FERC Issues Advance Notice of Proposed Rulemaking on Potential Reforms for Electric Transmission Planning, Cost Allocation, and Generator Interconnection Processes

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Troutman Pepper

[co-author: Sahara Shrestha]

On July 15, 2021, FERC issued an Advance Notice of Proposed Rulemaking (“ANOPR”) to solicit comments on potential reforms for electric regional transmission planning, cost allocation, and generator interconnection processes. Through public comment, the Commission seeks input on how transmission and interconnection planning and cost allocation procedures can be reformed to facilitate additional renewable energy integration and adjust for increasing demands on the grid. Comments on the ANOPR and replies to Comments are due 75 days and 105 days, respectively, after the ANOPR’s publication in the Federal Register. Following these filings, the Commission may consider whether to issue a formal Notice of Proposed Rulemaking, which would precede any final rule on these issues.

As the Commission explained in the ANOPR, notwithstanding landmark reforms issued more than a decade ago in Order Nos. 890 and 1000, additional transmission planning and cost allocation changes may be needed to facilitate both the changing electric generation resource mix and also accommodate different uses of the transmission system. In particular, FERC found that the electric generation fleet is beginning to rely on resources that are farther away from load centers and denser populations. In light of these changes, the Commission argued that it was timely and appropriate to consider reforms to regional transmission planning issues. In addition, unlike the transmission planning procedures established in Order Nos. 890 and 1000, the Commission argued that it was also important to consider generation interconnection procedure reforms, so as to optimize planning procedures and more holistically allocate costs based on benefits yielded for both system loads and new generation.

In the ANOPR, FERC identified three general areas potential reform: (1) reforms for longer-term regional transmission planning and cost-allocation processes; (2) reforms that focus on improving the cost allocation for regional transmission facilities and interconnection network upgrades; and (3) enhancements to Commission oversight over new transmission facilities identification and financing, and how customers may be protected from excessive costs. The ANOPR also sets out questions for commenters to consider within these potential reform areas, including (but not limited to):

  • Whether to require that transmission providers establish a process for identifying, and planning transmission in light of, geographic zones with significant renewable energy generation potential;
  • How to appropriately identify and allocate the costs of new transmission facilities consistent with FERC’s historic cost allocation standards; and
  • Whether participant funding of interconnection-related network upgrades may be unjust and unreasonable and whether the Commission should eliminate the independent entity variations that allow RTOs/ISOs to use participant funding for interconnection-related network upgrades.

While the ANOPR asks questions on a wide range of topics, the clear focus of the ANOPR appears to be probing ways of possibly changing cost allocation and recovery for interconnection-related upgrade costs. The ANOPR also raises the issue of whether or not additional planning oversight is needed through some type of Independent Transmission Monitor. This additional independent entity would apparently operate independently of existing RTOs/ISOs and could make referrals to FERC if problematic planning decisions were made.

In a joint concurrence, Chairman Glick and Commissioner Clements stated they are concerned that the current approach to transmission planning and cost allocation and interconnection processes will not meet future transmission needs in a just and reasonable manner. They urge the Commission to plan holistically and proactively for future transmission needs in light of increased demand for renewable energy. Commissioner Danly concurred separately to emphasize that public comments on the ANOPR should also address (1) whether particular reforms are within the Commission’s jurisdiction, and (2) the impact on ratepayers from the various proposed reforms. Lastly, Commissioner Christie concurred separately to explain that he is not endorsing any of the potential reforms but agrees that the Commission should seek public comment on these issues to ensure a reliable, efficient, and cost-effective transmission system.

Comments on the ANOPR and replies to Comments are due 75 days and 105 days, respectively, after the ANOPR’s publication in the Federal Register.

A copy of the ANOPR is available here and additional information on the notice is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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