FERC on Dec. 29 rejected Duke Energy’s proposal to update the transmission planning process for its utilities in the Carolinas without prejudice, meaning the utility could file a similar proposal addressing the commission’s concerns (ER24-314).
Duke Energy Carolinas and Duke Energy Progress participate in the North Carolina Transmission Planning Collaborative (NCTPC), which identifies transmission upgrades needed to maintain new reliability and integrate new generation and load onto their systems in both North and South Carolina. It produces annual local transmission plans by studying the system’s reliability, economic and public policy needs.
In recent years, coal retirements, compliance with state and federal laws, and continued economic development have strained the current NCTPC process, Duke told FERC. About 8,400 MW of coal resources are planned to retire, and Duke’s integrated resource plans in both states call for 5,400 MW of new generation to replace that by 2030.
To ensure the replacements are available in time to maintain reliability, the Duke companies asked FERC to approve changes to their Joint Open Access Transmission Tariff that included setting up a new “Multi-Value Strategic Transmission Projects” class of lines, as well as increased transparency and coordination for NCTPC stakeholders. They also proposed changing the NCTPC’s name to the Carolinas Transmission Planning Collaborative (CTPC).
Duke proposed a threshold for projects to qualify in the new transmission planning process of $5 million, which it said would ensure all major transmission lines are covered.
“We reject Duke’s proposed Joint OATT revisions without prejudice to Duke refiling without the proposed $5 million estimated cost threshold,” FERC said. “We find that Duke’s proposal to implement a $5 million estimated cost threshold that must be met for any local transmission project to be planned through the CTPC process is not consistent with Order No. 890.”
While FERC has granted an exemption to asset-management projects and activities that do not expand the grid from Order 890, it has not exempted transmission projects and activities that expand the grid but fall below a cost threshold.
Besides the $5 million limit running afoul of that precedent, however, FERC said the rest of Duke’s proposal appears to be just and reasonable and otherwise consistent with the 2007 order, which governs transmission providers’ planning processes. The commission disagreed with arguments that Duke’s proposal to keep using its existing cost allocation method for the new Multi-Value lines and public policy projects would violate Order 890. Duke did not propose revising its default cost allocation, which means the Multi-Value projects would be recovered under the cost allocation policies in the tariff, satisfying Order 890’s requirements, the commission said.
The proposed CTPC process would also satisfy Order 890’s transparency principle because it would continue to disclose criteria, assumptions and data used in the planning process to interested stakeholders, FERC said.
Several parties opposed Duke’s proposal to recover the cost of the Multi-Value projects under its formula rate, but the commission determined it did not propose any changes to cost allocation at all, making that beyond the scope of the proceeding. Even if it was within the scope, FERC said it was not convinced it should depart from its own longstanding policy of rolling into transmission rates the cost of networked transmission facilities like the ones that would be planned under the CTPC.
FERC found concerns about the proportionality of benefits of the Multi-Value lines to be speculative and said protesters failed to make their case that such lines would benefit generation developers by having interconnection costs covered in transmission planning.
“Even if Duke’s revisions were to result in identification of network upgrades through the transmission planning process that otherwise would have been identified through the interconnection process, the cost of interconnection process-identified network upgrades are ultimately credited back to interconnection customers at transmission customers’ expense,” FERC said.
Commissioner Mark Christie filed a concurrence to the order saying that if Duke refiles the proposal to address FERC’s concerns, the record would benefit from the views of the North Carolina Utilities Commission and the Public Service Commission of South Carolina.
“I believe the record would also benefit from information they could provide as to the authority of the NCUC and PSCSC to approve integrated resource plans that include local transmission construction plans, as well as their authority to approve or disapprove permits to construct individual local transmission projects, such as through a certificate of public convenience and necessity process,” Christie said.
