On June 17, 2010, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) unanimously approved the Notice of Proposed Rule Rulemaking (“NOPR”) on Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities at FERC’s monthly meeting. The NOPR seeks to build on Order No. 890, Preventing Undue Discrimination and Preference in Transmission Service.
The NOPR is based on the three-year precedent from Order No. 890, three technical conferences, and a 2009 Request for Comment on Transmission Planning and Cost Allocations. Over 150 comments were submitted. The NOPR includes the following proposals:
1. Each public utility transmission provider must participate in a regional transmission planning process, and that process must produce a regional plan that complies with Order No. 890;
2. State and federal guidelines must be accounted for in the regional plans, including any renewable portfolio standards;
3. All tariffs must remove any right of first refusal that give an incumbent public utility any preference or undue advantage over an non-incumbent transmission project developer;
4. All public utility transmission providers must enter into a transmission planning agreement with each neighboring regional transmission provider pursuant to the regional planning process.
The NOPR also contains a cost-allocation methodology proposed where transmission providers within a region would have the first opportunity to create a cost-allocation model, and Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) would be required to develop cost-allocation principles within their region and across their borders. At the FERC monthly meeting each commissioner noted that the NOPR will not be usurping any state or local authority. ISOs and RTOs would have six months after the final rule to make a compliance filing with FERC detailing their cost-allocation plans within their footprint. Meanwhile, inter-regional cost-allocation plans will need to be filed at FERC within a year. FERC hopes that these cost-allocation plans will lead to more long-distance transmission lines and further develop renewable energy.
A controversial aspect of the NOPR is the new role FERC will play when a region cannot come to a consensus on cost allocation. When a public utility transmission provider and stakeholders cannot agree on a cost-allocation plan, FERC may use the record developed from the regional process to determine the cost-allocation method. In addition, the record could provide useful input to Congress. At the FERC monthly meeting, Commissioner Moeller discussed how the record could also be used by Congress to draft new energy/transmission legislation in the future.
Comments on the NOPR are due to the Commission within sixty days of publication in the Federal Register. A copy of the NOPR is available on FERC’s website at http://www.ferc.gov/whats-new/comm-meet/2010/061710/E-9.pdf.
It is worth noting that in a separate order FERC also approved SPP’s regional cost allocation filing establishing a “highway-byway” cost sharing methodology. For facilities 300 kV and higher voltage, the costs of those new facilities will be socialized across the entire SPP footprint. For facilities rated between 100 kV and 300 kV, one-third of the cost of those facilities will be socialized across the footprint (with the other 2/3 assigned to the zone in which the facilities are located). For facilities 100 kV and lower voltage, the associated costs will be assigned to the zone in which the facilities are located. The SPP order can be downloaded at http://www.ferc.gov/whats-new/comm-meet/2010/061710/E-7.pdf.