On October 13, 2011, the Energy and Power Subcommittee of the House Energy and Commerce Committee held a two-part hearing to discuss electric transmission issues, including siting, planning, and cost allocation.  The subcommittee also addressed the Commission’s recently-issued Order No. 1000, Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities and its impact on transmission development. 

FERC Chairman Jon Wellinghoff and Lauren Azar, Senior Advisor to the Secretary of Energy, testified on the first panel.  The second panel consisted of: Greg White, Commissioner on the Michigan Public Service Commission, Philip B. Jones, Commissioner on the Washington Utilities & Transportation Commission, John DiStasio, General Manager & CEO, Sacramento Municipal Utility District, on behalf of the Large Public Power Council, Steven A. Transeth, Principal, Transeth & Associates, PLLC, on behalf of the Coalition for Fair Transmission Policy, Nicholas Brown, President & CEO, Southwest Power Pool, Inc. and Joseph Welch, Chairman, President & CEO, ITC Holdings Corp.

The focal point of the hearing was Order No. 1000.  However, the subcommittee also discussed DOE’s recent decision not to delegate to FERC authority under the Energy Policy Act to designate National Interest Electric Transmission Corridors (“NIETC”), as well as concerns over the need to construct new transmission in the wake of retiring units due to pending Environmental Protection Agency (“EPA”) regulations.  While subcommittee members and those testifying were generally supportive of FERC’s efforts in Order No. 1000 to encourage transmission planning and cost allocation, several members of subcommittee and hearing participants expressed concern over the definition of “benefits” for cost allocation purposes and the development of regional planning authorities in areas where there is currently no Regional Transmission Operator (“RTO”) or Independent System Operator (“ISO”). 

Chairman Wellinghoff’s opening statement before the subcommittee supported the need for an efficient electric transmission system and highlighted the ways in which Order No. 1000 works to achieve this goal by permitting regional flexibility in transmission planning and cost allocation.  He further emphasized Order No. 1000’s recognition of the states’ “vital role” in protecting consumers and the tools and perspective that state regulators bring to regional planning processes. Lauren Azar testified on behalf of the DOE and stated that DOE’s focus is on building new infrastructure, highlighting barriers to transmission development: (1) uncertain public policy goals; (2) market power; (3) out of phase timelines for building transmission and generation; and (4) parochialism.  Chairman Wellinghoff assured the subcommittee that Order No. 1000 allows state regulators to participate and ensures that they are included in stakeholder processes.  Subcommittee members asked whether Order No. 1000 expresses a preference for any particular fuel source (i.e. coal or wind energy).  Chairman Wellinghoff stated that Order No. 1000 does not prefer one type of fuel over another.  He indicated that the regions will determine how to plan for the resources they need and this will be driven by market forces.          

The second panel expressed mixed feelings concerning Order No. 1000.  Commissioner White expressed concern regarding cost allocation issues, and the idea that Michigan will be exposed to a disproportionate share of the costs.  Commissioner Jones stated that Order No. 1000 struck a good balance, and that FERC did not decide certain issues, like cost allocation.  Commissioner Jones supported DOE’s decision not to delegate additional authority to FERC concerning NIETC designations.  John DiStasio expressed concern about the idea of “subsidizing” additional renewables, when customers have already supported local renewable development.  Steven Transeth stated that Order No. 1000 did not go far enough to ensure that states and localities have a say in how things are done.  Nicholas Brown took a different stance, and stated that FERC could have gone even further, and supported interregional planning and cost allocation.  Joseph Welch generally supported the idea of investing in transmission infrastructure and was generally supportive of FERC’s efforts in Order No. 1000 towards development.  Some panelists expressed concerns over committing to a regional planning process before fully realizing what the benefits of the cost allocation method would be.  Others, like Commissioner White from Michigan, expressed concern that their ratepayers might shoulder more of the burden of costs, not commensurate with benefits.  Several panelists stated that compliance filings for Order No. 1000 would provide more detail on the implications of the order. 

 A copy of each panelist’s testimony is available here.