FERC proposes changes to regional transmission planning
The Federal Energy Regulatory Commission (FERC) proposed a rule Thursday that seeks to improve regional transmission planning in an effort to modernize the grid and facilitate the transition to clean energy, while also reducing costs for consumers.
The Notice of Proposed Rulemaking (NOPR) would require transmission providers to conduct regional transmission planning on a sufficiently long-term basis to meet transmission needs driven by changes in the resource mix and demand. Needs would have to be identified through multiple long-term scenarios that incorporate a minimum set of factors. Those factors include federal, state, and local laws and regulations that affect the future resource mix and demand; trends in technology and fuel costs; resource retirements; generator interconnection requests and withdrawals; and extreme weather events.
The rule also proposes changes to regional transmission cost allocation. Specifically, each transmission provider would be required to seek the agreement of state entities within the transmission planning region regarding the cost allocation for transmission facilities selected as part of long-term regional transmission planning. In addition, they would have to establish a cost allocation method for transmission facilities selected as part of long-term regional transmission planning that complies with the existing regional cost allocation principles. Finally, the proposed rule change seeks to permit the exercise of a federal right of first refusal for transmission facilities selected in a regional transmission plan for purposes of cost allocation, conditioned on the incumbent transmission provider establishing joint ownership of those facilities.
“Transmission facilities provide a broad range of benefits,” FERC Chairman Rich Glick said. “Planning for those facilities with a longer-term forward-looking approach, in addition to fairly allocating their costs, is essential to ensuring we are developing energy infrastructure in a manner that reduces costs and enhances reliability.”
FERC Commissioner Allison Clements said the proposal contains reforms to shore up cost protections and reliability of the U.S. electricity system “based on clear market signals about generation development and demand, the risks of extreme weather, and the increasing threat of cyber- and physical attacks.”
She also noted that transmission-owning utilities invested billions of dollars in U.S. transmission projects last year and that those costs continue to rise. “So, the correct question is not whether long-term planning will cost customers money. The correct question is whether planning wisely for the future will ensure that customers get the most bang for their buck from a cost and reliability perspective,” Clements said.
FERC’s proposal drew praise throughout the industry, including from clean energy groups and from investor-owned electric companies.
Phil Moeller, executive vice president of the Business Operations Group and Regulatory Affairs at the Edison Electric Institute (EEI), said the proposed rule was an important step forward, as electric transmission will be key in allowing electric utilities to maintain reliability while minimizing cost impacts to customers as the nation’s generation mix continues to evolve.
“Importantly, the NOPR supports long-term planning on a forward-looking basis while taking into account changes in the resource mix and in electricity demand,” Moeller said. “The NOPR also recognizes the important role that investor-owned electric companies play in developing transmission by revisiting the decision in Order No. 1000 to eliminate the federal right of first refusal for projects selected for regional cost allocation.”
American Clean Power (ACP) said the rule change has the potential to facilitate the development of more clean energy projects that have been stymied by a lack of transmission capacity.
“Clean energy resources are abundant in the U.S., but our grid falls short of connecting clean energy-rich regions to the population centers that need it most. ACP applauds FERC’s proposal to implement reforms that would expand and improve the grid. We encourage FERC to refine and finalize today’s proposal so that current and anticipated transmission needs can be met in a timely and cost-effective manner and support a transition to a clean energy future,” Heather Zichal, CEO of ACP, said.
The Solar Energy Industries Association (SEIA) and the American Council on Renewable Energy (ACORE) also came out in support of the NOPR.
“A 21st-century economy needs a 21st-century grid, and FERC’s new rulemaking on transmission is a long-overdue step in the right direction. This proposed rule addresses the need for long-term transmission planning that accounts for the grid of the future, which is vital for improving system resilience, keeping costs low for consumers, and delivering the clean power that Americans deserve. ACORE also strongly supports the inclusion of grid-enhancing technologies within such planning efforts,” ACORE President and CEO Gregory Wetstone said.
FERC is encouraging feedback that will support the development of more efficient and cost-effective transmission facilities. Comments are due 75 days from the date of publication in the Federal Register.
