FERC Order 1000 strikes a balance between state and federal authority, harmonizes coexisting interests with respect to the right of first refusal and fills a vacuum of legal authority, Commissioner Marc Spitzer said at a conference Sept. 12.
Addressing an audience of investors, developers, consultants and lawyers at the Platts Transmission Planning & Development Forum, Spitzer largely extolled the virtues of the order, which the Federal Energy Regulatory Commission issued at the end of July.
The order requires regional and interregional coordination with respect to building and allocating costs for transmission lines, and mandates that regions consider public policies while developing their transmission plans.
“We’re not mandating which public policies,” Spitzer said, nor is FERC mandating that regions adopt a public policy. “We are balancing the need for regional diversity with the need for a uniform federal standard,” he added.
The commissioner acknowledged that different regions in the US have different views as to renewables and the environmental consequences of transmission, generation and distribution.
Part of FERC’s reasoning for requiring the consideration of public policies, the commissioner said, is legal sustainability. Not mandating results but allowing regions to reach determinations and prescribe cost allocation methodologies on their own is a “very strong basis” for legal sustainability, he argued.
“There’s going to be mud and blood and beer spilled in those cost allocation meetings, but the regions are the places to have those very strong, very contentious discussions, as opposed to a one-size-fits-all at FERC. That’s not acceptable, nor is the status quo,” Spitzer said.
The consideration of public policies may also enable renewable projects to be brought to the table, Spitzer claimed.
The commissioner also addressed concerns that FERC, in issuing the order, is interfering with the authority of Congress. Given that legislation proposed by Sens. Harry Reid (D-Nev.), Jeff Bingaman (D-N.M.) and Bob Corker (R-Tenn.) has stalled, Spitzer said, FERC has provided a legal framework in which to operate.
“FERC has gone down the middle of the fairway. There was a vacuum, there was an absence of legal authority in the area,” the commissioner said.
Spitzer noted that the authority the FERC order does exhibit lies in the decision of the Seventh Circuit Court of Appeals, which provides that, in terms of cost allocation, benefits must be roughly commensurate with burdens imposed by the cost allocation methodology.
“We’ve incorporated as much as we can existing law, built upon that process by which public policy is to be considered and cost allocation plans are to be created, and we think we’ve not only filled the legal vacuum that exists in a way that respects local and state interests but hasn’t offended either interest here,” he said.
The order also establishes that incumbent transmission builders’ rights of first refusal are inherently anticompetitive, and omits the ROFR from the federal tariff. He noted that the ROFR remains in place if cost allocation is not sought, however .