On April 21, 2022, a split Federal Energy Regulatory Commission (“FERC”) approved 4-1 a Notice of Proposed Rulemaking (“NOPR”) on transmission planning and cost allocation. Issued pursuant to section 206 of the Federal Power Act, the NOPR represents a significant and long-awaited step toward expansion and upgrade of the Nation’s high voltage grid. The NOPR is more limited than the Commission’s July 2021 Advanced Notice of Proposed Rulemaking, perhaps in an effort to bring the Commissioners closer together and to issue a Final Rule by year’s end. Comments are due 75 days from date of publication in the Federal Register, which will occur in the weeks following the Commission’s April 21 meeting. Reply comments are due 30 days after the initial comment deadline.
The proposed reforms contained in the NOPR are intended to remedy deficiencies in the Commission’s existing regional transmission planning and cost allocation requirements. While committed to transmission rates that are just and reasonable and not unduly discriminatory or preferential, the NOPR builds on Order Nos. 888, 890, and 1000 to reform the Commission’s existing regional transmission planning and cost allocation requirements. Improving on the shortcomings of Order No. 1000, which aimed to facilitate the integration of the grid and wholesale markets, is a particular focus of the NOPR.
The NOPR does not address the backlogged interconnection process. Nor does is deal with interregional planning requirements, that are regarded by many parties as a key element in moving location-constrained renewable resources to major load centers. The NOPR would, however, give state regulators a more direct and active role in the regional transmission planning process. However, such provisions may have been instrumental in obtaining the enthusiastic support of Commissioner Christie, a former commissioner with the Virginia State Corporation Commission.
In anticipation of publication, below is a brief summary of the key aspects of the NOPR, as introduced and discussed by the Commission at the April 21 Commission Meeting.
Regional Transmission Planning
Regarding regional transmission planning, the NOPR proposes reforms that would require public utility transmission providers to conduct long-term regional transmission planning on a forward-looking basis to meet transmission needs driven by changes in the resource mix and demand.
Public utility transmission providers would be required to conduct several key actions. First, identify transmission needs driven by changes to the resource mix and demand through the development of multiple long-term scenarios including accounting for high-impact, low-frequency events such as extreme weather. Second, weigh the benefits of regional transmission facilities to meet the needs over a long-term horizon (i.e., 20 years minimum) starting from the estimated in-service date of the transmission facilities. Third, establish transparent and not unduly discriminatory criteria to select transmission facilities in the regional transmission plan for cost allocation that are cost effectively addressing the transmission needs.
Also, the NOPR proposes to require that public utility transmission providers more fully consider dynamic line ratings and advanced power flow control devices in regional transmission planning.
Transmission Cost Allocation
Regarding transmission cost allocation the NOPR proposes to require public utility transmission providers in each transmission planning region seek to obtain the agreement of relevant state entities within the region regarding the cost allocation methods that will apply to transmission facilities selected in the regional transmission plan for purposes of cost allocation through long-term regional planning.
The NOPR also proposes to not permit public utility transmission providers to take advantage of construction work in progress quick incentive for transmission facility selected in the plan for purposes of cost allocation through long-term regional transmission planning with respect to federal rights of first refusal.
The NOPR will amend the requirements under Order 1000 that permit the exercise of federal rights of first refusal for transmission facilities selected in a regional transmission plan for purposes of cost allocation, conditioned on the incumbent transmission providers establishing joint ownership of the facilities.
The NOPR aims to improve transparency and coordination by requiring public utility transmission providers to adopt requirements in its local planning processes and improve coordination with regional and local transmission planning, which is intended to improve the right sizing of replacement transmission facilities.
Interregional Transmission Coordination
To improve coordination and cost allocation at the interregional level, the NOPR proposes to require that public utility transmission providers revoice their transmission coordination procedures to reflect the long-term regional transmission planning reforms proposed in this draft NOPR.
For any questions on this latest FERC development, reach out to Michael Blackwell, James Hoecker, or another member of our Energy and Natural Resources team.