The Federal Energy Regulatory Commission (FERC) has approved a settlement agreement that establishes formula rates for the proposed Trans-Allegheny Interstate Line (TrAIL) and other related transmission projects.

The settlement agreement, filed earlier this year by Allegheny Energy’s subsidiary, Trans-Allegheny Interstate Line Company (TrAILCo), includes the following:

• an incentive return on equity rate of 12.7 percent for the TrAIL project;
• an incentive return on equity rate of 12.7 percent for the static VAR compensator installed at the existing Black Oak Substation, and
• a return on equity rate of 11.7 percent for any other projects TrAILCo may undertake for which no incentive return has been requested.

The settlement agreement, called “fair and reasonable and in the public interest” by FERC in its order, resolves all issues associated with establishing the transmission cost of service formula for TrAILCo.

Incentive rate treatment is intended to encourage new investment in electric transmission projects that will improve the reliability of electric service.

The TrAIL project will span portions of southwestern Pennsylvania, West Virginia and Virginia. TrAILCo is seeking regulatory approvals from the utility commissions in those states and expects a decision by the West Virginia Public Service Commission by early August. State regulators in Pennsylvania and Virginia are also expected to issue decisions later this year.