Connecticut law, UI’s retail electricity customers are able to choose their electricity supplier while UI remains their electric distribution company. UI purchases power for those of its customers under standard service rates who do not choose a retail electric supplier and have a maximum demand of less than 500 kilowatts and its customers under supplier of last resort service for those who are not eligible for standard service and who do not choose to purchase electric generation service from a retail electric supplier. The cost of the power is a “pass-through” to those customers through the Generation Service Charge, or GSC, charge on their bills. UI has wholesale power supply agreements in place for its entire standard service load for the first half of 2018, 70% of its standard service load for the second half of 2018 and 20% of its standard service load for the first half of 2019. Supplier of last resort service is procured on a quarterly basis, however, from time to time there are no bidders in the procurement process for supplier of last resort service and in such cases UI manages the load directly. In December 2016, the PURA approved new distribution rate schedules for UI for three years, which became effective January 1, 2017, and which, among other things, provides for annual tariff increases and an ROE of 9.10% based on a 50% equity ratio, continued UI’s existing ESM pursuant to which UI and its customers share on a 50/50 basis all distribution earnings above the allowed ROE in a calendar year, continued the existing decoupling mechanism, and approved the continuation of the requested storm reserve. Any dollars due to customers from the ESM continue to be first applied against any storm regulatory asset balance (if one exists at that time) or refunded to customers through a bill credit if such storm regulatory asset balance does not exist. The allowed ROEs established by PURA for CNG and SCG for 2017, were 9.18% and 9.36%, respectively. SCG and CNG each have purchased gas adjustment clauses that enable them to pass their reasonably incurred cost of gas purchases through to customers. These clauses allow utilities to recover costs associated with changes in the market price of purchased natural gas, substantially eliminating exposure to natural gas price risk. On January 22, 2014, PURA approved new base delivery rates for CNG, with an effective date of January 10, 2014, which, among other things, approved an allowed ROE of 9.18%, a decoupling mechanism, and two separate ratemaking mechanisms that reconcile actual revenue requirements related to CNG’s cast iron and bare steel replacement program and system expansion. Additionally, the final decision requires the establishment of an ESM by which CNG and customers share on a 50/50 basis all earnings above the allowed ROE in a calendar year. In accordance with the approval by PURA of the acquisition, SCG and CNG agreed not to initiate a rate case for new rates effective before at least January 1, 2018. On June 30, 2017, SCG filed an application with PURA for new tariffs to become effective January 1, 2018. SCG requested a three-year rate plan for calendar years 2018, 2019 and 2020 and a proposed ROE of 9.95%. SCG also requested to implement a RDM and Distribution Integrity Management Program (DIMP) mechanism similar to the mechanisms authorized for CNG. On October 16, 2017, SCG, Prosecutorial Staff from PURA, and the Connecticut Office of Consumer Counsel (OCC) filed an amended settlement agreement with PURA for approval, which included, among other items, the implementation of an RDM, ESM and the DIMP as proposed by SCG, the amortization of certain regulatory liabilities (most notably accumulated hardship deferral balances and certain accumulated deferred income taxes) and tariff increases based on an ROE of 9.25% and approximately 52% equity level. PURA approved the amended rate case settlement agreement on December 13, 2017, and BGC’s rates are established by the DPU. BGC’s 10-year rate plan, which was approved by the DPU and included an approved ROE of 10.5%, expired on January 31, 2012. BGC continues to charge the rates that were in effect at the end of the rate plan. In accordance with the approval by the DPU of the acquisition, BGC agreed not to initiate a rate case for new rates effective before at least June 1, 2018. Transmission - FERC ROE Proceeding See Note 12, Commitments and Contingent Liabilities, for a further discussion. CMP’s and UI’s transmission rates are determined by a tariff regulated by the FERC and administered by ISO New England, Inc. (ISO-NE). Transmission rates are set annually pursuant to a FERC authorized formula that allows for recovery of direct and allocated transmission operating and maintenance expenses, and for a return of and on investment in assets. On December 28, 2015, the FERC issued an order instituting section 206 proceedings and establishing hearing and settlement judge procedures. Pursuant to section 206 of the FPA, the FERC instituted proceedings because it found that ISO-NE Transmission, Markets, and Services Tariff is unjust, unreasonable, and unduly discriminatory or preferential. The FERC stated that ISO-NE’s Tariff lacks adequate transparency and challenge procedures with regard to the formula rates for ISO-NE Participating Transmission Owners, including UI, Maine Electric Power Corporation (MEPCO) and CMP. The FERC also found that the current Regional Network Service, or RNS and Local Network Service, or LNS, formula rates appear to be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful as the formula rates appear to lack sufficient detail in order to determine how certain costs are derived and recovered in the formula rates. A settlement judge has been appointed and a settlement conference has convened. We are unable to predict the outcome of this proceeding at this time. REV In April 2014, the NYPSC commenced a proceeding entitled REV, which is a wide ranging initiative to reform New York