FERC issues new rules on transmission planning and cost allocation – local zoning control unaffected 

On Thursday, July 21, the Federal Energy Regulation Commission issued a Final Rule that reforms the Commission’s electric transmission planning and cost allocation requirements for public utility transmission providers. While the rule is intended to address cross-jurisdictional transmission line issues to help promote the use of the renewable energy by ensuring that once sited, the energy generated can be connected to the grid, local control over siting decisions remains intact.    

The rule establishes three requirements for transmission planning:

• Each public utility transmission provider must participate in a regional transmission planning process that satisfies the transmission planning principles of Order No. 890 and produces a regional transmission plan.
• Local and regional transmission planning processes must consider transmission needs driven by public policy requirements established by state or federal laws or regulations. Each public utility transmission provider must establish procedures to identify transmission needs driven by public policy requirements and evaluate proposed solutions to those transmission needs.
• Public utility transmission providers in each pair of neighboring transmission planning regions must coordinate to determine if there are more efficient or cost-effective solutions to their mutual transmission needs.

The rule establishes three requirements for transmission cost allocation:

• Each public utility transmission provider must participate in a regional transmission planning process that has a regional cost allocation method for new transmission facilities selected in the regional transmission plan for purposes of cost allocation. The method must satisfy six regional cost allocation principles.
• Public utility transmission providers in neighboring transmission planning regions must have a common interregional cost allocation method for new interregional transmission facilities that the regions determine to be efficient or cost-effective. The method must satisfy six similar interregional cost allocation principles.
• Participant-funding of new transmission facilities is permitted, but is not allowed as the regional or interregional cost allocation method.

Nonincumbent Developer Reforms

• Public utility transmission providers must remove from Commission-approved tariffs and agreements a federal right of first refusal for a transmission facility selected in a regional transmission plan for purposes of cost allocation, subject to four limitations:

• This does not apply to a transmission facility that is not selected in a regional transmission plan for purposes of cost allocation.
• This allows, but does not require, public utility transmission providers in a transmission planning region to use competitive bidding to solicit transmission projects or project developers.
• This allows, but does not require, public utility transmission providers in a transmission planning region to use competitive bidding to solicit transmission projects or project developers.
• Nothing in this requirement affects state or local laws or regulations regarding the construction of transmission facilities, including but not limited to authority over siting or permitting of transmission facilities.

Compliance

• Order No. 1000 takes effect 60 days from publication in the Federal Register.
• Each public utility transmission provider is required to make a compliance filing with the Commission within 12 months of the effective date of the Final Rule.
• Compliance filings for interregional transmission coordination and interregional cost allocation are required within 18 months of the effective date.

Read a summary by the New York Times here: http://www.nytimes.com/2011/07/22/science/earth/22grid.html?scp=1&sq=%22Federal%20Energy%20Regulatory%20Commission%22&st=cse

For an article discussing the need for greater cooperation to promote siting and transmission of renewable energy, click here