FERC Transmission Planning Process Reform Updates | Husch Blackwell LLP

Regulatory Update – Reform of FERC’s Transmission Planning Process

On July 15, 2021, the Federal Energy Regulatory Commission (“FERC”) issued an Advance Notice of Proposed Rulemaking (“ANOPR”) to comprehensively review current policies for regional electric transmission planning, dispatch FERC generator costs and interconnection. ANOPR invites public comment on “potential reforms for longer-term regional transmission planning and cost allocation processes that take into account more comprehensive planning, including planning for expected future generation, overhaul of cost responsibility for regional transmission facilities and interconnection-related network upgrades, and increased transmission oversight on how new transmission facilities are identified and paid for. “A final rule could have a significant impact on transmission system planning processes across the country. Below are some key takeaways and insights based on ANOPR and its public consultation process.

Transport planning and cost allocation

Beyond FERC’s landmark transmission reforms in Orders 890 and 1000, ANOPR invites comment on whether additional changes may be needed to facilitate the changing resource mix of FERC. power generation, replacing aging infrastructure and adapting to changing uses of the transmission system. ANOPR recognizes that the power grid increasingly includes resources that are further away from load centers and dense populations, and that such a trend is expected to continue as renewable resources are expected to continue to come online in the future. In light of these changes, the Commission is considering reforming regional transmission planning and generation interconnection procedures to more effectively allocate system upgrade costs based on benefits to both system load and for new production.

ANOPR suggests that current planning processes may not produce the most valuable transmission infrastructure. Although FERC recognizes the need for improved transmission planning and cost allocation, the broad nature of transmission benefits creates significant challenges in accurately estimating the benefits of transmission projects and how they are allocated to groups. of customers and users. In response to these concerns, ANOPR questions whether certain potential reforms, such as the introduction of an Independent Transport Controller, are necessary to oversee planning processes. This independent entity would likely operate independently of existing regional transmission organizations and could make referrals to FERC if problematic planning decisions were made.

Interconnection study process

ANOPR is exploring the potential for improving the efficiency of interconnection study processes and revising methods for allocating and recovering network upgrade costs. The Commission invites comments on the adequacy and reasonableness of existing methods for allocating interconnection upgrade costs, and on variants of independent entities that allow RTOs/ISOs to use participant funding for interconnect-related network upgrades. The Board questions whether its current approach to overseeing the identification and funding of new transmission facilities as part of the intertie study process adequately protects customers from excessive costs.

Commission seeks input from industry

The Commission provides several opportunities for interested industry participants to comment on the various issues considered in the ANOPR. Specifically, the Commission is seeking comments on the following issues, among others:

(1) whether existing regional transmission planning and cost allocation processes appropriately consider the transmission needs of anticipated future production to guide study assumptions, or instead rely on less complete information , such as existing interconnection requests with completed facility studies, and whether such current planning criteria are appropriate or need to be revised;

(2) if the regional transmission planning and cost allocation processes’ consideration of reliability-driven transmission needs, economic considerations, and public policy requirements are unduly siled from each other and, in the yes, whether this influences the consideration of the potential benefits of a regional transmission facility (and the associated beneficiaries for the purpose of allocating the costs of such a facility);

(3) whether criteria in addition to those related to reliability, economic needs, and public policy requirements should be planned for and considered in the assessment of benefits, and used to determine the allocation of costs in the process of regional transport planning, and these needs must be clear, credibly quantifiable and non-speculative;

(4) how to identify and appropriately allocate the costs of new transmission infrastructure in a way that satisfies the Commission’s principle of cost causation whereby costs are allocated among beneficiaries in a way that is at least approximately proportional estimated benefits;

(5) whether or not it is appropriate for the costs of transmission facilities governed by state or local public policies to be passed through regional cost allocation to consumers in non-participating states, or whether changes to current mechanisms interconnection cost allocation may be unfairly and unreasonably shifting costs to customers of charging service entities;

(6) whether and what reforms are needed to the generator interconnection process to ensure more focused integration with regional transmission planning and cost allocation processes, a more efficient queuing process, and dispatch more efficient and cost effective interconnection;

(7) whether the regional transmission planning and cost allocation processes may have enabled transmission facilities to meet an unduly narrow set of transmission needs, including needs located within a single owner’s footprint of transmission network, and have limited regional benefits, but collectively can impose significant costs on customers;

(8) whether and how to better coordinate regional and local transportation planning processes to identify more efficient or cost-effective solutions; and

(9) whether and how to more clearly identify lines of regulatory and oversight authority between states and federal authorities with respect to regional and local transmission facilities to ensure proper verification of transmission infrastructure. In addition, we seek feedback on whether the current approach to monitoring transmission investments adequately protects customers, particularly given the potentially large and very costly investments proposed to meet transmission needs driven by a changing resource mix, and, if customers are not sufficiently protected from excessive costs, whose potential reforms may be necessary and are legally permitted to ensure just and reasonable tariffs.

Comments in response are due November 30, 2021. A notice of proposed rulemaking is expected sometime in 2022. A final rule is expected in late 2022 or 2023. The final rule has the potential to create significant changes in transmission study processes in much of the United States. states and generate significant compliance obligations for transportation planners, transportation owners, and production developers. Interested parties will also have the opportunity to provide comments to the Commission at technical conferences (such as the technical conference that took place on November 15) and follow-up comments at technical conferences.

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Louisa R. Loomis