State’s energy industry and regulatory practices. REV has been divided into two tracks, Track 1 for Market Design and Technology, and Track 2 for Regulatory Reform. REV and its related proceedings have and will continue to propose regulatory changes that are intended to promote more efficient use of energy, deeper penetration of renewable energy resources such as wind and solar and wider deployment of distributed energy resources, such as micro grids, on-site power supplies and storage. REV is also intended to promote greater use of advanced energy management products to enhance demand elasticity and efficiencies. Track 1 of this initiative involves a collaborative process to examine the role of distribution utilities in enabling market based deployment of distributed energy resources to promote load management and greater system efficiency, including peak load reductions. NYSEG and RG&E are participating in the initiative with other New York utilities and are providing their unique perspective. The NYPSC issued a 2015 order in Track 1, which acknowledges the utilities’ role as a Distribution System Platform (DSP) provider, and required the utilities to file an initial Distribution System Implementation Plan (DSIP) by June 30, 2016. The companies filed the DSIP, which also included information regarding the potential deployment of Automated Metering Infrastructure (AMI) across its entire service territory. The companies, in December 2016, filed a petition to the NYPSC requesting approval for cost recovery associated with the full deployment of AMI, and a collaborative associated with this petition began in in the first quarter of 2017, was suspended in the second quarter of 2017 and resumed in the first quarter of 2018. Other various proceedings have also been initiated by the NYPSC which are REV related, and each proceeding has its own schedule. These proceedings include the Clean Energy Standard, Value of DER and Net Energy Metering, Demand Response Tariffs, and Community Choice Aggregation. As part of the Clean Energy Standard proceeding, all electric utilities were ordered to begin payments to New York State Energy Research and Development Authority (NYSERDA) for Renewable Energy Credits and Zero Emissions Credits beginning in 2017. Track 2 of the REV initiative is also underway, and through a NYPSC Staff Whitepaper review process, is examining potential changes in current regulatory, tariff, market design and incentive structures which could better align utility interests with achieving New York state and NYPSC’s policy objectives. New York utilities will also be addressing related regulatory issues in their individual rate cases. A Track 2 order was issued in May 2016, and includes guidance related to the potential for Earnings Adjustment Mechanisms (EAMs), Platform Service Revenues, innovative rate designs, and data utilization and security. The companies, in December 2016, filed a proposal for the implementation of EAMs in the areas of System Efficiency, Energy Efficiency, Interconnections, and Clean Air. A collaborative process to review the companies’ petition is on going. In March, 2017, the NYPSC issued three separate REV-related orders. These orders created a series of filing requirements for NYSEG and RG&E beginning in March 2017 and extending through the end of 2018. The three orders involve: 1) modifications to the electric utilities’ proposed interconnection earnings adjustment mechanism framework; 2) further DSIP requirements, including filing of an updated DSIP plan by mid-2018 and implementing two energy storage projects at each company by the end of 2018; and 3) Net Energy Metering Transition including implementation of Phase One of the Value of DER. In September 2017, the NYPSC issued another order related to the Value of DER, requiring tariff filings, changes to Standard Interconnection Requirements, and planning for the implementation of automated consolidated billing. New York State Department of Public Service Investigation of the Preparation for and Response to the March 2017 Windstorm On March 11, 2017, the New York State Department of Public Service (the Department) commenced an investigation of NYSEG’s and RG&E’s preparation for and response to the March 2017 windstorm, which On November 16, 2017, the NYPSC announced that the Department Staff had completed their investigation into the March 2017 Windstorm and the NYPSC issued an Order Instituting Proceeding and to Show Cause. The Staff’s investigation found that RG&E and NYSEG violated certain parts of their emergency response plans, which makes them subject to possible financial penalties. NYSEG and RG&E responded to the order in a timely manner and have entered into settlement discussions with the Department Staff. The unprecedented weather that resulted in the March 2017 windstorm posed great challenges to the NYSEG’s and RG&E’s communities, employees, contractors, assisting utilities, and municipal partners who all worked tirelessly to safely restore power to all customers. NYSEG’s and RG&E’s priorities during any storm are the restoration of service to their respective customers and the safety of their communities, customers, employees and contractors. We cannot predict the outcome of this regulatory action . MPUC Investigation into the Response by Public Utilities to the October 2017 Storm On December 19, 2017, the Commission issued a Notice of Investigation regarding utility response to the October 2017 Storm. The wind storm of October 2017 was unprecedented in the number of customers impacted and the magnitude of the damage across the entire Central Maine Power service territory. During the event, thousands of trees were broken or uprooted and many caused damage to the electrical delivery system. The vast majority of tree related damage was from trees that were located outside of the maintenance clearance zone. Damage occurred on nearly every CMP distribution circuit, resulting in more than 1,400 broken poles. CMP currently estimates that the total incremental costs are approximately $70.2 million, of which approximately $32.4 million are capital costs associated with the replacement of damaged infrastructure, including poles, cross arms, transformers and related equipment. Additionally, approximately $744,000 of the incremental amount is operations and maintenance expense for repairs to CMP transmission facilities. Accordingly, the net incremental operations and maintenance expense for restoration of the distribution system are approximately $37 million. With regard to the recovery of incremental storm restoration costs in CMP distribution rates, CMP expects that recovery will be addressed in the Company’s 2018 Annual Compliance Filing proceeding pursuant to the applicable provisions of the stipulation approved by the Commission in Docket No. 2013-00168. Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the Tax Act) was signed into law. The Tax Act contains significant changes to the federal tax structure, including among other things, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017 Ginna Reliability Support Service Agreement Ginna Nuclear Power Plant, LLC (GNPP), which is a subsidiary of Constellation Energy Nuclear Group, LLC (CENG), owns and operates the R.E. Ginna Nuclear Power Plant (Ginna Facility and together with GNPP, Ginna), a 581 MW single-unit pressurized water reactor located in Ontario, New York. In May 2014, the New York Independent System Operator (NYISO) produced a Reliability Study, confirming that the Ginna Facility needs to remain in operation to avoid bulk transmission and non-bulk local distribution system reliability violations in 2015 and 2018. In July, 2014, GNPP filed a petition requesting that the NYPSC initiate a proceeding to examine a proposal for the continued operation of the Ginna Facility. In November 2014, the NYPSC ruled that GNPP had demonstrated that the Ginna Facility is required to maintain system reliability and that its actions with respect to meeting the relevant retirement notice requirements were satisfactory. The NYPSC also accepted the findings of the 2014 Reliability Study and stated that it established “the reliability need for continued operation of the Ginna Facility that is the essential prerequisite to negotiating a Reliability Support Services Agreement (RSSA).” As such, the NYPSC ordered RG&E and GNPP to negotiate an RSSA. On February 13, 2015, RG&E submitted to the NYPSC an executed RSSA between RG&E and GNPP. RG&E requested that the NYPSC accept the RSSA and approve cost recovery by RG&E from its customers of all amounts payable to GNPP under the RSSA utilizing the cost recovery surcharge mechanism. On October 21, 2015, RG&E, GNPP, New York Department of Public Service, Utility Intervention Unit and Multiple Intervenors filed a Joint Proposal with the NYPSC for approval of the RSSA, as modified. On February 23, 2016, the NYPSC unanimously adopted the joint proposal, which provides for a term of the RSSA from April 1, 2015 through March 31, 2017 and RG&E monthly payments to Ginna in the amount of $15.4 million. In addition, RG&E is entitled to 70% of revenues from Ginna’s sales into the NYISO energy and capacity markets, while Ginna is entitled to 30% of such revenues. The NYPSC also authorized RG&E to implement a rate surcharge effective January 1, 2016, to recover amounts paid to Ginna pursuant to the RSSA. The FERC issued an order authorizing the FERC Settlement agreement in the Settlement Docket on March 1, 2016, at which point the rate surcharge went into effect. RG&E used deferred rate credit amounts (regulatory liabilities) to offset the full amount of the Deferred Collection Amount (including carrying costs), plus credit amounts to offset all RSSA costs that exceed $2.3 million per month, not to exceed a total use of credits in the amount of $110 million, applicable through June 30, 2017. The available credits were insufficient to satisfy the final payment amount from RG&E to Ginna, and consistent with the agreement with the NYPSC, the RSSA surcharge continues past March 31, 2017, to recover up to $2.3 million per month until the final payment has been recovered by RG&E from customers. New York TransCo Networks holds an approximate 20% ownership interest in the New York TransCo, LLC (New York TransCo). New York TransCo was established by the New York transmission utilities to develop, own, and operate electric transmission in New York. In December 2014, New York TransCo filed for regulatory approval of its rates, terms, and conditions with the FERC. The filing requests a formula base ROE of 10.6%, one-hundred fifty basis points ROE incentives, construction work in progress, a formula rate mechanism, and a proposed cost allocation. Various parties, including the NYPSC, have protested the filing with the FERC, including the base ROE, the ROE incentives, and the cost allocation. New York TransCo will not make final decisions on transmission project development until a FERC decision. On April 2, 2015, the FERC issued an order granting, inter alia, New York TransCo’s owners’ request for a 50 basis point adder for New York TransCo’s membership in the NYISO regional transmission organization (RTO), subject to the adder being capped within the zone of reasonableness after a determination of where within that zone its base level ROE should be set. The FERC also set the formula rate and base ROE issue for hearing and settlement judge procedures. In addition, the FERC rejected New York TransCo’s owners’ cost allocation method for the Transmission Owner Transmission Solutions (TOTS) Projects because it would allocate costs to Power Supply Long Island (LIPA) and New York Power Authority (NYPA) that they did not voluntarily agree to pay. On November 5, 2015, the New York TransCo’s owners, filed the Settlement with the FERC to resolve all outstanding issues associated with the TOTS Projects, including issues related to the TOTS Projects that were set for |