In May, FERC released a long-anticipated rule about regional transmission planning that aims to spur significant transmission investment. Federal law allows any party to file, within 30 days of FERC’s order, a request that FERC reconsider or clarify aspects of rule. The Electricity Law Initiative’s request for rehearing and clarification focuses on two elements of FERC’s order.
First, the filing asks FERC to empower state regulators with authority to decide how the costs of new transmission projects are shared across a region. In the rule, FERC requires utilities to provide state regulators with an opportunity to propose cost allocation methods but authorizes utilities to decide whether to formally propose the states’ preferred approaches to FERC for its approval. FERC claims that federal law prevents it from demanding that utilities formally file the states’ preferred cost allocation methods. The Electricity Law Initiative’s request urges FERC to reconsider this legal constraint and find: 1) that there is no legal barrier preventing it from ordering utilities to file the states’ preferred cost allocation methods, and 2) that FERC must require utilities to do so in order to ensure that transmission rates are just and reasonable.
Second, the filing asks FERC to clarify that its new transmission planning rules are rooted in FERC’s legal duty to mitigate utility market power. For nearly thirty years, FERC has required utilities to treat all transmission users, such as independent power producers, municipally owned utilities, and the utility’s own power marketing operations on a “comparable” basis. This principle applies to transmission planning and demands that utilities consider how the needs of market participants, including utility customers and competitors, affect transmission expansion.
In the rule, FERC requires that regional transmission planning administered by utilities and Regional Transmission Organizations be premised on three long-term scenarios about the industry’s potential future supply mix. To develop those scenarios, FERC’s rule requires planners to consider seven factors, including utility and corporate energy purchasing commitments that affect long-term transmission needs. FERC’s rule calls out corporate demand for clean energy as a potential driver of transmission expansion. The Electricity Law Initiative’s request urges FERC to clarify that regional planning must consider all transmission users’ needs and that this requirement is based on FERC’s long-standing comparability principle.