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FERC clarifies transmission planning activities subject to 3rd-party involvement

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FERC clarifies transmission planning activities subject to 3rd-party involvement

In rejecting a complaint concerning Pacific Gas and Electric Co.'s transmission projects, the Federal Energy Regulatory Commission made some key clarifications about the types of transmission activities that must be conducted in an open, coordinated and transparent manner.

As for those maintenance and other transmission activities that are not subject to such requirements, FERC in a concurrent order accepted a proposal by Southern California Edison Co. to create an annual transmission maintenance and compliance review process and urged Pacific Gas and Electric, or PG&E, to do something similar.

In February 2017, the California Public Utilities Commission, Northern California Power Agency, City and County of San Francisco, State Water Contractors, and Transmission Agency of Northern California jointly told FERC in a complaint (FERC docket EL17-45) that PG&E conducts about 80% of its transmission planning, for about 60% of its annual capital investment, internally without stakeholder involvement.

The parties argued that FERC Order 890 requires transmission owners to conduct all transmission planning in a transparent manner and with stakeholder involvement. However, the parties alleged that PG&E is carrying out projects, including substation and transmission line replacements and upgrades, without allowing stakeholders, the CPUC or the California ISO to evaluate whether those projects are needed or efficient.

The current process leaves PG&E customers without a safeguard against rapidly escalating transmission rates, the parties insisted. They therefore asked FERC to order PG&E, and possibly other California transmission providers, to provide an open transmission planning process for projects that are not subject to CAISO's transmission planning process, or TPP.

PG&E responded to the complaint by insisting that the TPP in place for CAISO's control area is in full compliance with Order 890 and that nothing has changed since FERC rejected the very same arguments made by the complainants when it signed off on CAISO's Order 890 compliance filing.

Some of the same issues arose after SoCal Edison in 2017 proposed to create an annual transmission maintenance and compliance review process (FERC docket ER18-370) for projects that fall outside of CAISO's TPP.

To get a better handle on the situation, FERC in May 2018 held a technical conference (FERC docket AD18-12) exploring which projects should fall under CAISO's planning processes, whether maintenance projects count as transmission projects for planning purposes, and how the public should be involved in projects that fall outside of the TPP.

FERC's orders

FERC on Aug. 31 dismissed the PG&E complaint because the complainants failed to show that PG&E's tariff has become faulty and needs to be changed. Despite the complainants' arguments to the contrary, the commission clarified that Order 890's requirements simply do not apply to all transmission-related projects and activities capitalized in a transmission owner's rate base, including those at issue here.

The agency stressed that Order 890's transmission planning requirements are intended to ensure that transmission providers do not discriminate against third parties by refusing to expand the grid when needed. Here, FERC said the activities at issue are the maintenance, repair and replacement of existing transmission facilities and not the expansion of the grid. They therefore do not fall within the scope of Order 890, regardless of whether they are capitalized in PG&E's transmission rate base, according to the agency.

FERC further clarified that activities that result in an incidental increase in transmission capacity, such as replacing an old transformer with a higher capacity modern one, also would not make the project subject to Order 890's requirements. However, if a project results in nonincidental increases in transmission capacity, such as one that addresses a CAISO-identified transmission need by expanding the scope of the project, that incremental work would have to be approved by CAISO or become subject to Order 890's transmission planning requirements.

The commission also said that whether or not other transmission planning regions are considering asset management projects and activities through their regional transmission planning processes does not mean that Order 890 requires them to do so.

That said, FERC explained that it understands that the complainants' desire for more transparency regarding the maintenance activities that are not subject to Order 890 or CAISO's TPP and that such transparency would provide a number of benefits. The agency therefore urged PG&E to continue to develop a process to share and review information with interested parties regarding such projects.

In its concurrent FERC order accepting just such a process developed by SoCal Edison, the agency said it "may provide a useful example for PG&E and its stakeholders to consider."

FERC noted in the concurrent order that SoCal Edison revised the proposed process to address the concerns of the CPUC and others by doing such things as expanding the scope of activities and facilities subject to the process and the opportunities for stakeholders to provide input. SoCal Edison also agreed to provided information about cyber and physical security projects in aggregate format and create a dispute resolution process, FERC added.

With those revisions, FERC found that the proposed process "will provide stakeholders with an open, coordinated and transparent process for consideration of SoCal Edison's asset management projects and activities."

PG&E is a subsidiary of PG&E Corp.