FERC Seeks Public Comments on Potential New Reforms in Regional Power Transmission Planning and Generator Interconnection | Davis Wright Tremaine LLP


On July 15, 2021, the Federal Energy Regulatory Commission (FERC) issued an Advance Notice of Proposed Regulatory Proposal (ANOPR) that seeks public comment on a number of potential reforms aimed at improving electric transmission planning. regional, cost allocation and generator interconnection processes. If any of the proposals set out in the ANOPR are adopted, it could lead to dramatic changes in the way the U.S. electricity grid is extended and in the way renewable energy is connected to that grid.

A diversity of views among FERC commissioners

FERC said the electricity sector is transforming as the generation fleet shifts from resources close to population centers to resources, including renewables, which can often be located far from load centers. The growth of new resources seeking to interconnect with the transmission network and the different characteristics of these resources create new demands on the transmission network.

In light of these changing conditions, FERC is considering whether to make changes to existing regional transmission planning and cost allocation and generator interconnection processes and, if so, what changes are needed to ensure that transportation rates remain fair and reasonable and that reliability is maintained. FERC has not determined in advance that a specific proposal discussed in the ANOPR should be made or in what final form. Instead, FERC seeks public comment on many of the proposals and issues raised in the ANOPR and welcomes alternative proposals as well.

From discussions at the July 15 FERC meeting, it was clear that there was a range of views among FERC Commissioners on the topics covered by ANOPR, perhaps explaining why FERC chose to seek public comment and build a brief on a variety of issues before proposing specific new regulations.

In an agreement released with ANOPR, FERC President Glick and Commissioner Clements stressed their concerns that existing regional transport planning processes are siled, fragmented and not sufficiently forward looking, so that transportation facilities be developed on a piecemeal approach that is unlikely to produce the kind of transportation solutions that could more effectively meet the needs of the changing resource mix.

Rather, the pair favor a more holistic and forward-looking approach to transportation planning that would include a ‘build it and they will come’ approach to building the transportation grid in anticipation of the development of future renewable energy production, electrical storage and associated technologies. . President Glick and Commissioner Clements also underlined their conviction that other new initiatives will be necessary, in particular a reform of the planning of interregional transmission.

In a separate agreement, Commissioner Danly supported efforts to resolve interconnection issues, but expressed the view that some of ANOPR’s proposals would go beyond the legal authority of FERC, violate the principles of causation of costs, create stifling levels of oversight, violate utility rights and have other consequences.

Commissioner Christie’s separate endorsement indicates his support for some proposals not specified in the ANOPR, but raises fears that others may result in massive increases in consumer bills for little benefit or inappropriately extend federal regulation on regulation of local utilities.

Some of the more substantial changes discussed in the ANOPR could win the support of a majority in the Commission later this year, when another Democratic Commissioner is expected to be appointed to join the FERC.

Topics to Comment

FERC is seeking public comments on a number of specific topics and questions related to three main ANOPR topics.

The first major topic is whether FERC should require changes to the regional transportation planning and cost allocation processes to plan the transportation needs of the planned future generation resource mix. FERC proposes a number of potential reforms related to planning the transport needs of the potential future generation.

These potential reforms include modeling future scenarios to ensure that they incorporate sufficiently long-term and comprehensive forecasts of future transport needs determined by the future generation mix, identifying geographic areas that have high potential for development of renewable resources to meet increased demand and transport planning towards facilitating the integration of renewable resources in these areas and strengthening interregional or state-to-state coordination. FERC is also seeking comments on whether and how to improve coordination between regional transmission planning and cost allocation and producer interconnection processes.

Second, FERC is asking for comments on how to better identify the costs and liability of regional transmission facilities and grid upgrades related to interconnection. FERC asks whether it should demand a more forward-looking approach to the regional transportation planning process that plans for anticipated future production, potentially producing a different and broader set of benefits and beneficiaries for the purposes of cost allocation. FERC is also proposing potential reforms related to its participant funding and credit policy for grid upgrades related to interconnection.

Today, many Regional Transportation Organizations (RTOs) and Independent Network Operators (ISOs) in the most populous areas of the United States use “crowdfunding”, forcing developers of generation projects to fully pay the stakes. on the electricity grid that would not otherwise have been built in the short term “without” the proposed interconnections between the generators. This can significantly increase the costs of building and connecting new renewable energy production projects.

Among other things, FERC questions whether this participant funding for interconnection-related network upgrades is unfair and unreasonable and whether RTOs and ISOs should instead implement FERC pro forma credit policy where any payment made by generation developers would be offset by credits against future transmission service bills to provide electricity to these generators.

Finally, FERC is proposing potential reforms to provide increased oversight of transportation planning and spending on transportation facilities to ensure that transportation tariffs remain fair and reasonable. FERC is seeking comments on various potential areas for oversight, including how new regional transportation facilities are identified and paid for, local transportation planning, and increased clarity regarding roles and responsibilities between state and federal regulators in this regard. which relates to local facilities, and oversight by the state transportation planning commission. and cost allocation processes.

FERC proposes to mandate the establishment of “independent transport controllers” to review transport planning processes such as those administered by RTOs and ISOs and to monitor the costs of transport projects under development in order to inform a FERC determination of reckless transportation costs and, therefore, should not be recovered from taxpayers.

Next steps

The initial and response comments to the ANOPR are due 75 and 105 days, respectively, after their publication in the Federal Register. The FERC would then follow the ANOPR with a specific notice of proposed rulemaking expected no earlier than December and potentially a final rule in mid to late 2022.

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