FERC Poised to Overhaul Transmission Planning and Cost Allocation
FERC is taking the rare step of holding a special open meeting May 13, a Monday, to vote on a proposal to overhaul its transmission planning and cost allocation rules. 

FERC is taking the rare step of holding a special open meeting May 13, a Monday, to vote on a proposal to overhaul its transmission planning and cost allocation rules (RM21-17). 

The order would mark the first time since Order 1000 was issued more than a decade ago that FERC made universal changes to those rules. If fully approved as issued, the Notice of Proposed Rulemaking, which the commission issued in 2022, would require longer-term planning out to 20 years with multiple scenarios, create a process for states to agree on cost allocation for regional lines and expand the federal right of first refusal (ROFR) after Order 1000 largely eliminated it. 

One of the big issues generating debate around the rule is what FERC might do in terms of setting rules on its own if those state talks on cost allocation fail. Commissioner Mark Christie consistently has said states should not be forced to pay for others’ policies, while supporters of broader cost allocation have said transmission lines can offer broad-enough benefits to warrant wide cost allocation. (See FERC Observers, Stakeholders Lay out What is at Stake with Tx Rule Looming.) 

The ROFR issue also has split the industry between those who argue the move to competition has stifled development and those who maintain that rolling back competition would lead to higher costs for consumers in what promises to be a massive buildout of transmission in the coming decades. (See Pro-competition Group Plans to Sue if FERC Reinstates Federal ROFR.) 

The commission also will vote to update its backstop siting authority, as required by Congress, that would allow it to approve a line in a National Interest Electricity Transmission Corridor when a state denies the application before it (RM22-7). DOE recently announced a preliminary list of NIETCs. (See related story, On the Road to NIETCs, DOE Issues Preliminary List of 10 Tx Corridors.) 

The planning proposal has drawn support from around the U.S. and across the aisle, such as Kansas Gov. Laura Kelly (D) and a group of House Republicans from New York led by Rep. Andrew Garbarino. 

Less than a week ahead of the meeting, the EFI Foundation, led by former Energy Secretary Ernest Moniz, released a report that endorsed the NOPR’s main proposals. It argued the country is failing to proactively build transmission lines needed to connect new generation to customers, with the problem growing more acute because of new sources of demand. 

“New load that requires new power is growing today, but regional transmission typically takes at least a decade to build,” the paper said. “New power capacity (including all kinds of generator technologies and storage systems) could deploy faster if transmission capital investments could be more quickly planned, agreed upon and constructed by the nation’s regional transmission system operators.” 

FERC’s proposed rule includes many of the best practices that draw on real-world experiences of ISO/RTOs over the past decade, and many have said it should ameliorate the lack of transmission expansion. 

“But some will question whether FERC has the statutory authority to prescribe and direct jurisdictional transmission organizations to enact those reforms, as opposed to simply making suggestions and recommendations,” EFI’s paper said. 

Another school of thought argues FERC has broad authority to require transmission planning and cost allocation, having won the appeals of Order 1000 a decade ago, when a federal court found it had the authority to require transmission planning for needs driven by public policy.

But the EFI report noted the Supreme Court’s composition has changed since then, and its “major questions doctrine” could be a boon to opponents. 

“While never used explicitly in a major opinion, this doctrine suggests that in issues of major national significance, agencies may need to be granted clear statutory authority by Congress rather than relying on interpretations of more general delegated authorities,” the report said. “Through this lens, they may argue that prior legal decisions should be revisited to ensure that regulations are supported by clear congressional authorities.” 

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