A recently finalized rule by the Federal Energy Regulatory Commission (FERC) on regional and interregional electric transmission planning and cost allocation exceeds its authority under the Federal Power Act and “must be revised,” a coalition of seven utilities have told the commission.
The Coalition for Fair Transmission—whose members include CMS Energy, Consolidated Edison, DTE Energy, Progress Energy, Public Service Enterprise Group, SCANA, and Southern Co.—said in a request for rehearing filed on Tuesday that the Final Rule could “result in higher costs to many consumers, pre-emption of public utility and state prerogatives to determine and decide what generation resources best meet the reliability and economic needs of consumers and public policy requirements, and inefficiencies in competitive electric markets."
With respect to the potential impact on consumers, the Commission’s failure to limit in any way what individual regions may consider as benefits for which costs may be allocated is a fatal flaw of the Final Rule, the coalition said.
FERC issued the Final Rule on Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities (Order No. 1000) on July 21, 2011.
It essentially requires utility transmission providers to develop and participate in a regional planning process to produce a regional transmission plan; consider state and federal public policy requirements in transmission planning processes; eliminate, with certain exceptions, rights of first refusal (ROFRs) contained in FERC-approved tariffs, or contracts that entitle an incumbent utility to build transmission facilities identified in the regional transmission planning processes; develop regional cost allocation methods for transmission projects selected in regional transmission plans; and coordinate with each neighboring planning region to develop procedures for coordination of planning and methods of cost allocation for interregional transmission projects.
"The coalition is concerned that FERC’s order is inconsistent with its stated objectives in several areas and therefore fails to protect consumers," said Sue Sheridan, the coalition’s president and chief counsel.
The coalition listed four specific aspects of Order No. 1000 that should be revised, amplified or clarified to meet the requirements of the FPA and the Administrative Procedures Act:
- Allowing Regions to Define Benefits Too Broadly—"The potential for an overly broad definition of ‘benefits’ could result in regions considering highly speculative benefits that cannot be quantified and are beyond a typical planning horizon as a basis for cost allocation, resulting in the broad socialization of costs."
- Assigning Benefits (and Allocating Costs) of New Transmission Projects to Those Without a Customer or Service Relationship—"Public utilities and consumers should not be allocated the costs of new transmission facilities built by developers with whom they have no transmission service arrangement."
- Ability to Depart from Bottom-Up Planning—"The regional transmission planning process should consider state and federal public policy requirements, but such consideration should be driven by resource needs identified by those entities upon which the public policy requirement is placed."
- Inter-regional Cost Allocation Flexibility—"The same flexibility afforded public utility transmission providers to opt-out of the cost allocation methodology prescribed within a regional transmission policy process (and pursue development using other cost allocation methodologies) should be confirmed as available for both regional and inter-regional projects."
Sources: POWERnews, Coalition for Fair Transmission