FERC Order 1000 questions hatch regional, state task force

A broad range of stakeholders, including utility regulators, representatives, developers, and non-governmental organizations met Oct. 27 to discuss the implications and implementation of FERC Order 1000.

During the session, which consumed the majority of the morning at the Committee on Regional Electric Power Cooperation (CREPC) and the State-Provincial Steering Committee (SPSC) meeting in Monterey, Calif., participants discussed four general questions: How will Order 1000 reshape the subregions, how will these subregions be governed and what is the role of the states, how will subregions develop plans, and how will the subregions allocate costs?

An often-repeated response to each of these questions was, “It depends.”

In part, that response reflects the design of Order 1000, according to Kevin Kelly, Director of FERC’s Division of Policy Development. He repeatedly made the point that the order was designed to accommodate a wide range of plans, governance structures, and local and regional differences.

The participants who voiced an opinion on the topic agreed that the mandate for regional planning was a positive but raised many questions, including how regions and subregions will be defined and which entities will take part in the planning.

One participant noted that if entities that are not FERC-jurisdictional don’t engage in the process, the process will not ultimately be effective. Another said if non-jurisdictional entities cannot or will not participate in the planning process, “Order 1000 will effectively drive a wedge between jurisdictional and non-jurisdictional entities, particularly in the West.”

With regard to governance, FERC’s Kelly pointed out that Order 1000 was designed to accommodate a wide range of governance structures. The common themes that emerged during this aspect of the discussion were that states need to continue to be involved – and even increase their involvement – and that groups like subregional planning groups (SRGs) and the subregional coordination group (SCG) need to be more accessible to stakeholders like developers who don’t own assets but have a definite interest in regional planning.

The question of how subregions will develop plans also raised questions. FERC’s Kelly again pointed to Order 1000’s flexibility, stating that “good planning” is planning the satisfied seven principles: coordination, openness, transparency, information exchange, comparability, dispute resolution, and economic planning.

Commissioner Jim Tarpey of the Colorado PUC said broad involvement is key: “If you have the right stakeholder process, there’s a lot of leeway about how things are done.”

Several participants agreed that the most difficult and complex of the questions will be how subregions allocate costs.

Though FERC’s Kelly said it is not FERC’s intent that every project have the costs shared by everyone in the region, others expressed skepticism. One participant said, “especially with non-jurisdictional utilities, there’s a concern that you’re going to get hit with costs for projects that won’t benefit your customers.”

Even if such skepticism can be overcome, there are still issues that will require extensive discussion and negotiation. Many participants agreed applying principles like cost-causation and beneficiary pays, and apportioning tangible characteristics like cost and megawatts would be relatively easy. But Order 1000 also speaks to less tangible benefits, including environmental, societal, and economic development potential. They will be harder to quantify and, said one participant, “We have no idea how to allocate intangible benefits. None.”

The meeting concluded with agreement to form a CREPC/SPSC Order 1000 Task Force to address the questions of how to finance state participation in subregional planning, how to incorporate public policies into planning, and to continue to “sort through Order 1000 issues.” The task force will report to the full group in early 2012.