The Federal Energy Regulatory Commission fielded nearly four dozen requests for rehearing and clarification to its major new grid expansion rule that requires scenario-based transmission planning for at least 20 years into the future.
State utility regulators urged FERC to clarify their role in developing long-term regional transmission plans. Grid operators asked the commission to provide more regional flexibility, while consumer advocates and clean energy groups raised concerns about transmission competition.
Meanwhile, a 19-state coalition led by Texas argued the final rule violates the US Supreme Court's new "major questions" doctrine.
FERC's final rule, Order 1920, is the first major update to its long-term regional grid planning policies in more than a decade.
Issued in May, the rule requires regional grid planners to use a minimum 20-year planning horizon. Plans must incorporate seven inputs, or transmission drivers, including trends in fuel technology costs, state and local laws and regulations, and corporate clean energy commitments.
The rule also requires transmission providers to seek consensus with states on cost allocation methodologies. These methodologies should use seven different economic and reliability benefits, including energy production cost savings, reduced transmission congestion costs, and the avoided costs of grid outages during extreme weather events.
Requests for rehearing and clarification to Order 1920 were due June 12.
Clarification on benefits, cost allocation
FERC's final rule allows transmission providers to file multiple cost allocation methodologies for approval. At the same time, the rule prohibits transmission providers from distinguishing among project types, such as those driven by reliability needs versus state-level public policies, when applying cost allocation methodologies.
The 13-state PJM Interconnection LLC urged FERC to clarify that it did not intend to preclude regional grid operators from adopting multiple methodologies that allocate costs based on the different benefits associated with a particular transmission facility.
"This would allow transmission providers the flexibility to develop, if appropriate, a cost allocation methodology that includes allocations that vary depending on the specific benefits of a project," PJM said.
The Organization of PJM States, a coalition of state utility regulators, asked FERC to clarify that transmission providers must also file cost allocation methodologies developed and agreed upon by states.
As written, the final rule "does not provide a defined path for those proposals — where the states have agreed to a cost allocation methodology — to be brought before the commission," the organization warned.
The Harvard Electricity Law Initiative agreed, saying FERC should require a process "for filing all regional cost allocation methods approved by relevant states entities."
The American Public Power Association said FERC should amend the final rule's definition of "relevant state entities" to include public power utilities and state and municipal governing bodies.
A coalition of utility regulators representing the ISO New England region added that FERC should further clarify that grid operators must rely on states for planning inputs where appropriate.
"The commission should require transmission providers to rely on states in developing long-term scenarios where state laws, regulations and/or policies are the drivers of long-term transmission needs," the New England States Committee on Electricity said.
Consumer cost concerns
FERC's initial proposal would have eliminated a construction-work-in-progress (CWIP) incentive for regional transmission lines that allows developers to start recovering costs before lines reach commercial operation. But FERC kept the CWIP incentive in its final rule, saying the commission may address the incentive in a separate proceeding.
The National Association of Regulatory Utility Commissioners urged FERC to revisit that decision, calling it "arbitrary and capricious."
"There is substantial unrebutted evidence in the record that the proposed CWIP incentive for long-term regional transmission facilities arbitrarily shifts acknowledged and excessive risk to consumers due to the long lead-times and a higher risk that such facilities will be built," the association said.
The Electricity Transmission Competition Coalition, Resale Power Group of Iowa, and competitive developer LS Power Development LLC also jointly argued that FERC acted arbitrarily by granting incumbent transmission owners a federal right of first refusal for right-sized replacement facilities.
"Order No. 1920 failed to demonstrate that FERC has the legal authority under the Federal Power Act to mandate the issuance of a transmission monopoly preference or federal transmission franchise for the development and construction of electric transmission facilities in interstate commerce," the coalition said.
Advanced Energy United, a clean energy trade group, agreed.
"Fewer rights of first refusal, with increased transparency and oversight, are needed to improve the transmission system in an efficient and cost-effective manner," the group said.
Meanwhile, the Edison Electric Institute said that FERC violated the Administrative Procedure Act by adopting key elements of a cost containment proposal floated by a broad consumer advocate coalition after the public comment deadline closed. The final rule includes a provision that allows regional power lines to be reevaluated to ensure their projected benefits outweigh costs.
"The new reevaluation mechanism added to the final rule is arbitrary and capricious under notice-and-comment procedures," the Edison Electric Institute said.
The National Rural Electric Cooperative Association agreed, arguing that FERC's final rule does not represent a "logical outgrowth" from its initial proposal.
Republicans cite major questions doctrine
With an eye toward the Supreme Court, a coalition of 19 Republican attorneys general cited the major questions doctrine in arguing that Congress must authorize FERC to regulate grid planning on a nationwide basis.
The major questions doctrine, as reflected two years ago in the Supreme Court's West Virginia v. EPA decision, holds that agencies cannot regulate on matters of "vast political or economic significance" without express authorization from Congress.
FERC's authority under the Federal Power Act "does not extend to making the sweeping public policy change — a mandate to build transmission to accommodate distant renewable generation and to override state generation planning authority — that is adopted by Order No. 1920," the attorneys general said.
The coalition, led by Texas, includes Alabama, Arkansas, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, and Utah.
In a dissent to the final rule, Republican FERC Commissioner Mark Christie argued that Order 1920 represents a "blatant violation of the major questions doctrine."
But FERC's two sitting Democrats, Chairman Willie Phillips and Allison Clements, disagreed in a joint concurrence.
"Significant investments in transmission are already being made by public utilities around the country regardless of anything we do — or do not do," Phillips and Clements said. "This final rule regulates the process by which those investments are identified, evaluated and, where appropriate, selected in order to help ensure that they reflect the most efficient and cost-effective options available."
