The Federal Energy Regulatory Commission’s Order 1920 gives states an “unprecedented expansion” of their role in the transmission planning and cost allocation process, according to 33 utility commissioners from 14 states and the District of Columbia.
“Nothing in Order 1920 causes one state to be forced to pay for lines that only have public policy benefit to others,” they said in a Monday letter to the commission. “Order 1920 builds on long-standing FERC precedent that customers need only pay costs that are ‘roughly commensurate’ with the benefits they are expected to receive.”
The letter comes as states, clean energy groups, environmental groups and others are challenging various aspects of FERC’s transmission planning and cost allocation rule in appeals courts around the United States.
Utility commissions from Georgia, Louisiana, Mississippi and West Virginia, as well as the state of Texas, have asked appeals courts to reverse FERC’s rule.
The Public Service Commission of West Virginia, for example, argued the rule undermines the states’ role in transmission planning, “eviscerates” their role in determining how transmission costs are allocated and interferes with state decisions on power plant planning, according to a rehearing request filed in June at FERC by the state agency. It will also make states pay for transmission lines that are built to meet other states’ policies, the PSC said.
FERC on May 13, on a 2-1 vote, approved Order 1920, a rule requiring transmission providers to consider forward-looking factors when developing their plans — such as utility resource plans, state energy goals, corporate energy procurement commitments and interconnection queues. The transmission plans must look ahead at least 20 years.
Transmission operators must also consider certain economic and reliability benefits when considering possible transmission projects, including production cost savings and how transmission could help grid operators handle extreme weather events.
“The current status quo of incremental, reactive transmission planning has led to more expensive outcomes for consumers and businesses than the proactive multi-purpose approach FERC has developed,” the utility commissioners said, noting the transmission planning rule was influenced by a transmission task force of state and FERC commissioners that met eight times.
FERC’s rule requires direct consultation with state regulatory authorities in deciding how transmission costs will be shared, while avoiding a process where a single state could effectively veto a cost sharing framework for transmission that could provide benefits across a whole region, the state regulators said.
“This order has been informed at every level by the views, perspectives, and authorities of the states and is designed to lead to the effective planning of the interstate transmission system and an equitable sharing of the costs associated with transmission buildout, the outcome of which will be a lower delivered cost of energy for the ratepayers of our states,” the regulators said.
Utility commissioners signing the letter come from California, Colorado, Connecticut, the District of Columbia, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Oregon, Vermont and Washington.
The utility commissioners said they represent different parts of the country and have diverse political backgrounds. Also, they come from states with a range of regulatory frameworks, including vertically-integrated and restructured markets and regional transmission organization and non-RTO areas, the regulators said.
