On Thursday July 21, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”), the FERC voted 5-0 to issue a final rule on Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000 (“Order No. 1000”). Commissioner Moeller issued a partial dissent to the Final Rule. A more detailed summary of Order No. 1000 is available here.
Order No. 1000 is intended to apply to new transmission facilities. The requirements of Order No. 1000 will apply to the evaluation or reevaluation of any transmission facility that occurs after the effective date of the public utility transmission provider’s filing adopting the reforms required by Order No. 1000. The Commission directed public utility transmission providers to explain in their compliance filings how they would determine which facilities would be subject to the requirements of Order No. 1000. Based upon an initial summary of the Commission’s open meeting on Thursday July 21, 2011 and staff comments, Order No. 1000 establishes the following:
Three requirements for transmission planning
- Each public utility transmission provider must participate in a regional transmission planning process, which produces a single regional transmission plan and satisfies the principles under Order No. 890;
- Each transmission planning process at the local and regional level must consider transmission needs driven by federal or state laws or regulations; and
- Public utility transmission providers in neighboring transmission planning regions must coordinate concerning more efficient or cost-effective solutions.
Three requirements for transmission cost allocation
- Each public utility transmission provider must participate in a regional transmission planning process, which has a regional cost allocation method for new transmission facilities that satisfies six regional cost allocation principles;
- Public utility transmission providers in neighboring planning regions must have a common interregional cost allocation method for new interregional transmission facilities, which satisfies six regional cost allocation principles; and
- Participant funding of new transmission facilities is permitted but not as part of the regional or interregional cost allocation method.
Federal Rights of First Refusal must be removed from Commission-approved tariffs and agreements subject to four limitations
- The requirement would not apply to a transmission facility not selected in a regional transmission plan for purposes of cost allocation;
- The requirement would not apply to upgrades to transmission facilities (i.e., tower change outs or reconductoring);
- The rule would allow, but not require, competitive bidding to solicit transmission projects or developers; and
- Nothing in this requirement impacts state or local laws concerning construction of transmission facilities, including siting or permitting.
- Each public utility transmission provider must add a tariff provision that requires the provider to reevaluate the regional transmission plan to determine if alternative solutions need to be evaluated when there is a delay in the development of a transmission facility. Such alternative solutions can include those proposed by the incumbent.
All public utility transmission providers would be required to make a compliance filing within 12 months of the effective date of the final rule; compliance filings for the regional planning and cost allocation requirements will be due in 18 months.
A copy of Order No. 1000 is available here. Troutman Sanders will host a webinar discussion of Order No. 1000 on Tuesday, August 2, 2011 from 1:00 – 2:00pm. Formal invitations will be sent Tuesday, July 26, 2011.