On March 23, 2010, the House Subcommittee on Energy and Environment held a hearing entitled “Oversight of the Federal Energy Regulatory Commission” to examine how the Federal Energy Regulatory Commission (“FERC” or the “Commission”) is implementing its statutory duties and authorities.  The four current FERC commissioners testified at the hearing and then responded to questions from subcommittee members, including questions about transmission planning and cost allocation.

At the hearing, Chairman Wellinghoff reiterated that the two primary goals of the Commission are: (1) to promote the safe, reliable and efficient energy infrastructure that serves the public interest and (2) to ensure that rates, terms and conditions for wholesale sales and transmission of electric energy and natural gas in interstate commerce are just and reasonable and not unduly discriminatory or preferential.  He noted that many renewable energy resources are located far from consumers and existing transmission facilities, and that removing barriers that keep renewable energy resources from competing in wholesale markets must be part of the nation’s strategy to move toward energy independence and greater reliance on clean energy.  To that end, Chairman Wellinghoff said that the Commission has completed a series of technical conferences to review regional transmission planning rules and will evaluate how FERC can improve the regional planning process.  In response to a question from Rep. Tammy Baldwin (D- WI), Chairman Wellinghoff stated that he expects FERC to complete its review of the thousands of pages of comments the Commission received in response to the technical conferences in about six months, and will consider initiating a rulemaking proceeding at that time.

Both Rep. John Dingell (D-MI) and Rep. Parker Griffith (R-AL) asked Chairman Wellinghoff to comment on how cost allocation issues should be resolved.  He responded that instead of a standard approach, he prefers letting the states and Regional Transmission Organizations (“RTOs”) decide cost allocation issues. 

Rep. Baldwin also asked about FERC’s response to the Seventh Circuit Court of Appeals striking down a FERC order, Illinois Comm. Comm’n. v. FERC, Aug. 6, 2009, 576 F.3d 470 (7th Cir.), which had approved PJM Interconnection’s “postage-stamp” pricing that required all RTO members to share equally the costs of new transmission lines 500 kV or greater.  Chairman Wellinghoff stated that remand of the case is pending but that FERC has requested parties to supplement the record in the case so that the Commission can demonstrate that PJM’s cost allocation method was just and reasonable.

Finally, Rep. Peter Welch (D-VT) stated that he wanted FERC to give the Independent System Operator-New England guidance on conducting transmission planning on a least cost integrated resources basis.  Chairman Wellinghoff responded that FERC has no authority to order an RTO to conduct least cost integrated planning, but would provide the subcommittee with draft language to request such authority, as requested by Rep. Welch.

Additional information on the oversight hearing is available online at: http://energycommerce.house.gov/index.php?option=com_content&view=article&id=1937:oversight-of-the-federal-energy-regulatory-commission&catid=130:subcommittee-on-energy-and-the-environment&Itemid=71.