By Rich Heidorn Jr.

PJM, ISO-NE and SPP appear to be thwarting Order 1000’s intent to open transmission projects to competition by abusing the “immediate need” exemption for reliability projects, FERC said Thursday.

“We are concerned that the responding RTOs may be implementing the exemption in a manner that is inconsistent with or more expansive than what the commission directed, and therefore may be unjust and unreasonable, unduly preferential and discriminatory,” FERC said in initiating its investigation under Section 206 of the Federal Power Act. The commission ordered the three RTOs to respond within 60 days with a defense of their use of the exemptions (EL19-90, EL19-91, EL19-92).

Order 1000 required RTOs to eliminate from their tariffs a federal right of first refusal for incumbent transmission developers for facilities selected for cost allocation in a regional transmission plan. CAISO, MISO and NYISO did not seek immediate-need exemptions.

In allowing PJM, ISO-NE and SPP to create the exemptions, FERC set out five criteria, including that a project is needed in three years or less to solve reliability criteria violations. It also required the RTOs to post information about the exemptions to ensure transparency.

Between 2015 and 2018, FERC said, ISO-NE designated 29 immediate-need reliability projects, while PJM designated 241 and SPP designated five.

The commission said “it is unclear how each responding RTO determines whether an immediate-need reliability project is needed in three years or less,” noting that PJM designated 19 immediate-need reliability projects between 2017 and 2018 with need-by dates prior to or in the year they were designated.

“Similarly, the majority of ISO-NE’s immediate-need reliability projects have need-by dates occurring prior to ISO-NE’s designation of these projects as immediate-need reliability projects in the regional transmission plan, with 24 of 29 designated projects having need-by dates prior to or in 2016,” FERC said.

In other cases, FERC found, the dates the projects were projected to be in service after the need-by date. “For example, of the projects designated in 2014, PJM reported 10% in the engineering and procurement phase and 18% in the construction phase. Combined, 28% of PJM’s 2014 projects have in-service dates well beyond their need-by dates.

“Similarly, SPP designated an immediate-need reliability project in December 2018 that is needed by June 1, 2020, but has an expected in-service date of June 30, 2023. Based on information on the SPP website, it appears that none of SPP’s immediate-need reliability projects have gone into service, even those that have need-by dates past the present date.”

Transparency Questions

The commission also faulted the RTOs for a lack of transparency, saying it was difficult to locate where they identify and post explanations of reliability violations and system conditions with time-sensitive needs.

“Therefore, it is not clear whether the information provides sufficient detail of the need and time sensitivity, as required,” it said. “Where information is provided, it appears that the responding RTO discloses the reliability need and the transmission project proposed to meet that need to stakeholders at the same time, rather than posting the time-sensitive reliability need in advance. Furthermore, when the responding RTO posts an immediate-need reliability project, the information about the project is in some cases very limited, with little or no explanation of the circumstances that generated the immediate reliability need, what other transmission and non-transmission alternatives the responding RTO considered to meet the reliability need, and why the need was not identified earlier.”

The order criticized PJM for providing “minimal explanations” of immediate-need issues and said it “does not describe in any detail alternative solutions it considered or provide a defined comment period for stakeholders.”

It cited PJM’s approval of the Flint Run 500/138-kV substation project as a 2018 immediate-need reliability project, which the RTO said was needed because of load growth in the Marcellus Shale region. “The size of this particular project raises questions about why PJM did not identify this need earlier, how PJM determined that this project qualifies as an immediate-need reliability project, and whether PJM should have opened an abbreviated competitive proposal window for the project,” FERC said.

It was also critical of ISO-NE, saying that because the RTO does not conduct an annual transmission planning process, and instead relies upon needs assessment studies, “it appears that all reliability needs in ISO-NE may be classified as immediate-need reliability projects.”

The order requires the RTOs to demonstrate how they are complying with the immediate-need project criteria, that their exemptions remain just and reasonable, and that they consider additional conditions or restrictions on the use of the exemption.

Commissioners: Order 1000 not Achieving its Intent

FERC Chair Neil Chatterjee said the order “is an important step to ensure that the rules in each RTO appropriately balance reliability with the benefits of competition.”

“Order 1000 is not achieving what was initially intended,” he said after the meeting.

Commissioner Richard Glick said the new proceedings are “a smart thing.”

But he added, “I would say that I’m concerned if we say that this is our answer to addressing [all] the ills or the issues that Order 1000 has raised.”

Although “Order 1000 has done a lot of good things,” he said, it also created incentives for utilities to develop transmission projects “that might not necessarily be the best type of transmission project” in order to avoid competition.

“We need to promote competition; I don’t think we’re doing that; I think we’re doing the opposite in Order 1000,” he said. “I think we need to look at that in large part because everyone around here recognizes that states set ambitious clean energy goals and a lot of corporations around America have done the same. And we will not be able to achieve those goals if we don’t build out the transmission system, and in a lot of cases that’s interregional transmission lines that are sufficient in length and size.”

Chatterjee said he agreed with Glick that more needs to be done on Order 1000. But he added, “We have so much on our plates at the commission right now that a full comprehensive re-look at Order 1000 might be a difficult lift.”