CORRECTED: Challenges to Order 1000 Filed in Federal Court as President Acts on Grid Modernization

Several power companies, state commissions, and trade groups have filed briefs with the U.S. Court of Appeals for the D.C. Circuit challenging parts of the Federal Energy Regulatory Commission’s (FERC’s) Order 1000, a rule they argue will lead to high costs for consumers and diminish the authority of state and regional regulators. Meanwhile last week, the White House issued a memo directing federal agencies to improve siting and permitting process to help modernize the nation’s grid.

The July 2011–issued Order No. 1000 requires public utility transmission providers to improve transmission planning processes and allocate costs for new transmission facilities to beneficiaries of those facilities. It also requires public utility transmission providers to align transmission planning and cost allocation. FERC says those changes will remove barriers to development of transmission facilities.

But "Order No. 1000 and its sequels require extensive and unprecedented changes to transmission planning, development, and cost allocation that will affect all transmission service providers and their customers," says the brief from petitioners, which include the Edison Electric Institute, the Coalition of Fair Transmission Policy, the Alabama Public Service Commission, and the National Rural Electric Coop. Association.

The parties raise a number of challenges to Order 1000 and succeeding orders, including the May 2012-issued Order 1000-A and the October 2012-issued Order 1000-B. Many object that the transmission-planning mandate "exceeds FERC’s statutory authority," which they argue is limited to encouraging, not requiring, coordinated planning. Others argue that FERC’s orders are "arbitrary and capricious" because they are aimed "not at correcting specific abuses or unreasonable existing rates, but at addressing what FERC describes as the ‘theoretical threat’ that existing planning arrangements might not produce a ‘more efficient and cost-effective’ transmission system." Other petitioners contend that mandating consideration in the planning processes of transmission needs driven by so many federal, state, and local public policy requirements violates the Federal Power Act by making the needs of load-serving entities "an optional consideration."

FERC’s response is due on Sept. 25. The case is South Carolina Public Service Authority et. al v. FERC.

Petitioners include the Alabama Public Service Commission, the American Public Power Association, the Coalition for Fair Transmission Policy, the Edison Electric Institute, First Energy, International Transmission Co., Large Public Power Co., Midwest ISO Transmission Owners, the National Rural Electric Coop. Association, NYISO, Oklahoma Gas and Electric Co., PSEG Energy Resources, Sacramento Municipal Utility District, South Carolina Public Service Authority, and Southern Co.

As well as a number of power companies and grid entities, intervening for the petitioners are state regulatory agencies the Connecticut Public Utilities Regulatory Authority and the Florida Public Service Commission. Also intervening is the National Association of Regulatory Utility Commissioners (NARUC).

Meanwhile, a June 7 presidential memo from the White House directs the Agriculture, Commerce, Defense, Energy, and Interior Secretaries to improve the siting and permitting processes for transmission lines in an effort to modernize the electric grid. The Energy Department, in particular, has been assigned the task of creating a report on current research on transmission issues and utilization of renewable energy. The first part of that report, which will focus on western states, will be due in December 2013, while the second part, focusing on the rest of the nation, will be due in April 2014.

"Modernizing our Nation’s electric transmission grid requires improvements in how transmission lines are sited, permitted, and reviewed," the memo notes. "An important avenue to improve these processes is the designation of energy right-of-way corridors (energy corridors) on Federal lands. Section 368 of the Energy Policy Act of 2005 (the "Act") (42 U.S.C. 15926), requires the Secretaries of Agriculture, Commerce, Defense, Energy, and the Interior (Secretaries) to undertake a continued effort to identify and designate such energy corridors."

Sources: POWERnews, D.C. Circuit, The White House

Sonal Patel, Senior Writer (@POWERmagazine, @sonalcpatel)

CORRECTION (June 14): This story originally erroneously stated that the Florida Public Service Commission has intervened on behalf of FERC. The Florida PSC has intervened in support of the Alabama Public Service Commission, a petitioner in the case. The article has also been updated to reflect that the National Association of Regulatory Utility Commissioners has intervened on behalf of the petitioners. POWERnews regrets the error.

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