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Industry members, lawmakers assail FERC transmission order

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Industry members, lawmakers assail FERC transmission order

Power industry representatives and lawmakers criticized the Federal Energy Regulatory Commission's Order 1000 for power transmission coordination and development at a May 10 hearing on Capitol Hill, with one former FERC member saying the rule's mandates should go on a "severe diet."

Among other directives, Order 1000 required public electric utilities to participate in a regional transmission planning process that must factor in public policy requirements such as state renewable portfolio standards. In addition, the rule sought to improve coordination between neighboring transmission planning regions and required public utilities to have common regional and interregional cost allocation methods for new transmission facilities. To bolster competition, Order 1000 also eliminated a federal right of first refusal for incumbent transmission providers to build needed new transmission facilities.

Despite its good intentions, critics say the order has fallen short of its goal to spur needed transmission development and, in fact, impeded new projects.

"While some regional transmission planning processes have become more effective, Order 1000 has all but failed to develop new lines between and among [regional transmission organizations] and other planning regions," said U.S. Rep. Fred Upton, R-Mich., chairman of the energy subcommittee of the U.S. House of Representatives' Committee on Energy and Commerce.

Committee Ranking Member Bobby Rush, D-Ill., said the order seems to have had mixed results and that "modifications may be needed to help meet its objective."

Industry experts and executives also blasted the rule. Ralph Izzo, chairman and CEO of Public Service Enterprise Group Inc., said Order 1000 has actually hindered efficient transmission planning and that FERC should repeal the rule or at least "hit the pause button" until planning regions can show significant benefits from the order.

Izzo said no U.S. planning region outside of an organized RTO or independent system operator market has opened up a competitive transmission bidding opportunity since the order was issued in 2011. Activity has not been much more robust within organized markets, with few projects awarded bids in those areas, he added.

Former FERC commissioner Tony Clark added to the criticisms. Clark, who is now a senior adviser at Wilkinson Barker Knauer LLP, recently published a white paper on Order 1000 that said the rule has fallen short of its goals and FERC should better tailor the rule to recognize the significant regional differences across the electric power industry.

Clark repeated some of those thoughts at the May 10 hearing, including that the rule is less necessary in parts of the country that already had extensive transmission planning processes before Order 1000.

"Especially in those regions of the country where the majority of the states … maintain vertically integrated utilities, I would argue that Order 1000 should be put on a pretty severe diet," Clark told lawmakers.

But other witnesses and industry members defended Order 1000, or at least parts of it. In a statement on the hearing, LS Power Corp. vice president Sharon Segner said the competitive transmission processes contained in Order 1000 are working and that numerous companies are competing for regional projects across the country with "no negative impact" on reliability or transmission planning.

"Order 1000 is a carefully developed, bipartisan rule that enjoys widespread support and has been upheld by the highest courts in the land," Segner said. "Transmission rates are the fastest growing portion of consumers' electricity bills, and consumers benefit from competitive pressures in transmission."

Rob Gramlich, president of Grid Strategies LLC and executive director of the WATT Coalition (Working for Advanced Transmission Technologies), said at the hearing that broad regional planning and cost allocation are "the core elements" of Order 1000 and "should be preserved and expanded."

Although Gramlich acknowledged the rule has spurred little expansion of interregional grid capacity, he suggested fixes that could help reduce development barriers. To overcome the "triple hurdle" of a project needing to meet both regions' transmission planning and cost requirements and then the interregional requirements, Gramlich said FERC could harmonize the different cost allocation and benefit assessment methods and criteria between neighboring RTOs. The commission could also provide an affirmative obligation to identify and jointly evaluate alternatives proposed by stakeholders and remove exclusions on certain voltage levels or project sizes, he said.

FERC Chairman Kevin McIntyre said at a recent hearing before the subcommittee that the agency's transmission planning processes are ripe for review. The commission held a two-day technical conference in June 2016 that looked at competitive transmission developments since Order 1000's issuance but "has neither taken nor proposed additional action" on the topic since then, FERC spokesman Craig Cano said May 10.