On June 18, 2020, FERC issued an order finding that PJM Interconnection, L.L.C. (“PJM”) has been inconsistently implementing Order No. 1000’s immediate need reliability project exemption and directed PJM to implement certain aspects of the exemption more fully and transparently. Concurrently, in separate orders, FERC concluded there was insufficient evidence to find that either Southwest Power Pool, Inc.’s (“SPP”) or ISO New England Inc.’s (“ISO-NE”) implementation of the immediate need reliability project exemption was unjust, unreasonable, or unduly discriminatory or preferential.

In 2011, FERC issued Order No. 1000, which, in part, required transmission providers to eliminate provisions from their tariffs and agreements that grant incumbent transmission owners a federal right of first refusal (“ROFR”) to construct transmission facilities selected in a regional transmission plan for purposes of cost allocation. FERC, however, permitted an exemption in which a limited ROFR may be retained for certain transmission facilities that are needed to meet a time-sensitive reliability need. To ensure the exemption is used only in limited circumstances, FERC established five criteria to restrict when the exemption may be used and require regional transmission organizations to post information related to the exemption process.

In October 2019, FERC instituted an investigation under Federal Power Act (“FPA”) Section 206 into whether PJM, SPP, or ISO-NE may be inconsistently implementing Order No. 1000’s immediate need reliability project exemption (see October 24, 2019 edition of the WER). In the order, FERC requested that PJM, SPP, and ISO-NE: (i) show how they are meeting the five-criteria test for immediate need reliability projects; (ii) demonstrate that their implementation of the immediate need reliability project exemption is just and reasonable; and (iii) respond to additional potential conditions or restrictions which FERC could impose to promote competition for transmission development while avoiding delays.

After reviewing PJM’s and other parties’ comments, FERC found that PJM was not in compliance with three of the five criteria of the immediate need reliability project exemption. Specifically, FERC found that PJM: (i) was not adequately posting explanations of reliability violations and system conditions in advance for which there is a time-sensitive need; (ii) was not posting sufficient descriptions detailing PJM’s reasoning for designating incumbent transmission owners as the entities responsible for new immediate need reliability projects; and (iii) the three-day period PJM had been providing stakeholders to respond to posted project descriptions was too short and PJM needed to post all stakeholder comments related to the projects on its website, whether provided in writing or submitted verbally at relevant meetings. FERC directed PJM to implement changes in order to comply with all five criteria and further directed PJM to submit a compliance filing within 60 days of the date of the order.

FERC also reviewed comments related to SPP and ISO-NE’s implementation of the immediate need reliability project exemption, and found there was insufficient evidence in the record to find that either SPP or ISO-NE’s implementation was unjust, unreasonable, or unduly discriminatory or preferential. Accordingly, FERC terminated the its FPA Section 206 investigations in both instances. Additionally, in all three orders, FERC found there was no need to impose additional criteria on the immediate need reliability exemption as some commenters had requested.

A copy of the PJM order is available here.

A copy of the SPP order is available here.

A copy of the ISO-NE order is available here.