On Tuesday, FERC issued a notice requesting supplemental comments to its proposed Smart Grid Policy Statement and Action Plan that was released in March (see March 20, 2009 edition of the WER) due to the release of two Smart Grid funding opportunities offered by the U.S. Department of Energy (“DOE”).

The Policy Statement, among other things, proposed an interim rate policy to encourage the development of Smart Grid Systems. Specifically, the Policy Statement proposed to accept single-issue rate filings submitted by public utilities under section 205 of the Federal Power Act to recover costs of Smart Grid projects.

After the issuance of the Policy Statement, DOE released two documents related to solicitations for applications for Smart Grid funding authorized by the Energy Independence and Security Act of 2007 (“EISA”). In particular, Section 1301 of the EISA states that it is the “policy of the United States to support the modernization of the Nation’s electricity transmission and distribution system to maintain a reliable and secure electricity infrastructure that can meet future demand growth and to achieve each of several goals and characteristics, which together characterize a Smart Grid.” The EISA authorized DOE to create two separate funding programs for Smart Grid projects. The funding programs allow DOE: (1) the ability to provide up to 50 percent of the cost of certain demonstration projects; and (2) the ability to provide federal matching funds for Smart Grid investment costs.

The DOE solicitations for applications pursuant the Smart Grid funding under the EISA instructed applicants to submit a funding plan for their projects that identified the sources of project funds and directed applicants to include a commitment letter from third parties providing a specific minimum dollar amount of cost sharing. The notice from DOE specifically identified electric utilities as a category of eligible bidders for the funds.

As a result of the announcement from DOE and given the requirements for potential applications by electric utilities, the Commission now seeks comments on its Policy Statement “on how it should address requests for rate recovery that may be necessary for public utilities to qualify for awards under the [DOE] programs.” In addition, the Commission also seeks comments on whether some form of conditional approval could be useful to public utility applicants with respect to jurisdictional Smart Grid facilities and whether “consistent with [the Commission’s] obligations to ensure just and reasonable rates under the [FPA], should adopt processes for public utilities that may apply for funding for jurisdictional Smart Grid facilities through [DOE’s] Smart Grid funding opportunities.”

Comments are due 7 days after publication in the Federal Register. The Commission’s notice request for supplemental comments can be found at http://www.ferc.gov/EventCalendar/Files/20090519094135-PL09-4-000.pdf.