Energy Insight: Order No. 1000 Update—FERC’s Initial Compliance Orders

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The utility and transmission industry received significant guidance today from the Federal Energy Regulatory Commission on the direction FERC intends to take in its implementation of Order No. 1000. Order No. 1000 significantly altered the landscape for transmission planning and cost allocation and FERC has now finally voted to issue the beginning of a series of long anticipated orders relating to the local and regional proposals of the transmission providers within the PJM, MISO and WestConnect footprints. Comparable guidance will be forthcoming for all RTO and non-RTO regions of the country in the coming months and will significantly affect decisions about the expansion and reliability of U.S. transmission infrastructure for decades to come.

What Is Order No. 1000?  

Order No. 1000 established three main categories of reform: 1) enhancements to local, regional and interregional planning efforts inclusive of recognition of public policy requirements established by state or federal laws or regulations that may bear on such planning, 2) enhanced definitions of and processes to apply and qualify for regional and interregional cost allocation for new facilities, and 3) increased opportunities for non-incumbent transmission developers to participate in projects, primarily through the elimination of a federal right of first refusal to incumbent public utility transmission providers.

What Did FERC Do? 

In the three orders approved today, FERC accepted the proposals of PJM and MISO as “largely compliant” with Order No. 1000 and the proposal of WestConnect and its jurisdictional transmission providers as “partially compliant” with the rule. Emotions ran high on the PJM/MISO orders, particularly on the issue of the elimination of incumbent utilities’ right of first refusal. Commissioners Moeller and Clark, the two Republican members, voted against the PJM and MISO orders. Each noted they believed the way the RTOs proposed to eliminate the federal right of first refusal, as accepted in the order, would set back development of new transmission. Further statements from the two dissenting commissioners should be released soon. The orders also direct further compliance filings directed at PJM and MISO’s elimination of the controversial right of first refusal, cost allocation methods and for procedures regarding consideration of transmission needs driven by public policy requirements.

The WestConnect order was unanimously approved by all five commissioners. Most notably, the Commission’s order directs the WestConnect participants to make regional cost allocation binding on intended beneficiaries. This will be particularly challenging given the fact that there is not a common open access tariff that binds the Desert Southwest and Rocky Mountain transmission providers to one another, and that region contains a considerable number of non-jurisdictional entities. FERC also directed WestConnect to further identify transmission solutions that “more efficiently or cost-effectively meet transmission needs driven by reliability and/or economic considerations or by public policy requirements.” Finally, FERC seeks clear procedures and opportunities for stakeholder input to identify transmission needs.  

Other Important Order No. 1000 Developments 

In late February, FERC issued two orders addressing the regional Order No. 1000 compliance requirements that also foreshadow FERC’s path as it addresses other regional proposals in the coming months.

First, in an order addressing Duke Energy Carolinas LLC and Carolina Power and Light Company compliance filing, together with a companion filing encompassing the limited interconnection assets of Alcoa Power Generating, Inc., FERC found that the applicants were a single public utility transmission provider, and therefore cannot satisfy the regional scope requirement of Order No. 1000. FERC gave the applicants only 90 days to submit a new compliance filing. 

Second, FERC granted Maine Public Service Company a waiver of the regional transmission planning requirements, noting the unique geographic situation of MPS. FERC did require that MPS comply with Order No. 1000’s directive that the local transmission planning process consider transmission needs driven by public policy requirements. MPS has 90 days to make a filing to define, identify and incorporate such public policy requirements.

The Commission continues to plow through its review of a multitude of initial Order No. 1000 compliance filings, which it has described as one of its largest and most difficult rulemakings to process. The next wave of filings addressing interregional coordination and cost allocation are being formulated and vetted through stakeholder processes. The original compliance deadline for interregional filings was April 11, 2013, but that deadline has been extended until July 10, 2013. In today’s meeting, the Commission indicated that the PJM, MISO and WestConnect compliance filings will be due 120 days from the date the orders are issued, which essentially puts the local/regional compliance and the interregional filings within just a few days of one another.