By Rich Heidorn Jr.

Four former FERC chairs celebrated two decades of RTOs Tuesday with a call for federal action to increase interregional transmission and price carbon emissions into energy markets.

Former Chair Jon Wellinghoff (2009-13) said Congress, which gave FERC authority to enforce mandatory reliability standards in 2005, should now give the commission the power to create a national transmission policy to move renewable power to load centers.

“I think it’s now time for the Congress to give FERC direction about our climate crisis and how the transmission system is going to address that,” Wellinghoff said during a webinar by Americans for a Clean Energy Grid. The hour-long session celebrated the 20th anniversary of FERC Order 2000, the December 1999 order that pressed transmission operators to join regional transmission organizations.

Wellinghoff — who was joined by former Chairs James Hoecker, Pat Wood III and Cheryl LaFleur — said FERC needs congressional direction on transmission siting and cost allocation. “Without those specific things being addressed in some congressional authorizations, I think FERC will continue to be moving around the edges of things. We really need to move beyond that to address the climate crisis that we’ve got before us.”

Hoecker (1997-2001), former counsel to the trade group WIRES, said Order 2000 was needed to address anticompetitive practices that continued despite the open access requirements of 1996’s Order 888.

He lamented that Order 2000 was not mandatory. While the six FERC regulated RTOs and ISOs are “a lot more complicated and sophisticated than we anticipated,” he said, all the Southeast and much of the West remains without access to organized wholesale markets today.

Hoecker “was Moses; he got to see the promised land. I was Joshua [who] actually got to walk through the muck to get into it,” joked Wood (2001-2005), referring to the compliance filings that FERC received in 2001.

Wood said he would have preferred the original plan to have four RTOs, one each in the Northeast, north Midwest, Southeast and West. “That would have been the best [design] possibly. But after multilateral settlement talks, it became clear that it just wasn’t going to work out for a number of reasons, both political and interpersonal and operational.”

As a result, the commission approved filings by PJM and ISO-NE to become RTOs and later helped craft MISO and SPP “from the ground up,” he said.

Wood said Order 2000 reduced opportunities for gaming, reduced generators’ profit margins and facilitated state retail access programs. He acknowledged the changes were not popular with generators, particularly those operating inefficient coal- and gas-fired generators that were displaced by more efficient units and renewables. “That’s how a market is supposed to work,” he said, noting the importance of transmission and price signals. “We saw this on about the fourth hour that MISO was open. We saw redispatch happening in real-time. It was fascinating to look at the heat map.”

Wood said the big question for RTOs now is how to deal with the increasing penetration of zero variable cost renewables, saying he’s been “intrigued” by proposals for having a separate clean energy attribute market.

“From the beginning, the goal was simply an economic goal. But now we need to also consider these non-economic factors such as carbon intensity that are important to now — probably — the majority of the states.”

LaFleur, who served as chair or acting chair during parts of 2013-17, said RTOs’ regional planning and operations allowed a faster and more efficient transition away from coal and toward natural gas and renewables. It also helped regions deal with their own challenges, said LaFleur, who joined ISO-NE’s board of directors after leaving FERC last year.

“ISO-NE built several billions of transmission in the first decade of this century that essentially eliminated generation congestion that had been a problem there for decades. PJM was able to seamlessly adapt to MATS [the Mercury and Air Toxics Standards] that drove a tremendous amount of coal-to-gas switching in PJM … . Because you had a market, you never felt the blow.”

LaFleur and her colleagues agreed that some rulemakings since Order 2000, including Order 1000, which sought to open transmission development to competition, have not met their goals. Wood said he’d like to see Congress give FERC “backstop” transmission siting authority, which the commission could use as a “hammer to get people to the [negotiating] table” on interregional transmission needed to deliver renewable power.

But he said policymakers must find a way to pay for the new infrastructure that doesn’t encourage customers to leave the grid altogether in favor of distributed generation.

Moderator Rob Gramlich asked the panelists to predict whether RTOs will take root in the West and Southeast. The Western Energy Imbalance Market (EIM) has steadily increased since 2014. In the Southeast, lawmakers in North and South Carolina are considering legislation to study creation of an RTO for their states following the billions lost on the cancelled expansion of the V.C. Summer nuclear plant.

“It’s hard to think that, after all the economic carnage that happened in the Southeast, people don’t figure out that organized markets [are] a damn good way to get transparency on future investment,” said Wood. “We can’t repeat those mistakes again where you’ve got utility-driven investment that gets no market check at all. At a minimum, the energy imbalance market concept — or what we always called the day-one market — clearly makes sense across the country, even in the vertically regulated areas of the country like the Southeast.”

But he acknowledged the “politics of this probably haven’t changed at the congressional level, so we’ve got to win their hearts.”

LaFleur noted that the growth of the EIM has been driven by individual states and utilities, not a federal mandate. “I’d love to see that happen in the Southeast as well,” she said, cautioning against a fight over a federal mandate.

But Wellinghoff said a federal mandate is needed to prevent transmission owners from using threats to quit an RTO to exercise control over RTO management. “I think it’s a fight worth picking,” he said.