The Sacramento Municipal Utility District and the Large Public Power Council object to the rule advanced in Order 1000 requiring the creation of regional transmission plans, John DiStasio, SMUD’s general manager and CEO, said in testimony presented the House Energy and Commerce Subcommittee Oct. 13.
The rule would allocate the cost of new transmission development to utilities on the basis of presumed “benefits,” whether or not the utilities to which these costs are allocated use the new facilities, he said.
Assessing these costs without regard to usage would subsidize generation located remotely from utilities, to the detriment of local energy solutions, including local renewable resources and investment in demand management programs and efficiency initiatives, he said.
“I am concerned that FERC’s rule forces transmission planning to be driven inappropriately by regulatory policy instead of economic demand, will likely result in additional and unnecessary costs for our customers, and that the transmission subsidy contemplated by the order will tilt the market playing field in favor of distant generating resources, and against more efficient resources such as local renewables and demand management resources,” DiStasio said.
Currently, more than 24% of SMUD’s electric supply portfolio is renewable and that figure is expected to increase to 37% by 2020, he said, adding that SMUD is also implementing a smart grid program featuring 615,000 new smart meters in its system.
DiStasio also said he is concerned that mandating development of regional plans, which must include cost allocation mechanisms, will turn existing planning and coordination into contentious processes that may “grind to a halt.”
With regard to cost allocation, he said Order 1000 does not define how benefits will be calculated, other than to note that they may include such vague notions as reliability, economic, and public policy benefits, and consequently, the order could result in transmission charges being assessed to entities for facilities over which they take no transmission service.
As a municipal utility, a company like SMUD would generally be exempt from an allocation of costs by FERC, he said, noting that in the order, FERC says such utilities participation in regional planning discussions means they benefit from new regional transmission and must pay new costs. “I do not think that FERC has the legal authority over us to take this action, and I believe that threatening to do so will discourage companies such as SMUD from participating in regional planning as they historically have,” DiStasio said.